Evolution Mining Limited

Thanks, Darcy. Good morning, everyone. Thanks for joining us this morning. As always, we really appreciate it. I'm turning to the presentation that was released on the ASX this morning, and on page three, we've set up the order of the call. I'll start by making a few brief remarks. Laurie Conway, our CEO and Managing Director, will then take you through a business update. where you will hear that we remain on track to deliver FY24 production and cost guidance. Barry will talk you through the financial results, which demonstrate our cash generation is gaining momentum. And finally, Glenn will provide an update on the mineral resources and reserves, which will showcase our very high-quality portfolio of assets. I do want to start by acknowledging that the last month since we released our December quarterly report has been challenging. For those of you who have provided us feedback, we hear you and we are listening. We know we need to safely deliver our guidance and we also know that we need to build predictability into our business. I assure you that everyone at Evolution understands this imperative. To achieve this, we also recognize that we will need to be focused and not distracted. We also know that our business is well positioned. If you turn to slide four, an area that I think investors have been looking for is highlighted in the first column. Our cash generation is increasing. In the half year, net mine cash flow was up 136% to $203 million. Underlying EBITDA increased by 28% to $573 million, and our gearing reduced to 29%. With copper and gold prices remaining elevated and a lower capital intensity going forward, investors should feel confident that this momentum in higher cash generation will be further demonstrated in the second half, as we also benefit from the capital investment we have made in the portfolio. Our EBITDA margin of 43% is high, and our portfolio now has an average mine life of around 15 years, and this is based only on ore reserves. The quality of the geological upside in our assets is reflected in the fact that excluding North Parks, we pretty much replaced all the answers we mined over the last 12 months, and our success at the drill bit delivered a very material increase in copper ore reserves. You may recall that when we acquired North Parks in December, we said that a priority was to release a JORC-compliant resource and reserve, which we have done today. This confirms that North Parks has a very large metal inventory, over 400 million tonnes of resource, which gives us great confidence in the very long mine life ahead of us at this operation. As you will hear from Laurie, the integration and first couple of months of the operation are going well. Its addition to the portfolio also provides investors with increased exposure to copper, with it now making up about 30% of our revenue. If you look at copper's contribution to our mineral resources, it now makes up around 40% of the in-ground metal value. As we treat copper as a byproduct credit, this exposure to copper provides us with a long-term structural competitive advantage over our peers with respect to costs. Now I want to turn to slide five. I think a pretty good analog for underlying value is looking at growth of a company's mineral resources on a per share basis. After all, outside of our people, The most valuable asset that we have and any other mining company has is the metal it owns in the ground. The chart shows that as a shareholder of Evolution, you have had significant growth in both gold and copper resources on a per share basis since we formed the company in 2011. In other words, in spite of the many ounces we have mined and the almost $1.2 billion we have returned to shareholders in dividends, there is more copper and gold attributable to each evolution share than at any other time in our 12-year history. Another good indicator of accretive value is the cost of discovery. If you look at our long-term track record in this area, we have added ounces to our mineral resources through only discovery, and here we are excluding ounces that we have acquired at a cost of less than $50 an ounce of gold. And if you include copper as a gold equivalent, it reduces to below $40 an ounce. For an update as to how we're going to get these ounces and tons out of the ground safely and efficiently, I'll now hand it over to Laurie for a business update.

