Evolution Mining Limited

Thank you, Rachel. Good morning, ladies and gentlemen, and welcome to today's conference call with Evolution Mining. As Rachel said, my name is Peter O'Connor. I am General Manager of Investor Relations at Evolution Mining. Today, we have lodged four announcements with the ASX platform. Firstly, the September quarter FY23 quarterly production update, an expiration update covering our cow, mangari, and also our annual report for FY23 and our sustainability report for FY23. We have four members of our leadership team from Evolution Mining attending the call today to talk to specifically the first two of those announcements, the quarterly update and also the exploration report. In attendance, we have our Chief Executive Officer and Managing Director, Laurie Conway, our Chief Operating Officer, Bob Fulker, our Chief Financial Officer, Barry Vandermeer, and our VP of Exploration Discovery, Glenn Masterman. And with that, Laurie, over to you.

Thank you, Peter. Good morning, everyone. We appreciate you joining us as we outline the results for the September quarter as released on the ASX this morning. Prior to discussing our performance for the quarter, I want to comment on the current gold price. We know that there are many drivers to the gold price, and one of these is geopolitical unrest. That said, the ongoing situation in Israel, which is contributing to a higher gold price, is one of the drivers that we're not comfortable with. The civil unrest and atrocities which is resulting in such devastation to so many people, including loss of life, is deeply saddening and we sincerely hope the situation is able to be resolved promptly. For this reason, we're a bit more subdued about the benefits we are receiving from the higher spot gold price today. At the June quarterly and our full year financial results, I outlined that we work to finish FY23 so as to set up set us up to deliver improved results and financial performance in FY24 and beyond. The September quarter has seen us track to that plan. On the sustainability front, a recordable injury frequency reduced further to 8.3, continuing the trend of recent quarters. We also confirmed during the quarter that we had reduced our emissions in FY23 by 11.2% over the FY20 baseline. This places us well on track to achieve our commitment of a 30% reduction by 2030. At the end of the first quarter, we remain on track to deliver our guidance of 770,000 ounces at an all-in sustaining cost of $1,370 per ounce plus minus 5%. We knew that the first quarter was going to be a low-production and high-cost quarter due to a number of factors, including the ramp-up at Ernest Henry, the planned shutdowns at a number of our processing facilities and the utilisation of lower-grade material, including some stockpile material, which carry higher non-cash inventory values. For the quarter, we produced 158,000 ounces at an all-in sustaining cost of $1,612 per ounce. As we move through the year, we'll see production increase as we access more higher-grade material at Cowell and Red Lake, and the AISC will trend down. Bob will go through our operational performance shortly. Financially, we generated an operating cash flow of $280 million at a rate of over $1,700 per ounce. This is a 42% increase over the June quarter. However, it reflects the benefits of Ernest Henry returning to the reliable cash contributor that it was before the impacts of the weather event in March. All operations were cash positive before major capital, generating a combined $245 million, which shows that the business is returning to an improved cash generation position. This will increase further as we move through the year and should push us well over the billion-dollar annual rate. If the spot price is maintained, then cash flows will be materially higher again and contribute further to our deleveraging of the balance sheet. On the projects front, we made good progress at Mangari 4.2 project, previously known as the Future Growth Project, with the main EPC contract awarded during the quarter. The contract locks away over 60% of the total project costs. However, more importantly, we've been able to confirm the construction will be within the original project schedule and budget while the required workforce has been secured, as has the associated accommodation. The project team had a kick-off meeting with the contractor last week and activities will ramp up in the coming months. When we approved the project, we talked about the potential to grow the resource base, targeting underground opportunities to support the ability to sustain for longer the 200,000 ounces per annum post-expansion production rate. Today we announced some excellent drilling results from two new structures within the Kandana Mining Centre at Genesis and Solomon. These results give us confidence in the potential for longer periods of higher-grade material being fed to the expanded plant. Just as exciting are the results at Cowl in the underground mine, with significant results between Delwini and Regal showing upside potential outside the existing mine resource. Glenn will take you through these results soon, but what it does confirm is that the organic growth opportunities we outlined at our Investor Day have much more upside potential and we'll continue to work on these opportunities to further improve the financial returns of the projects and the assets. I'll now hand you over to Bob for an update on the operations.

