Evolution Mining Limited

Thank you, Kayleigh, and good morning, everyone. I'm joined on the call today by Barry Munderverve, our Chief Financial Officer, Matt O'Neill, our Chief Operating Officer, Glenn Masterman, our VP Discovery, and Peter O'Connor, our GM Investor Relations. Today we released our September quarterly report and an exploration update. We laid the foundations during the second half of FY24 to enable safe and reliable delivery of our FY25 plan and and a continuation of high-margin cash flow generation. The September quarter delivered exactly that. It was very satisfying to start the year in a positive way with a first quarter on plan and an improved safety performance where our TRIF reduced to 7.2, which was a 7.5% improvement. We are well on track to deliver our production guidance of 710,000 to 780,000 ounces of gold and 70,000 to 80,000 tonnes of copper at an all-in sustaining cost of $14.75 to $15.75 per ounce. The charts on page one of our report clearly demonstrates the solid start to the year, the material amount of cash we are generating and the opportunity ahead of us for even higher cash flow levels. Our first quarter production was around 26% of the midpoint of guidance, while cash flows were about 24%. Given the current spot prices are materially higher than the spot prices at the time we released our guidance, there is potentially an excess of $105 million of further upside in cash flow this year. We produced just under 194,000 ounces of gold and 19,000 tonnes of copper. Group production was in line with plan. A highlight for the quarter was further improvements at Red Lake to over 37,000 ounces. In addition, the Cowell Underground mine achieved an annualised mining rate of 2 million tonnes. Our all-in sustaining cost of $15.69 per ounce for continuing operations was better than planned, even considering our achieved copper price was around $900 per tonne below our guidance assumption. It's a credit to the team to manage our operating costs and sustaining capital to deliver these low-cost ounces. The all-in sustaining cost margin was an outstanding 57% or over $2,100 per ounce based on the September quarter achieved price. This increases by another $290 per ounce if the spot price is sustained. Brute cash flow of $108 million continued the downward trend for gearing, which reduced by 1.5% to 23.8%. Our cash balance at the end of the quarter was $484 million, giving us liquidity of over $1 billion. With the cash being generated and the profile of our debt repayments, we are very satisfied with where our balance sheet is placed. The group cash flow was on the back of strong operating and mine cash flow before major capital of around $430 and $380 million, respectively. As I mentioned earlier, and as shown on the charts on page one, the September quarter gives us the platform to generate more than $1.9 billion of operating mine cash flow, which would be around 24% higher than what we achieved before. Considering this would be at a gold price only 18% higher than last year, it does demonstrate the cash-generating capacity of the portfolio and sector-leading cost position we have. Some standouts in the cash flow include Cal at $125 million net mine cash flow, placing it well on track to be above the $350 million top end of our previously announced guidance range. Red Lake delivered a record quarterly cash flow under Evolution's ownership at $27 million. With consistency starting to materialise at Red Lake, it is now focused on building on the great start to the year. Mount Rawdon delivered $21 million of net cash in the last quarter of its mining operations. Lastly, we also released our exploration update today with excellent results at Ernest Henry's Burt ore body, a potential new ore source at the Cowell Underground, and further positive results at the Major Tom Target at North Parks with healthy copper grades. All of these results give us confidence about additional production sources over and above the areas we are currently mining. These programs will continue during the year, and I'm sure Glenn and the team will deliver further success in the coming quarters. I'll now hand over to Matt to provide an update on the operations.