Thank you, Jake, and good morning, everyone. I'll provide you with an update on the business and an outlook for the remainder of FY24. Firstly, to slide six. Our group FY24 guidance remains unchanged with production within the range of 789,000 ounces of gold and 62,500 tonnes of copper at an all-in sustaining cost of $13.40 per ounce, plus or minus 5% for all guidance metrics. All operations are on track to produce the midpoint of guidance or better, except for Red Lake, which we updated in our December quarter report. The performance in January was good and ahead of plan, which keeps us on track. Specifically, the key drivers for the March quarter are completing the planned major shutdowns at Cowell and Ernest Henry, as well as ramping up the Cowell Underground to be at commercial production by the end of the quarter. These activities will enable higher production levels in the June quarter. Additionally, the continued ramp up at the Cowell Underground in the June quarter will enable higher throughput at higher grades. In the June quarter, we do have a planned major shutdown at North Parks, which was included in our guidance for the asset. At Mungaree, the June quarter will see a higher proportion of higher-grade underground materials compared to the March quarter. Moving to slide seven. At Red Lake, we took the decision last month to change their plan so that they deliver an improved cash position for the year, as well as focusing on being more reliable. Margin and productivity are more important than just ounces for this operation. Pleasingly, January's performance was on plan and this has continued into February. That said, we need to maintain the discipline for this to continue for the remainder of the year. Our organic growth projects remain on track and budget with Mungare 4.2 project advancing well. The updated reserves we released today for Mungare provides us with even more confidence in this project. The studies that Ernest, Henry and Cal are tracking to plan. Overall, our capital remains within the guidance range. The good progress we've made in the first half has seen us transition to positive cash generation, which is what we indicated in our investor day in June last year. As we deliver the plan in the second half of the year, including banking the benefits of higher than planned metal prices, This will see us materially increase the cash flow and continue to deleverage in the second half of the year. Moving to slide eight and looking at North Parks. The acquisition was successfully completed in December and in January we paid the final working capital adjustment. This adjustment was essentially funded from proceeds received during January from a pre-acquisition shipment. As part of our purchase price allocation, the contingent consideration has been fair valued at $28 million. It is to be noted here that this contingent consideration was above our base case valuation, and should we pay this over the next three years, Evolution would benefit by approximately $70 million in additional revenues. The integration work is making good progress. We've had very good engagement and support with our external stakeholders. Rob Cunningham started as the general manager a couple of weeks ago, and the site leadership team structure is in place. Rob has extensive experience at and knowledge of North Parks. The first joint venture meeting was held, including a visit by Sumitra, and now operations. As I mentioned on the call last month, the operation made a net cash contribution in December, pro-stream commitments, and this continued into January. The operation has delivered to plan in the first two months. We've delivered on our commitment to report the resources and reserves today, and Glenn will cover this shortly. The feasibility study for E22 is on track, and there has been very good engagement with the study team on assessment of the alternative sub-level cave option. The study is due to be completed in the June quarter. We are planning a site visit before the end of the financial year to show the quality of this well-established long-life asset, which has significant upside potential. Thank you for your time this morning. I'm going to hand over to Barry, who will take you through our financial results.

Thank you, Laurie, and good morning, everyone. Starting on slide nine. During this half, we delivered an improved set of financial results with higher profitability and cash generation. Underlying profit after tax was up 54%, and we started to deleverage, driven by a 28% increase in underlying EBITDA that increased by $127 million. An 18% increase in revenue and continued cost management drove the EBITDA margin up to 43% from 39%. Capital expenditure reduced as planned, and major capital expenditure was $71 million lower than the same time last year, with net mine cash flow increasing $117 million, which is 136%. Gearing is 29.7%, down from 32.8% at year end. The board declared a fully franked dividend of $0.02 per share. Now moving to slide 10. The most pleasing part of our results is the momentum we are building with generating cash to reduce debt and provide shareholder returns. As we said at our investor day last year, our capital intensity is reducing. Major capital per ounce is down $198, or 22%, compared to FY23. And total capital expenditure is $76 million lower than half one of FY23. The base plant for the cow underground is now commissioned and the mine ramping up to commercial production. Capital expenditure guidance remains unchanged. Compared to FY23, the all-in margin per ounce increased three and a half times from $173 per ounce to $600, driven by a strong gold price, lower capital expenditure and continued cost control. The graph on the bottom right of the slide paints the resulting picture of how our group cash flow before debt, M&A, and dividends grew from a cash outflow of $95 million in quarter four of FY23 to cash generation of $79 million in quarter two of FY24. As production increases during half two, driven by the Cal ramp-up and increases in red light production, this momentum will continue to build. Lastly, on slide 11, The board declared a fully franked dividend of $0.02 per share. This is the 22nd consecutive dividend, which in total is now approaching $1.2 billion since inception. It will be paid on the 5th of April to shareholders that are on the register on 28 February. A balance sheet is strong and with $716 million in available liquidity and a fully repaid revolving credit facility has adequate flexibility to provide shareholder returns through dividends. It was announced at our investor day last year. Our debt maturity profile is aligned with longer expected mine lives and their cash generation profile. This is evidenced by our investment grade credit rating that was reaffirmed in August. Our cost of debt is a low 4.99%, of which 74% is long-term debt fixed at a rate of 4.5% per year. Over the next two and a half years, around 95% of our production is unhedged with only 120,000 ounces hedged to cover the capital of the Mongari 4.2 project at an average price of $3,185 an ounce. In conclusion, we are very pleased that cash generation started to gain momentum during the first half, which will continue as we deliver high production in the second. We have a strong and flexible balance sheet with a revolver fully repaid and $760 million in available liquidity. I will now hand over to Glenn for the MROR update. Thank you.