Thanks, Laurie, and good morning, everyone. As Laurie mentioned, our safety is trending nicely. All operations are currently dedicated to further improvements through their safety improvement plans and implementing an online critical control verification system. Production in the September quarter of 158,000 ounces was consistent with the previous quarter and we expect quarterly production to improve through FY24. Notable highlights for the quarter were Ernest Henry back to normal operation. Operating mine cash flow improved to $280 million for the quarter. and the Mangari 4.2 growth project commenced and remains on schedule and budget. Turning to Cal, their cash flow improved significantly during the quarter, and we expect this trend to continue through the remainder of the year. The high-grade underground mine project is now in ramp-up phase to circa a million tonnes this year, and will underpin the 18% lift in production. Capital to spend is also forecast to be significantly lower. The CNL achievements for the quarter was on the scheduled completion of the planned processing plant maintenance, the accommodation village becoming fully operational, and paste delivered underground has commenced. In summary, CAL has returned to the substantial cash generator for the group, generating $112 million in operating on cash flow in the September quarter, combined with a reducing capital expenditure profile. Ernest Henry is on track to deliver production and cost guidance. They have successfully restored production to normal operating levels as guided with 20,000 ounces of gold and 13.5,000 tonnes of copper produced for the quarter. Operating mine cash flow improved significantly to 110.6 million for the quarter. They also delivered a record underground development both under evolution and prior ownership. with an impressive 3,114 litres completed during the quarter. This is a testament to the site team's continued focus on improvement. The future growth plans continue to progress, and the life extension feasibility study remains on schedule for delivery in the March FY25 quarter. Over to Red Lake. They remain on track to deliver our full-year guidance. The September quarter production was in line with the previously guided range of 15% to 19% of the FY24 production. and the quarterly production is expected to improve as the year progresses. Workforce reductions were completed during the quarter to align headcount with the production fleet requirements. This represents an annual saving of approximately $12 million. Remediation work has progressed nicely to ensure the future or continuity from a coastal mine. The work program highlighted in the figure on page five of the September quarter outlines the immediate solution of the number three pass and a near-term solution of the raised board number four pass. This pass is scheduled for completion in the December quarter. In the longer term, the ramp breakthrough will provide an alternative for both ore haulage and mine access. Pleasingly, the oil and sustaining cost reduced by 16% compared to the previous quarter for an AISC of $2,552 per ounce, with the underlying cost trending to improve. so cost trend continuing to improve. We remain on track for the FY24 AISC guidance of $2,000 Australian per ounce. A key highlight for the quarter was the significant improvement in the operating mine cash flow to $27 million Australian. This was the best operating mine cash flow in almost three years. In conclusion, Red Lake has right-sized the workforce, delivered positive operating mine cash flow, addressed the near-term haulage constraints and remains on track to meet FY24 guidance in production and cost. Mangari's production is on track to meet this year's guidance. The September quarter was in line with expectations given the reduced ore availability during the ramp-up at the Paradon mining hub. Mill throughput was maintained by the processing of stockpiled ore. In coming quarters, we will see improved production and a reduction of the stockpiled ore processed reversing a non-cash inventory charge seen in the September quarter. The new Paradigm Mining Hub is expected to achieve full ore production during the December quarter and will contribute to the higher quarterly production at Mangarra. Mount Rawdon is on track to deliver FY24 production guidance and delivered consistent production in the September quarter. They continue to make a valuable contribution to the group, generating $8.2 million in operating mine cash flow. In summary, We remain on track to achieve our FY24 production and all-in sustaining cost guidance. The September quarter was in line with our expectations given the resumption of normal production at Ernest Henry and the planned maintenance activity at a number of the operations. Pleasingly, all operations were cash flow positive at the operating mine level before major capital with $245 million generated. Thank you for your time and I'll pass it over to Glenn for an exploration update.