Thanks, Laurie, and good morning to all. As this is my first full quarter in the role, I thought I'd start today by answering a question I've most frequently asked, and that's what are my initial observations after some time in the job? So now having spent time at all the operations, and not just in management forums, but also in less formal situations such as shift changeovers, safety interactions, even breakfast or dinner conversations in the camps and local communities, One clear observation for me has been around the quality of both the people and the assets. What I've seen is a willingness from people to work as part of a team, but also for me really importantly is a strong desire to be part of a successful team, which has made the start to the year really pleasing. In relation to the quality of the assets, this observation for me is based on what I've seen in the building blocks. So the ore bodies, the infrastructure and the life of mine plans. which in a number of our operations is 15 years and beyond and includes optionality to either extend or to grow. So bringing the conversation back to the first quarter's performance, we've seen an improvement in our lagging safety indicators, as shown in the reduction in the recordable injury frequency rate. Probably a key driver of the improved safety outcomes has been a focus or our focus on the leading indicators, indicators such as critical control verifications and material risk actions, and we'll continue this into the future. As a group, we produced just under 194,000 ounces in the September quarter, which was in line with plan. And as noted, Cal was a standout performer, delivering a cash flow of $125 million for the quarter. For me, in terms of highlights, Cal's performance was very closely followed by Red Lake, which, as Laurie indicated, produced its highest quarterly cash flow under Evolution Ownership. Cow's production was in line with plan, and as noted, was the group's major cash flow contributor, and it's set to continue to deliver strong returns for the remainder of the year. Ernest Henry's production also in line with plan. The highlight here at Ernest Henry for me was the drilling results that Glenn will talk to later. North Park's had a solid quarter, completing a major shutdown in the shaft, and it met plan for production. North Park's cash flow for the quarter was impacted, though, through the timing of concentrate shipments, which we'll see the cash flow realised in the December quarter. At Mungaree, we're slightly below our plan. This was due to some wet weather in July, which impacted some ore movement between the Paradigm mine and the mill. I'm pleased to be able to report since then we've brought online the Rajax mine, as well as building up some buffer at the mill, so that should prevent that from occurring again. The expansion project is tracking well, running slightly ahead of schedule and on target for cost. and the team on site are very much looking forward to the opportunity the new mill will unlock. As I've already noted, Red Lake performed well, with record cash flow on the back of a strong focus on cost control and the operation producing in line with plan. Of note for the quarter here was that we drew down on the surface stocks, which was in line with our plan, and these surface stocks will be replenished over the course of the next quarter. Mount Rawdon completed mining this quarter and will continue to process stockpiles through into the final quarter of this financial year, where it will then move into care and maintenance. So as a whole, the outlook for the operations for the remainder of the year is positive and we're on target to achieve our full year plan. I'll now hand over to Glenn to report on the exploration results for the quarter.

Thank you, Matt, and good morning, everyone. I'd like to turn your attention to the exploration announcement released which highlights a number of very pleasing and significant exploration results delivered in the September quarter and which nicely complements the way in which our operations have started the year. As Laurie alluded earlier, we received further exciting drilling results from Ernest Henry, North Parks and Cow, all of which confirm the geological endowment at each operation and the potential to deliver future incremental production from various alternative oil sources. Firstly at Burt, which as a reminder to everyone is a separate football body at Ernest Henry, returned an impressive intercept in hole 1426 with copper and gold grades well in excess of average reserve metal grades. This result follows on from our Burt exploration announcement last quarter of the best gold intercept ever drilled at Ernest Henry in hole 1402. The two holes are highlighted in figure one on page two. which clearly show the continuity of strong metal grades between them both. The BERT drilling program will continue through the December quarter to further delineate the extent of mineralisation. We will run an update of the BERT resource model at the end of March next year, which will include these latest holes and all others completed between now and then. The new results are expected to increase the size of the resource, which continues to shape as a future potential incremental production target. At North Parks, drilling during the September quarter focused on extending zones of near-surface copper mineralisation at the Major Tom and E51 targets. Both are located within a kilometre of each other and represent potential open-pit resources only three kilometres from the processing plant. Results from Major Tom confirmed the healthy copper grades in holes we previously reported and shared during our site investor visit back in June. For those of you who attended, You'll recall the entertaining experience at the core shed delivered by our geologist Jonathan Hoy as he described Porphyry Copper Geology 101 as we were looking over spectacular intervals of abundant bleby boronite mineralisation which is the driver of grade at Major Tom. I'm happy to report that we're seeing more of the same mineralisation in holes drilled above and below the hole on display that day. The ongoing drilling program aims to expand this zone of copper mineralisation along Strike to the south where it has the best opportunity to continue to grow. Nearby at E51 we are closing in on having sufficient information to commence geologic modelling as the next stage of evaluation with the aim of moving towards estimation of maiden resources at either or both of these targets next year. Moving west to Cow, we are pleased to report our first result in our new exploration target situated between the open pit and the southern end of the underground mine. We originally budgeted to test this target later in the year. However, one of our underground break control rigs was drilling from a platform at Delwini South when our geologist decided to extend a hole which hit the target at a pretty reasonable angle to return this very good result. We're confident we have identified a repetition of the key geological contact relationship which localises high-grade mineralisation in the underground. The contact zone is open along Strike and down Dip in an area that has not been previously explored. Assuming we're right, this area potentially represents a new future underground mining front at Cow. In other news, we commenced drilling during the quarter at our Concurring North earning JV, located 10 kilometres northwest of Ernest Henry. We're drilling copper gold targets in rocks analogous to those hosting the Ernest Henry ore bodies. Although we're yet to get a hole into a new discovery, we're pleased with the visual indicators that we've drilled in the early holes, which suggests we may be on the edge of a copper gold mineral system. I look forward to being able to report back next quarter on the ongoing drilling progress we're making at Ernest Henry, North Parks and Cow. I'm confident we'll continue to grow and unlock resource potential at these exciting near-mine exploration opportunities. With that, I'll hand over to Barry.