Thank you, Barry, and good morning to everyone. I'd like to turn your attention to slide 12 of the presentation, which references results reported in our December 2023 Annual Mineral Resources and Oil Reserve Statement, which we released to the ASX this morning. Gold and copper resources are up year over year by 8% and 134% respectively. And likewise, our reserves have increased by 15% for gold and 100% for copper relative to the December 2022 result. A key message I want to leave with you is that the MROR grew by a combination of acquisition, drilling and design changes. The other key message is is that we have a quality portfolio of assets in great geological addresses that we will continue to grow. Our MROR growth in 2023 was driven primarily by the acquisition of North Parks, which on an 80% attributable basis added 2.6 million resource ounces of gold and 2.3 million resource tonnes of copper. along with 660,000 reserve ounces of gold and 390,000 reserve tonnes of copper. As Jake mentioned earlier, you will recall in early December when we announced the acquisition of North Parks that we cited resources and reserves as reported by CMOC in their public disclosure. At the time, we committed to do the work which would enable us to report the North Parks MROR under and in accordance with the York 2012 Code. This work was completed over December and January, whereby we have determined that the result is consistent with the findings of our extensive due diligence. The main adjustment we made was to account for a full year of mine depletion in 2023. You will be able to find the North Park's Material Information Summary and Table 1 in the rather lengthy appendix of our MROR Statement. The next step at North Parks is to report the mineral resource to include the ore reserve so that it is consistent with the way we will report the MROR for our other assets. What this means is that the current mineral resource reported this morning for North Parks does not include the metal that informs the ore reserve. We inherited this reporting situation from CMOC which is identical to the way Canadian companies report their resources and reserves. Our aim over the next six months is to rerun the mineral resource at North Parks to include the ore reserve. A conservative estimate of the full and positive impact North Parks has on the group results can be achieved by viewing Table 1 on page 2 of this morning's MROR announcement and summing the North Parks ore reserve that contained gold and copper to the metal totals of the reported group mineral resources. Moving to slide 13, I'd like to focus your attention on the waterfall charts, which highlight year-over-year changes to the group MROR. As mentioned, the key growth driver of our mineral resource was the North Park's acquisition. However, we also reported a material addition at Mangari, driven mainly by a higher gold price assumption, along with increases delivered in the Kandana underground from our drilling programs. The Mungaree result is a 10% increase in its mineral resource. We also realised notable additions at Cow driven mainly by drilling successes in the underground and as well at Ernest Henry. As Jake mentioned, our long-term group discovery cost updated to reflect the changes in 2023 is under $50 per ounce for gold additions to the mineral resource and a very competitive $37 per ounce on a gold equivalent basis. At Red Lake, we are reporting a reduction in the mineral resource. The main drivers of the change are mining depletion, reclassification of the resource at Aviation, which has moved some of the mineralisation out of the inferred category based on recent drilling results, and alignment of the resource cut-off grade of several oil bodies in the lower areas of Campbell, Red Lake and Echoshina to the current mining costs. Our mineral resources are reported within an optimised pit shells or underground mining shaft, assuming a long-term gold price of $2,500 per ounce gold and $12,000 per tonne copper. The one exception is Ernest Henry, where the estimate is reported within the interpreted 0.7% copper envelope. Outside of North Parks, group oil reserves grew substantively, with a key contribution from Ernest Henry for both gold and copper. Pleasingly, the Ernest Henry ore reserve doubled during the year relative to the size of the ore body when we acquired 100% ownership two and a bit years ago. We realised a 30% addition to reserves at Mangari, reinforcing our confidence that throughput will be maintained at the 4.2 million tonne milling rate deep into the mine life at Mangari. Our oil reserves assume long-term gold and copper prices of $1,800 per ounce and $9,000 per tonne respectively. I'm going to conclude my section with some comments on the growth history of gold and copper resources and reserves since formation of the company. We have built our business through a series of creative and accretive M&A transactions. that have provided the foundation of our business from which we have been able to significantly grow our resources and reserves. We have outpaced depletion of our MROR with growth from drilling along with modelling, optimisation and design updates. A key ingredient in our success is the identification and acquisition of assets in world-class geological addresses where we can continue to unlock value with our drilling programs. With that, I'll hand back to Jack for closing comments.