Thank you, Bob, and good morning, everyone. I'd like to draw your attention to the exploration announcement we released this morning describing exciting and high-grade drilling results at Manggari and Kow. The results highlight potential for additional high-grade mineralization outside of non-mineral resources near active mining fronts at both sites. Mangari's results reinforce our approach of continuing to discover and delineate further high-grade underground ore to support the planned expansion from 2 million to 4.2 million tonnes per annum, which positions the site to further increase its mineral resources. The results at CAL further expand the potential of the underground mine and underline our focus on delivering continued and reliable higher-grade underground production in the coming years. Turning firstly to Mangari, I refer you to Figure 1 of this morning's ASX announcement, which illustrates the relationship of the Genesis and Solomon veins relative to the Christmas vein, which is where most of our underground production at Kandana is currently situated. This morning's drilling results confirm that Genesis is the next high-grade discovery at the Kandana Mining Centre. Pleasingly, we've already reported production from along the Genesis structure, including a stope that reconciled above 17 grams per tonne from the area we visited with those of you who were able to join our tour of Mungare during Diggers and Dealers in August. During that site visit, you'll recall the ore drive where we walked and inspected the high-grade quartz vane arrays exposed along the sidewalls and in the backs. We have progressed our geological understanding, which now confirms our interpretation from that time, that we were standing at the very top of the vein structure, almost 500 to 600 metres below surface. This is one of the reasons why Genesis has remained hidden from our knowledge for so long, along with the fact that most of the previous drilling was completed from the footwall side of the mine and stopped short of the Genesis position. Our site geology team has shifted their thinking away from the geological dogma that assumed the Centenary and Strezlecki main vein structures were the only hosts of high-grade mineralisation at Kandana. Our geological work illustrates there are other mineralised structures that were not previously known situated in new geological positions that have extensive strike and dip potential. We are excited about the growth and life of mine prospects at Kandana, with further drilling planned this year, the aim of expanding mineralisation at Genesis and Solomon, while continuing to lengthen the same drill holes to infill the Christmas resource for conversion to reserves. At Cal... It is really pleasing to be able to report the new drilling results from underground, which very nicely follow along from the drilling update I spoke about at our investor day back in June. I refer you to figure two in this morning's announcement, highlighting the locations of these new results, which have expanded the Delwini and Regal ore bodies across the gap zone towards each other. The gap zone, which we will shortly rename along the lines of the same single malt theme as our other underground ore bodies, is one of the areas in the underground that remains very underdrilled. There is strong potential to connect Delwini and Regal across this space as we expand our drilling coverage into this area. We are also seeing some very encouraging results from our closed-spaced ore definition drilling in the areas prioritised for early production in the underground mine schedule. A best example is at Galway, where we are generally seeing higher grades from slightly smaller ore volumes for overall higher metal reported entirely within the ore reserve. Lastly, I would like to mention that underground drilling recommenced at Ernest Henry during the September quarter. Two rigs are currently operating with initial drilling targeting the down plunge extension of the Burt Allbody along with potential extensions to the Ernie Junior Allbody. I look forward to being able to report new results to you after we complete the December quarter. With that, I will hand over to Barry.

Thank you, Glenn. generated strong cash flow for the quarter, underpinned by earnest energy return to normal operations. All operations contributed positively to operating cash flow of $280 million and mine cash flow before capital of $245 million, which increased 42% and 98% respectively on the previous quarter. Net mine cash flow returned to positive territory, improving by $176 million from the last quarter of FY23. Group cash flow improved by $69 million, or 72%, an outflow of $26 million for the quarter. As outlined by Laurie, our production will increase and our AAC per ounce reduce further as the year progresses. This will result in even stronger cash generation in the remaining quarters, putting us on track to reduce net debt in FY24. We are very pleased that Group AISC per ounce decreased by 16% to $1,612 per ounce quarter-on-quarter. This was driven by Ernest Henry being back at normal operations and Red Lake that was lower, resulting from higher ounces sold, partially offset by the impact of the Canadian dollar that was slightly stronger than Q4 of FY23. Mangari increased quarter-on-quarter, driven by additional costs from non-cash or stockpile drawdowns to mitigate the slower ramp-up at Paradigm. This is not expected to recur with Paradigm reaching full mining rates in the December quarter. Cost management remain a key focus area, and our full year cost guidance of $1,370 per ounce remain unchanged. As Laurie mentioned earlier, capital intensity is reducing, and capital expenditure guidance is approximately $117 million lower than last year. For the quarter, capital expenditure was $60 million lower than the previous quarter due to reducing capital intensity and timing of expenditure at Cal and Ernest Henry in FY24. As the Mangari 4.2 project ramps up over the coming months, capital expenditure will increase from current levels, which is well matched with stronger cash flow expected later in the year. Our full-year guidance of $450 million to $490 million for major capital and $190 million to $230 million for sustaining capital remain unchanged. During August, we completed the debt restructuring that was announced at our investor day in June. This was done to align our debt maturity profile with increasing mine lives and provide financial flexibility to provide shareholder returns. In August, we received $200 million from our latest U.S. private placement, which is repayable in equal parts in FY34 and FY36, respectively. The restructure did not change our gross debt position, and we have no debt repayment commitments until the December 2024 quarter. Since issuing our USPP, 10-year U.S. Treasury yields increased about 100 basis points to about 4.6%, excluding the spread or margin. At 4.8%, our average cost of debt, with an average debt tenor of about seven years, is very favorable. We have available liquidity of $504 million, and the committed $525 million revolving credit facility is available until October 2025. After payment of the interim dividend of $38 million in October and with a continuing ramp-up of production over the year, a strong gold price and reduced capital intensity, our expectation and commitment to deleverage the balance sheet remains well on track. I will now hand you back to Rachel to open the lines for questions. Thank you.

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 two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from David Radcliffe with Global Mining. Please go ahead.

Hi, good morning, Laurie and team. My first question is on the news that's just come out on Glencore's plans to reportedly shut in production at Mount Isa. I understand this doesn't affect the smelter, which maybe you guys could clarify, and you've got a mine gate arrangement anyway. and it's all pretty new news, but to put you on the spot, I was wondering if you could comment on any potential impacts you might see for Ernest Henry or even opportunities, you know, maybe there's increased labour availability that could be a positive. Could there be anything on the tolling that you could see that could be an opportunity?

Thanks, David. Yeah, look, I mean, with regards to the Glencore's plans at ISA, in terms of the first one, our offtake agreement for the life of mine at Ernest Henry, already has provisions in place for if the smelter does close, which basically still requires them to take the concentrate and place it into smelters with the freight rates and everything already agreed. In regards to the second part of it, obviously there will be a redeployment of people there that Glencore will look at, but it does mean there will be people available. If there's any of that that fits in with our requirements at Ernest Henry, we certainly will look at that. And then the last piece, does it provide opportunities for us around toll treating and the like? We know we've got capacity at the plant. We do have some contracts that we have with Glencore that we do toll treat at the moment on campaign contracts.

um but if if it does provide that opportunity which then would obviously help with the processing costs um that's something that we'd have a look at okay all right no thanks thanks for that and then maybe as a follow-up if you could just provide um some a little bit more color maybe on the profile of the capital spending for the year um i know you're only one quarter in so it's still early days but you are tracking under it looks like on both growth and sustaining capital guidance on an analysed basis. Obviously, Mangari spending is still to come, but everything else looks like it's under a bit as well. So is that just a factor of managing spending to match expected stronger second half cash flows? Or in some cases, might you actually be running under anticipated run rates?

Yeah, so if we look at it, David, sustaining capital through the course of the year, you know, doesn't fluctuate too much as you'd expect. Sites rushed through in Q4 to get all of last year's done and therefore has a slower start up in Q1. As we go through Q2, Q3 and Q4, it'll be higher than what we saw in Q1, but still within the range, as Barry said. of the 190 to 230. Then in terms of major capital, it really does come down to the expansion project at Manggari, where a lot of that activity comes back into Q3 and into Q4. So you'll see Q2 similar to Q1, Q3 increase a little bit, and then Q4 will be the biggest quarter as the Manggari plant expansion works expand. which then also lines up to the hedging that was put in place that are in the second half of this year leading into next year to cover for that capital as it comes on.

Okay, brilliant. Thank you. I'll pass it on.

The next question comes from Andrew Bowler with Macquarie. Please go ahead.

G'day, Al. First one's probably for Barry. I'm just noticing the $47 million in working capital move and part of that was accounts receivable related to Ernest Henry Con. Has that normalised now that Ernest Henry's back at full noise or is there still some normalisation to happen next quarter? And also, have you just got an update on stamp duty timing for Ernest Henry as well? Thanks, Barry.

Yeah, sure, sure, Andrew. So the components of that working capital outflow that you see A bit of Ernest Henry debtor, which of that pipeline is full again, Ernest Henry back to normal operations. So that absorption of working capital has happened. The bulk of it was really creditors' payments relating to capex we spent in the fourth quarter of last year. So we had quite high capital expenditure in the quarter that was paid. So that gives you the $47 million outflow. If you're going to just look at that over the year, as we get into that Mangari project, as Laurie said, as CapEx ramp up, you'd see the working capital position pull back a bit again. So we'd expect that $47 million to improve slightly as we go through the year. And then with respect to stamp duties, we don't have timing on that. That'll come through when it comes through. But as we stand, we've not been notified of any of that.