Thanks, Glenn. Just before opening the lines for questions, I'd ask you to turn briefly to slide 14, where we've summarised the key messages we'd like you to take away from this. As you'll see, our cash generation is increasing. There is no change to our guidance. The quality of our portfolio is improving. Our balance sheet has started deleveraging. And I assure you, we as a team know exactly what is expected of us for the remainder. With that, Mel, can you please open the lines for questions?

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. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Kate McCutcheon with Citi. Please go ahead.

Hi, good morning, Laurie, Jake and Glenn. At North Parks, you mentioned that the JV meeting went well and you're assessing the SLC option for the E22 study due out next quarter. Is the JV supportive of the sub-level cave versus a block cave? I guess I'd interpret the strategy of maximizing cash flow over maximizing NPV. Would that be fair? And what comments can you give around E22 looking forward?

Thanks, Kate. I'll let Larry answer that question. Yeah, thanks, Kate.

The first question, yes, Sumitomo is very supportive of looking at both options. That was something that they brought to the meeting from their own side. And the other thing is they want us to maximise both NP and cash flows. They're not wedded to one. They want to make sure that the right decision is made. I think the The good thing we've seen in the first couple of months has been that the site team is engaged openly around looking at both options. I think earlier on with the previous owners, they were locked into one and thought that was the only solution, whereas at the moment the engagement's been very positive.

I'll just add to that. I think, Kate, like with the mineral inventory of the size, which is at North Parks, and yesterday the board got an update from Glenn on some of his early views on geology. And, yeah, there's certainly a lot more to be discovered in the field. And I think with the inventory of that size and scale, you've got a real opportunity to optimise it And as Laurie says, Simitomo came to the meeting actually constructively engaged and supportive of looking at it from both a cash flow and an NPV perspective, which may have been different to the previous owners.

Okay, got it. So June we will get an update, or June quarter? Yes. Cool. Somewhat of a strategy question, I guess, resource reserve update, you're now running 1,800 for gold and 409 a pound for copper versus peers, you have been slower to lift those up and they're still lower than some of the US peers that we look at who have long mine lives as well. How do you think about making sure that you're making the most out of the reserves versus a conviction in pricing, I guess, or being able to flex a mine plan to take advantage of commodity prices?

I think that's a good question. We have been very conservative, and I was actually pleased to see that the bellwether of low reserve price assumptions, Barrick, is even lower than us. They're using $1,200. It's something I've always looked at Mark Bristow and Barrick and thought conservative reserve price assumption is a good way to look at the long-term value of your portfolio. But on the short term, we do look at optimizing our mining strategies to take into account the higher gold price. Of course, we're very happy that the gold price is higher, but I think a conservative gold price assumption is correct. And I think it does reflect the quality of our portfolio, and it does mean that not every reserve ounce that you compare across a portfolio of different companies is of the same quality. I would say that those with the lowest price assumption demonstrate higher quality.

Okay. Thank you, Jake. Thank you. Your next question comes from Manav Shah with Morgan Stanley. Please go ahead.

Hi, it's Rahul and Anne from Morgan Stanley. Look, two questions for me. First one quickly on North Park's, the adjustment to the reserves number. Am I reading that right, that it's about a 30% adjustment lower? You know, it seems like, you know, I'm just focusing on the reserves here, not the resources. And you, you know, Glyn did talk about how this was expected because, you know, the previous adjustments or resource and reserve were not per the JAW code. So how should we think about sort of how you're modelling this going forward after this cut and what parts have you seen specifically in terms of your development plans around E22 that might have been impacted?

Well I'll let Glenn answer that one.

Yeah, so what I think might be happening here is in our acquisition announcement, the resources and reserves were cited at a 100% on a 100% basis. What we have done with the work to bring it into accordance with the JORC code is report those resources and reserves at our attributable ownership interest, which is at 80%. that will be the difference plus an adjustment for depletion in 2023. So I think that's perhaps where you might be sort of looking at that 30%. So it's actually not a 30% reduction. The only adjustment was for the depletion, as I said.

And I think the only other thing that, Roel, I'd draw your attention to is that in the case of North Pogs, we have not included yet the reserves in the resource. So as Glenn indicated, that'll be work which is done through this calendar year and will be added to the resources to be consistent with the way other companies report York resources.

Yes, that makes sense. Okay, that's fine. And then look quickly, a second one, perhaps a bit on the working capital side of things. You had a bit of a working capital release in the half past. I just wanted to understand with North Parks coming in, where are you seeing this working capital move to? What's the current status of North Parks in terms of working capital requirements? So $22 million was your release in this half, I take it?

Thanks, Raoul. I'll pass you on to Barry.