So, Andrew, just to add a little bit on the Ernest Henry, the way that we have to think about it is that in the June quarter, there was essentially no production. So the receivables were very low. As we come into this quarter, that's where it builds back up. So there was over a $25 million increase in receivables because... The Ernest Henry cash flow, they don't hold working capital. They have a notional cash flow. So the net of that is what would have happened in the quarter. But essentially, now that they're back to full production, the receivable will sort of level out depending on the copper price. But also I'll add that the outflow in the working capital at the group level for the year, for the quarter, the September quarter last year was around, you know, 30, 35 million outflow and the full working capital movement for the year was a positive 20. So that's what you should expect to see that the working capital move throughout each quarter up and down depending on where we're at. But over the course of the year, there's not a lot of material movement in working capital.

No worries, thanks. And last one from me, just on the drilling results at Kandana. So, you know, obviously some pretty handy results at Solomon and Genesis Load. I think, Laurie, you mentioned earlier that, you know, it gives a bit more clarity on, you know, underground grades for longer. But is there any scope to sort of, you know, lift production level by level? Or should I say lift output levels? you know, quarter on quarter, you know, over time as you start to head into those areas or are the Kandana mines, you know, sort of constrained in terms of haulage capacity and those extra loads will lead to mine life extensions as opposed to production uplift in the medium term?

Thanks. Andrew, if I could try to answer it. The Kandana production will remain probably stable, so it will give us extension of life. because we have the mining sequence as well as the actual profile of the ore body, so the geometry of the ore body. So I don't expect it to increase the actual instantaneous or the yearly production, but it will go for longer.

No worries, makes sense. Thanks, gents. Thanks, Andrew.

The next question comes from Levi Spry with UBS. Please go ahead.

Good day, guys. Thank you for the call. Maybe a question for Bob. Could you just give us a bit of an update on how things are progressing at Red Lake? Six weeks or so in now, and what the profile just reminds us, I guess, of the profile you're expecting over the remainder of FY24? Tons and grade type stuff?

Yeah, Levi, as we said in the report, we've actually managed to... or alternate path in for Koshner. So that's brought the Koshner ore flow security up. We have a second path that's actually in progress at the moment, which will further improve the actual security of the Koshner flow. Both of those will actually secure the rest of the year and ensure that we actually increase our production down through the year. It is heavily weighted towards the back end of the years we actually have previously announced. We also did a trial in the Upper Campbell area of a soaping area, as we said in the announcement as well, and it came through quite nicely. So that actually proved that theory of bolting at a bit of a lower grade mining block. So those two actually went well. Development's starting to pick back up again. Generally speaking, I think we're on track.

Okay, thanks, Bob. And maybe just one follow-up on the Glencore question, Dave. So the mines are closing, as we understand it. Is that right? Could there be any opportunity there for you picking up some assets, operating some assets that do have some life for a different operator, since it looks like you've got a good relationship based on what's happened to Ernest Henry?

Yeah, Levi, I mean, if I look at it, I think we've got the best mine in the region through Ernest Henry, and if it's closing because of grades and costs, I don't think there's much opportunity for us to refocus our attention away from Ernest Henry.

Got it. Thanks, Laurie. Thank you. Thanks, Bob.

The next question comes from Daniel Morgan with Bear and Joey. Please go ahead.

Hi, Tim. Just the first question on cow and the paste plant commissioning appears to be a little bit slower than I thought. Can you just outline any issues that you might have had during the quarter and whether these have now been resolved and are you reliably delivering paste? Thank you.

Yeah, thanks, Dan. I'll hand this to Bob. We did commission it through the quarter, and with these sorts of plants, you've got to go through that commissioning and some teething problems, which we have, but where we look at it for the year, it's still going to ramp up in line with the production ramp-up. Bob, maybe you want to just talk about the plant?

Yeah, thanks, Laurie. As Laurie said, we did put first paste underground during the quarter. We have been going through the commissioning. As you get with paste plants, we have had some issues with quality and throughput. They're both all fixed now. We're getting good quality paste underground. All the actual UCS sampling is coming back well. So paste is continually paste.