So, Raoul, thanks for that. I mean, when you look at the working capital on the The stat balance sheet, just a couple of things to keep in mind. So you need to adjust for North Parks and what came in. So there's 70 million net trade working capital position that we assumed on that. And then also take into account that there's non-trade accruals. For example, the accruals for stamp duties and transaction costs sits on the balance sheet as well. I think the best reference point, if you want to have a look at the cash straight working capital flows for the half is to go back to the December quarterly report where we showed that outflow of 57. And that was really in three parts. It was as Ernest Henry came out of the weather event, it was building up some working capital. So that was a component there. The Cal long-term stockpile was about 10 to 20 of that, and then trade creditors that decreased in the half was 10 to 20. That made up that 57. If I look ahead... Considering there's increased activity into the second half, one would expect that that'll kind of up the creditors a bit. The Mangari project is also ramping up. So a bit of an uptick in creditors from that and then offset by the Cal stockpile build, which is a constant feature of our working capital. So when I look ahead at working capital, I don't expect North Park to distort that or influence that. in any material way because we got it with a full working capital position. And then I think pretty flat going forward. Don't expect any real moves there.

Okay, that's clear.

I'll just add a couple of comments there. I think as Barry indicated, this half from June to December, you see the buildup as Ernest Henry returns to full production. So in the In the June half of last year, it was down because there wasn't production for that period. And then now they're back into a normal rhythm. So that's monthly. So you wouldn't see much of a swing anymore going forward with Ernest Henry. North Park, as Barry said, that builds up just on an acquisition. Their concentrate shipments are not monthly like Ernest Henry, just due to the volume of production. So they will move into a quarter, but over the full year, you sort of see that even out, and therefore, then you'll just have different creditors and debtors move. So I would expect in the second half of this year, it gets back into a steady run rate.

Got it. Okay. That's clear. Thank you very much. That's my two. Cheers. Thanks.

Thank you. Your next question comes from Levi Spry with UBS. Please go ahead.

G'day team. Thanks for your time this morning. Maybe if I could just take you back to Kate's question on price assumptions. Like I used to think about, it was a $1,450 sort of reserve price. Now it's $1,800, but it's probably a little bit more complicated than that. How should we think about Red Lake and Mangari going forward in terms of the assumptions and I guess high level how you think about them versus your rest of your portfolio now.

I think just before handing over to Glenn, I'll just make a couple of comments, Levi. I mean, as you correctly say that we used to be at $14.50. I think our price increases have been materially lower than the sector. So we still are right at the bottom end. Yep. And I think, as Laurie said, you know, the focus and shift at Red Lake is now on cost margin rather than on headline production numbers. And we reset that in January as we move forward. So you can see us be much more focused on that as we're delivering. And pleasingly, for the first six weeks of this year, you know, it is delivering to plan. And likewise at Mangari, as we said when we answered the question from Kate, where there is opportunity to take answers which are profitable, contribute to our cash generation, we'll take them from the pits and the mining areas where we have development in place to recover them.

Yeah, look, I'll just add to that. Levi, particularly at Mangari, we do, for our underground issue in the long term, gold price assumptions for the reserve there, which is sitting there at $1,800 an ounce now. I think one of the things that we do take into consideration at Mangari is with the open pits. So where we have open pit mining scheduled in a 12 to 18 month period, we will look at a a range of gold prices and do the sensitivity analysis to understand what the best mining option will be for us and of the $1,800 per ounce. So that's certainly something that does get taken into consideration in the short term. At Red Lake, we're still utilising the current price assumptions that we've assumed in the update we released today. There are models at Red Lake which are run on the older assumptions and these will be gradually updated with time. Okay, thank you. Thanks.

Thank you. Your next question comes from Matthew Friedman with MST Financial. Please go ahead.

Sure. Thanks. Morning, team. A couple of questions. Firstly, if I can just dig into a little bit the falling capital intensity, and obviously you guys have called out that that's really one of the key drivers in terms of your improvements in your cash flow, and that's clearly driven by some of your key capital projects ending. So I'm just trying to get a sense of how that looks into next year and over the medium term. So maybe firstly, a couple of questions on that. Can you remind us or just give us a bit of a summary of what studies are expected over the next, say, six to 12 months in terms of key projects? I mean, off the top of my head, you've got the Ernest Henry Life Extension, cow open pit continuation study. You've just talked about the North Park study in answering Kate's question. Is there anything I'm missing there? Anything from Red Lake? And if you can just sort of give us the rough timing on that.

Laurie, over to you.

Yeah, Matt, I think you've got most of them. So if we look at it, the Mangari plant expansion, that's in execution. In terms of the study, the Ernest Henry study, The feasibility study runs through to the March quarter 2025. We've got the cow open pit continuation, which the study's nearing completion, but ultimately the timing on that one is going to be determined by regulatory approvals. We've made submissions back to the government this last couple of weeks, so that's now back with them and we're waiting. what consent conditions and other requirements that would come for that before we can even go to a decision on that. And then we've obviously got the feasibility study at North Parks on the E22, which is coming through into the June quarter. As we said in June at the Investor Day, and those projects are outlined in that pack, we will time those as and when they're needed. When we look at Ernest Henry, Every day that Glenn keeps drilling and finding more metal, it makes it harder for the study team. But most of that capital is out in 27, 28. And when we look at... the cow continuation we've got that flexibility about stockpiles we've obviously got water on the lake and how we build the bund there and they're also the mining fleet and the mining crew so we'll assess that over the next six months based on how the regulatory approvals go but that's where each of those studies are at for the moment. And we're right in the middle of life and mine planning. So as we come to finishing this financial year is when we'll give the outlook and guidance on these capital projects. But I think, you know, as Barry highlighted, net mine cash flow up 136% is being driven by two things. One, the capital intensity is decreasing and the higher metal prices are flowing through to the bank.

Thanks very much, Laurie. And I know that there's nothing necessarily specific in terms of studies due on Red Lake, but it is a big chunk of the mine development and growth capital in FY24 at least. You know, you've talked about how you reset the expectations in the near term at that asset in terms of production, but how do we think about the rate of capital spend there? I mean, you've been spending $50 or $60 million a quarter at least for the last two and a half years at Red Lake. Does the focus on margin going forward mean less mine development capital? Should we expect growth capital is going to roll off materially as Upper Campbell is completed? Just kind of, yeah, trying to step through how that looks.

Yeah, look, I think that's a good question, Matt. When we look at it, What John and the team are going through now, you know, we've got two processing plants, we've got three mining areas. Certainly you need to do a lot of development to keep the plants running. What John is now doing is working out how does he... keep those plants full with the right productivities from the three mining areas that we've got available, while at the same time making cash. We did that restructure of the workforce in the first quarter of this financial year and working out then what do we need going forward with that real shift in mindset of rather than trying to develop and move the mining rates up to levels that basically need too much capital. And given it hasn't returned cash at the moment, that's the change in the focus for them. I do think, though, again, if you look in the financial statements and the turnaround at At Red Lake, while it's not getting to where we need to be, the cash flow before the major capital has moved dramatically compared to the December half of last year. So we are seeing some, but we're not seeing the outcomes in terms of the ounces delivering the cash.

And I think from a strategic perspective, Matt, I'd just add that our portfolio has changed materially over the last decade. I think when we started the company, the average mine life of our portfolio was like five years on a reserve life basis. It's now 15 years. That's only on reserve. So we've got 30 million ounces in resources. And if you take the copper resources as a gold equivalent, that adds another 20 million. with obviously the addition of Northparks being the longest life asset. So we're very focused on capital allocation, making sure that we only allocate to projects where it's necessary and which passes the hurdles and which fits with the overall portfolio. As you've seen over the last decade, the portfolio is subject to change as well. What I am assuring people is that there won't be additions to the portfolio, but the portfolio is continually under review.

Thanks for that, Jake. And thanks, Laurie. Jake, maybe just quickly while I've got you talking about the portfolio and capital allocation. You called out in the presentation, obviously, the significant contribution to revenue and to sort of in situ value that the copper makes in the group now. Can I ask how that sort of drives decision-making around potential changes in the portfolio, potential acquisitions, potential divestments, and just internal capital allocation decisions? I mean, do you want to keep the copper exposure sort of circa 30%? Is that the right level? And I guess, are you conscious of avoiding being overexposed to copper? So potentially that drives decisions around asset additions, as you just spoke to.

Matt, we're not fixed on a number. I think it goes back to the strategy of quality of portfolio. And what we have found, certainly with Ernest Henry and North Parks, we acquired the balance of Ernest Henry in 2021, and we acquired North Parks recently. They're very large assets, they're very long life, and they're very low cost, and they're very cash generative. So I'm not skewing our BD team to say let's only look at copper gold assets, but we've been looking at things where we think we can improve the quality of the portfolio and that mine life and cost of production increase. North Park's happened to come up late last year. We'd been looking at it from February, and, in fact, it was an asset that we were interested in 2021 or 2020 when the triple flag stream was acquired. So it's been on our radar. It's in our backyard. But, yeah, again, going back to messages that we've heard from investors, There will not be additions to the portfolio of a material nature until we have demonstrated that reliability and predictability, and investors can be confident on that reliability and predictability, and we've earned the right to grow.