And over the course of the year, we still expect to get to the million tonnes out of the underground as per the plan.

Okay, thank you very much. And Red Lake, when we were at site, there was a seismic event which you did call out in the quarter. Can I just check that there's no ongoing impacts to production from that event? Is it quite discreet?

Thank you. The seismic event that happened when you were there has still got one section of the R zone with an exclusion around it. We expect to get that lifted during this month, if not beginning of next month, Dan. There was a fairly big event, so it's taken us time to get back in there. With all these things, we prefer to be conservative and get back into them slowly, and we're working around that. So John and the team have actually got plans to work around it, and that's what they're doing.

Thank you. Mangari. You're opening up the Paradigm open cut. Can you just expand on what the grade looks like coming out of that over the course of the year? Thank you.

Yeah. Paradigm is a pit further away from the processing hub. So the average grade of the pit is higher than what we have had before. I'm trying to remember then exactly what the resource grade was, Glen. My memory was one and a half to two grams, something like that then was the actual resource grade that we were mining. We are seeing nice grades coming out of it at the moment.

So suffice to say, at Mungaree we should be thinking about higher grades in the quarters ahead. you know, lift the production profile through the year.

Yes. Yeah, Dan, you should expect the paradigm grade to sort of be about the 1.8 over the remaining quarters of the year.

And you've got to remember, Dan, that we did process low-rate stockpiles during the last quarter.

Thank you. And just, sorry, going back to that Glencore question, Can you just remind us of how the offtake works with your treatment charges? You know, are you currently, like, does the mechanics of it or the financials of it work that it would not be an impost if the smelter were to shut? Or, you know, does it work that you send it to, you know, I guess implicitly to Asia already financially? I guess I'm trying to ask.

Yeah, no, good question, Dan, in that the way the offtake does work is that you don't get the full benefit of not shipping into Asia. So your rates for treating and refining are set on basically a hybrid between Australia and Asia. So there's not a material change. And the other thing that would change is you actually, through the government, do get a benefit on royalty because it's treated and refined in Australia. So your royalty would increase. But those two items are not material. And from our understanding of the announcement is that there's a commitment for that smelter to be open till 2030 is our understanding.

Thank you. Thank you very much.

The next question comes from Matthew Fryderman with MST Financial. Please go ahead.

Sure, thanks. Morning, Laurie and team. Maybe just continuing on the questions on MIM. I think it was Levi asked about, I guess, the mines themselves, whether there'd be any interest there. But maybe more broadly, are there any tenements or assets, you know, infrastructure assets or otherwise that could potentially be interesting to you in time? Maybe anything that might help to de-risk Ernest Henry's future or I guess give you further options at Ernest Henry specifically?

Yeah, Matt, I almost would say it's a bit early to be getting down into that detail. I mean, as I said earlier, you know, we think Ernest Henry is the best of it for us if there's any of those sorts of things happening. At an asset level, there's nothing that would interest us in terms of some other infrastructure and the like. I think we'll just see how that pans out, but there's nothing that's front of mind at the moment.

Yeah, got it. Thanks, Laurie. Maybe moving back onto Red Lake, and obviously you cited the all-pass issues over the quarter, and as Bob's talked through, you've got a pretty clear plan to resolve them in Koshner. Obviously, Cochrane is maybe a bit of a deeper and older area of the various production fronts you've got. Are there any other areas where you're conscious that these sorts of issues may appear over time, perhaps the deeper areas of Red Lake? And I guess, how are you thinking about that? And then if we think about Upper Campbell, which is obviously going to be a bigger contributor to your production as the year goes on, clearly that's a shallower production face. It's a new mine design, new mine development area. and obviously brand new materials handling infrastructure. So should we expect that that area of the mine won't have or won't be impacted by any of these sorts of issues, whether it's seismic or sort of all-pass issues? Is that a fair assumption?

I'll hand it to Bob, Matt, but I think it's fair to say that when we look at the all-pass at Koshner, the real positive is the way that John and the team have addressed that in putting the contingencies in, but also... The demonstration, as Bob talked about, the trial that we did with the low-grade stope to keep the plant filled with ore that actually makes money is sort of showing the shift at the asset about how to operate this better. And also, Bob, we'll touch on the Upper Campbell.