That's pretty clear. Thanks for your comments, Jack, and thanks, Laura.

Thank you. Your next question comes from Daniel Morgan with Baron Joey. Please go ahead.

Hi, Jake, Laurie, Glenn and team. First question is just on your comments in the presentation you talked about January, you know, seeing some very good performance operationally across the group. Can I just look into a couple of assets? So at the Cal Underground, are we still on track to declare commercial production in the March quarter? Is it now tracking well the Underground with you know, the paste plant, the mining sequence. So these all in, you know, relatively healthy rhythm. Thank you. Laurie.

Yes, Dan. So, you know, essentially as we got to the end of December, the paste plant was nearing commissioning and that happened Through January, the tons have increased and we'll see that continue through February and March. We're still on track based on the performance to date in this quarter to move to commercial production from the start of the fourth quarter.

Okay, thank you. At Red Lake, in the aviation mining front, there was obviously seismicity in September last year, which temporarily quarantined an area of high-grade ore. Last month you said you expected access to be restored and there was a regulatory decision on that as well. Have you got access to it? Has this now occurred or is this something you still expect in Manila?

We have got access back into Hanging Wall 7, Dan. That happened in January.

Thank you very much. And maybe just exploring on that red light comment, I think in the presentation, there's comments about changing the mine plan to focus on cash generation. I mean, can you just expand a bit more on that? Like, what are you doing here?

Yeah, so, I mean, what John and the team have done is they've basically identified the areas that we need to get the production drilling, getting the development done to deliver consistently through the second half of the year and get their productivities up because we weren't seeing that in the first half. So, you know, we're unlikely to mine as much as we had in our plan. And what we've seen through January and February, that shift in focus around productivity in areas Drilling and development metres is starting to show improvements. And not only that, in the processing areas, we have seen improvements in discoveries, which was another area that John and the team wanted to focus on.

Dan, I had the opportunity of catching up with John who passed through Sydney a couple of weeks ago, and I'm actually going to Red Lake in a week's time and looking forward to seeing it. But a very pleasing thing from the board's perspective on this is that Red Lake's really starting to focus on costs. And Laurie's directed them to that in this new strategy. You know, real focus on costs. We've seen a 10% reduction in the workforce in June. John is looking at other areas where we can optimize costs and make the mine more efficient. So I think this shift in approach is going to deliver a better outcome from a portfolio perspective for us.

Okay. Thank you very much. Good perspectives.

Thank you. Your next question comes from Al Harvey with JP Morgan. Please go ahead.

Yeah, good day, team. Maybe just a quick one. Obviously, you retained the group guidance. Just wondering if you can step us through how the remainder of the portfolio should make up that 40,000 ounces taken out of Red Lake in the December queue and, I guess, what the key risks are to making up that difference. All right.

Yeah, Al, look, as I said on the call and again last month, each of the assets are tracking to the midpoint of guidance or better. Red Lake is the one that we've downgraded. We've said we'll be in the range of the $7.89 plus minus $5. I think you can... Yourself work out that it won't be the plus five. So we are in that range. What we'll see is Cal, Ernest Henry, Mangari, Rawdon and North Park delivering at midpoint of guidance or better. It won't obviously offset all of that 40,000 ounces. And it is predicated on how Red Lake works. goes at their new target range. But as we stand at the end of January and as we stand midway through February, we're still on track for that range of the $7.89 plus minus $5.

Sure. Thanks, Laurie.

And I think, you know, and just to add to that, and it was in the presentation, you know, what we see is Cal and Ernest Henry have their shuts this quarter. They get to commercial production on the underground. So, yes, Cal has a lift up. They are able to put more tonnes through in the fourth quarter than the third quarter. You'll see Ernest Henry, which will be consistent quarter on quarter. And Mangari, as I said, you get more underground material into the fourth quarter as opposed to this quarter. We've ramped up to full mining at Paradigm. Mount Rawdon is just finalising the mining of the pit. They'll finish that in the September quarter. And North Parks, as a cave, is performing to plan.

Sure. And just on North Parks, I know you talked a bit about kind of like a three-year cash harvest at the acquisition stage. I just wanted to clarify if that includes capex for E22, regardless of whether it's a block cave or a sub-level cave?