Thanks, Laurie. Matt, I think there's three questions in the one there. I'll try and answer them, but don't just re-ask it. The difference between Koshner All Pass and the Red Lake All Pass is the geology and the rocks in the different areas. The Koshner system, we've built future redundancy into it with the raised bore and the decline will give us further redundancy when it breaks through and we'll continue to actually have that forward look to ensure that it doesn't affect us in the future. If we go up to Red Lake, Red Lake is actually deeper. We aren't having the same issues with the all-passes there, although we do have a series of raised bores to go in. If you go back probably six to nine months ago, we talked about an all-pass issue at Barmer, and we have that all designed with a bypass to go in to make that flow better to improve the actual material handling. And we've got a second ore pass, which will actually be the waste pass design that will improve the waste transfer as well. So we've got multiple improvements going on at one time. The main priority at the moment is the Koshner one, purely because we need to get redundancy in that system. And the Barmer ones are actually working as we speak. We would just like them to work better. To do with Campbell, Campbell will be a truck operation. So we've got a 62-tonne truck in there which can hoist through the decline a significant amount of dirt. So it is de-risked purely from the fact that it's a, I'm going to call it a traditional decline operation as we would know it in Australia, with the ability to move equipment around and to improve production flow as we need it.

Got it. Thanks, Bob. I think you've covered off on everything there, so thank you for that. Maybe just finally, and maybe it's one for Glenn, but perhaps more broadly, the drilling at the Cowell Underground in the gap zone where you've identified some early successes. How do you think about the development of that underground over time in terms of whether linking up all of these various zones and, I guess, giving you a more fulsome resource? How does that affect how you think about the mining methods that you use and whether over time you might look to move to a more bulk underground mining method? I mean, obviously... You've got a pit and a lake on top, which does somewhat restrict things. But is that an option as you continue to explore the underground areas? And also, can you remind me of the timing of the open pit continuation study as well and where we're at with that, please?

So, Matt, I'll pick up on the exploration piece in the underground, I think. At the moment, we're feeling really excited that we're going to be able to close that gap and hopefully fill it with ore as we increase the drilling coverage into that area. Yeah, in terms of how we approach it from a mining point of view, I think all of the above that you mentioned is on the table in terms of how we integrate this into sort of the existing mine design and what we need to sort of change to, you know, optimise the ore bodies. So, firstly, it's understanding, you know, kind of what the resource upside is going to be, defining that, and then putting a design around and how we sort of optimise it into the plan. So I think there's a fair bit of work to come on, but I think there are also going to be opportunities as we drill this to sort of sequence things that optimise grade and production around those types of opportunities. And whether we come at it from the rigorous side or the Delwini side, we need to do the work firstly to... you know, to understand that aspect of the underground. But I think what we're seeing is strong growth potential, which is going to, you know, extend that mine life for, you know, longer than, you know, than we have in the plan at the moment. I'll hand to Bob on the OPC.

So just finishing on the Cal underground, I agree with everything Glenn said. And I think the opportunity here is the, The potential to increase in the short term the grade and to increase the actual life of the mine is really exciting from my perspective from the drill results that we're getting. So the actual underground is looking really good. Mining methods, as I said, all the above. We've got to take into consideration, though, the constraints of the open pits on the top end as well as the actual lake end. the lake protection bond and all the environmental and social aspects that go with it. So all those things need to come into the thinking process. OPC is tracking to plan. I'm just trying to remember. It was two years still?

Yeah, I think, Matt, the main status of the project at the moment is that all of the – Public display comments and feedback have been received and the team is going through the responses and we'll put our responses back to that in the next 12 months in this quarter. And then we'll basically then be in the hands of the regulator. We've allowed at least 12 months for us to go through the regulatory process, but it's, as Bob said, it's at least two years before we have that decision point on the project. You know, there obviously will be some decisions later parts of the infrastructure and the like over the next 12 months, but it all does happen. And the only other thing is that given what Glenn's finding, it's going to have to be a high-quality single malt for the trap zone.

It might be a blend, Laurie.

Maybe a bit of Lafroig or something. No, that's excellent. Thanks, everyone, for the responses. Thanks.

Your next question comes from Alex Barkley with RBC. Please go ahead.

Thanks. Good morning, everyone. A question on that $63 million of restructure and non-operating costs that was mostly capitalisation at Cal. Is that beyond FY24 major CapEx guidance? And what might that number be in the coming quarters?