Yeah, when we look at that, I mean, the study will be finalised in the June quarter and then obviously, as we said, we're looking at the two options, the block cave, the sub-level cave. Our view is the sub-level cave is the better one, both from a cash and even an NPV perspective, given that it allows you to go to a block cave later in the mine life. So as we finish that, we'll be able to articulate. But on the basis of a sub-level cave, that's what we see is the next three years has been cash-positive in each of those years, then you've got some capital investment. But that's where it currently sits. But we've just got to wait to the end of the fee study.

Sure. Thanks, Laurie.

Thank you. Your next question comes from Joan Bishop with Jarden Group Australia. Please go ahead.

Good morning. Thanks for taking my questions. Just probably extending a little bit around... your trade payables or net payables position. I realise these are only snapshots in time, but can you give me a bit more context as to what's driven the sort of the increase over the last, call it three years? I mean, if I look at your historicals at each of the reporting periods, you've gone from maybe net payables of around $60 million about three years ago to about 300 with your December 31 numbers. Is it just a function of the increase in asset scale or is there some underlying... bits or movements there that we should be aware of.

I'll let Larry answer the question, but creditors are still being paid on time. Don't worry about that.

There's a couple of things to that, John. Yes, it has been on the assets. But I think if you do look at it through the last three years, that is when our capital spend was increasing. And so you would see at reporting dates, you'd have larger balances of payables. And then what you would see, as Barry mentioned earlier... As we get to the December half, we've picked up the North Park's liabilities around stamp duties and the likes that go into there. And also, as the acquisition of Ernest Henry, 100% of it at the start of 2022, we then go to having 100% of that concentrate, whereas in the past we actually only had 30%. And so that was also in the receivables, but you also have your TCRCs that are attached to that that then have to be booked as a payable.

Okay, that's helpful. Thank you. And just to touch on the discussions you've had with Sumitomo since you've taken the keys, you've obviously inherited some open pit mining operations which seem to be gold heavy. Given your stream, that's probably not in your interest to maintain gold. How is that sort of dynamic going in terms of your discussions with mine plans with Sumitomo?

I'll hand that to Glenn, who chaired the joint venture meeting. But I think, you know, from Sumitomo's perspective, it's making sure we get the best value out of the asset. You know, then obviously not... linked into the stream. They didn't make that decision. But certainly our view is pretty well aligned to theirs about optimising the asset. Glenn?

Yeah, and one of the ways in which Sumitomo have expressed to us how that is to be done is to Their preference is to be able to maintain that uniform, consistent production over the medium term, over the next five years, and really optimise and maximise how we mine in the underground. Noting, of course, in the open... They are short-term pits and so they are still sort of focused and aligned with us in terms of how we want to think about North Park's going forward.

I think just on that, John, one of the pits is gold dominant and the other is a gold copper. So they are different pits.

And just a final comment. I mean, I think our early engagement with Sumitoba and Triple Flag has been really positive and constructive. You know, I think they're pleased to see us as the new owner. And, you know, we're looking forward to engaging both of them to optimise the value of the asset going forward.

And just some examples of that, John. We've engaged the technical teams on the evolution side and on the supply side. I mean, they have a very long history there, as you know, and it would be fair to say that they probably have a deeper understanding of the asset, particularly around its history than we do. So we've got the technical teams coming together, sort of sharing concepts, ideas, and really sort of trying to pick up from the learnings of Sumitama over the years on how we can continue to improve at the asset.

Great. That's really helpful, guys. Thanks for answering my questions.

Thank you. Your next question comes from Hugo Nicolacchi with Goldman Sachs. Please go ahead.

Morning, team. Thanks for the update. Just one on costs. If noted in the pack, you're expecting a lower level of labour cost increases for FY25. Can you just remind us the timing of contracted labour pricing resets broadly across the portfolio? Thanks.

Yeah, Hugo. Employee labour reviews are done annually and they take effect from 1 June. So that's most of the workforce. Then the contractors are basically dependent on these contracts. For our fixed plant shutdowns, as each of the shuts come through, some of those are obviously on contracts over two to three years with indexation built into them. And then for the other contracts that are awarded as new contracts, it's depending on the market rates at the time that we award the contracts. But what we saw through last calendar year, it averaged pretty well in line with what we had movements for our workforce as well.

Great. Thanks for that, Tam. I'll pass it on.

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

Thanks, Mel. Thanks, everyone, for joining. Final thing to add is happy Valentine's Day. Have a good day. Cheers.