Yeah, so Alex, basically what you have at the moment is underground as it ramps up. It's not at commercial production. So under the accounting standards, which have changed over the last couple of years, you basically capitalise the costs. You don't net them off against revenue anymore. So the revenue from the underground still will flow to the P&L and you must move the costs to the balance sheet. So as we guided at the beginning, At the start of the year, we expect commercial production to commence in the second half of the year. So you should expect another quarter whereby the costs of the underground go to the balance sheet and goes to the P&L. And at December, Barry and the team have to make an assessment whether we have hit commercial production or not, and then we'll inform the market based on where we're at at December.

Just a quick one on Red Lake. I think there was a whole site milling and mining study that was progressing. Do you have an expected date for that? Maybe something tentative?

I just want to say that again, Alex.

Sorry, at Red Lake, I think there's a whole site milling and mining study that's been progressing. Do you have an expected date for that one?

Yeah, so on that one, we finished what options would be if we were to go above the 1.1 million tonne processing rate at the end of FY23. But as we've made the decision to keep Red Lake at the 200,000 ounces, 1.1 million tonne per annum rate, for the foreseeable future where we're actually not doing anything on that study because it's likely at least three years before we have to make a decision on that and we'll revisit the study at that point. But what it was at the end, it identified a number of options to take it from the 1.1 to 1.8, what the capital would be and how we would go about doing that. But at the moment, we're not moving forward with it.

Okay. That makes sense. All right. Thanks very much, guys.

Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Al Harvey with JP Morgan. Please go ahead.

Yeah, g'day, guys. Just wanted to clarify at Red Lake, those ore pass issues are related to the seismicity. Is seismicity the cause of those issues? Just want to double check that. And if it is, what are the risks for pass three and pass four also having difficulties.

So, Hal, there's multiple issues that were coming into the effect. One is the ground that the all-pass went through. We did have some activity in the wall of that all-pass, but that was not the same activity that was talked about at Barmer. It was totally isolated and separate. The all-pass that we're using now, or number three, the bottom half of it has actually been ground-supported. So it's an old Alamac rise, so it was actually ground supported when it was put in. And we've put a small hole, which is just a small raised bore equivalent hole into the top of it to keep that circular integrity in place. I don't expect that all passes at Koshner will last for 10, 15 years. I think that they're going to last for a shorter period of time than Barmer, purely because of the rock type and the geology. um but if we can actually or when we actually get a a raise in the intent is to not to touch the integrity of that circular opening and to just uh tip at the top and pull at the bottom and not break into it anywhere in the middle of the all pass which is a different strategy to the past great thanks for that bob um and maybe just one quick one very brief mention of

drilling at Ernest Henry in the expiration release, drilling down deep of Ernie Jr. and Bert and looking for results in the December quarter. We're likely to get those results separately or we probably see them with the December quarterly next year. And I guess just wanting if you can remind us what's in scope for the Ernest Henry expansion feasibility study, if there is any potential for that to slip in there as an option.

Thanks, Al. I'll take that one. I think what we will do with the current drilling program is just report a results update in January in line with our December quarter reporting schedule. The reason I want to hold back on those numbers is to give us the most amount of time we can to understand with the drilling program how things are evolving. So that's the strategy, you know, in terms of the drilling program. In terms of the feasibility, you know, we're looking at, you know, mainly the sort of mine extension project that we've previously spoken about between the 1125 and the 775. So that's where the FS is focused on. We're obviously in parallel with that sort of starting to develop. FS will be predominantly focused on that mine extension that I spoke about.

No worries. Thanks, Glenn.

There are no further questions at this time, and I'll hand back to Laurie Conway, Managing Director and CEO, for closing remarks.

Thank you, Rachel, and thank you, everyone, for your time today. We really appreciate you making the effort to join the call. Before closing out, I do want to reaffirm my opening comments around the current spot price and the impact of what's going on in Israel and the real difficult time and really the atrocities that are happening there. And it is affecting a lot of people, including a lot of friends and colleagues of ours in Australia. So we do hope that that can get resolved sooner rather than later. We have started the year well. We are on track to deliver 770,000 ounces. And at 1370 an ounce, our capital intensity is, as Barry mentioned, 117 million lower than last year. And when we take the combinations of those plus the higher gold price than what we actually achieved last year, it does position us as we move through the remaining quarters to deliver stronger cash generation and continue growing. our efforts to deleverage the balance sheet this year. Thank you, everyone.