Thank you, Glenn, and good morning. This was a very pleasing quarter for me as the business continues to generate strong cash flow supporting our deal leveraging plan. Net mine cash flow of $172 million for the quarter and group cash flow of $108 million reduced gearing a further 1.5% to $23.9. Our cash balance increased by $81 million to $484 million, reducing net debt to $1.35 billion. We paid $21 million in stamp duty in the quarter for the Kandana acquisition. The group now has available liquidity of $1 billion. Cost performance for the quarter was also very pleasing, with an AISC per ounce of $1,569, which was better than planned. This is for the continuing operations, as Mount Jordan is now processing stockpiles. We are well on track to achieve a full year cost guidance of $1,475 to $1,575. Our disciplined approach to capital expenditure continues, only spending capital on projects when it is required. We remain focused on delivering multi-year projects like the Mangari 4.2 mill expansion to its overall business case. The Mangari 4.2 project is on budget and slightly ahead of schedule. We are on track to meet our capital guidance for all three. In addition to the upside driven by current gold spot price that is about $250 per ounce higher than that achieved in the first quarter, as explained by Laurie earlier, The December quarter will further benefit from cash receipts for three North Park's concentrate shipments arriving at the port of delivery as scheduled. The 1,500 tons of copper that was produced but not sold in the September quarter will provide a further cash benefit. We have only $75 million of debt to repay in FY25, of which $15 million falls due in the December quarter. and our 23rd consecutive dividend was paid on October the 5th. Considering the very good start to the financial year and continuing cash generation momentum, we are on track to reduce gearing to around 20% by the end of FY25, while at the same time investing in the business and increasing shareholder returns through dividends. Kaylee, will you please now open the line 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 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.

Hi, good morning. Well done on the quarter and the expiration results. Just your comments on BERT in the quarterly, you've said in the notes there that that could take capacity closer to 8.5 million tonnes per annum. I thought you'd previously been talking to that as an incremental 1 million tonne-ish, so your comments today imply some more confidence in that potentially being bigger. Is that fair?

I'll hand that to Glenn and Kate. I think Glenn's saying it moves us there, but...

Yeah, well, we're moving towards fully delineating a resource that will be studied. In terms of the quantum production rate, I think it's a bit premature to say too much about it until we do the study and understand how that's going to be integrated into where we're mining at Ernest Henry. But it's certainly shaping at this point, Kate, as an opportunity for incremental production.

Okay, it makes sense. It was just that you had that comment in there that you see a feed rate closer to 8.5, but I will look out for the updated results. And then evolution was mentioned in the media today, re-inacquisition. Can I just confirm that you are still focused on the portfolio today and getting that gearing down towards your 20% I think you've talked to at the next stop before the 15%? As in there's no plans to make any changes to the portfolio for now?

I think you answered the question yourself, Kate. I mean, it is true. I mean, our focus is on safely delivering the plan this year, maintaining the focus on the growth studies and execution projects we've got and the great results that Glenn and the team keep delivering to give us further optionality.

Okay.

Thank you for clarifying. Your next question comes from Daniel Morgan with Bear and Joey.

Hi, Laurie and Tim. Can I just understand Mongaria a little bit more? You indicated today the project is slightly ahead of schedule, which I believe is March 26th for completion. You also say you're on budget and you disclosed you spent 60 of the 250 mil budget on the mill. So I appreciate spend can be lumpy, but how do we think about this? Like, could the project be delivered ahead of schedule? Is it too early to make that call? Is it Some work streams are maybe ahead but not the ones on the critical path. Maybe you could just expand a little bit. Thank you.

Yeah, thanks. Good morning, Dan. I think, you know, if we look at it, and for those who were able to make the site visit at Diggers, a lot of the surface infrastructure and getting things ready to connect into the new plant, they're the things that are progressing well and they're ahead of schedule. I mean, yeah, we're talking weeks, not months ahead of schedule here. But a lot of those works that need to be done in readiness for, for when the mill arrives and a number of other items that will get installed over the second half of the project. We're halfway through now. So that spend rate is on getting all of that installed and then when the big items come towards the back end of the project, that's when that capital will flow through. So that's where we sit. I mean, I think if we look at it, the project team has got the capital and the works programmed out for that 30-month period. It will move in between the months, but there's nothing that we would sort of say as to how to plan that out in the next couple of quarters. All we should work on is that through to the end of the project, at the end of the 30 months, we're tracking to the $250 million budget.

Okay, thank you. And probably a more holistic, simple question regarding the entire business. Looking to the December quarter, I would have thought you'd have a lift in production for both gold and copper, given you've got no major shuts, some reasonable grades still at Cal, and a bit better cash flow if these spot commodity prices hold. Is that a fair assessment, or is there anything you'd like to flag about the quarter coming?

Yeah, look, I mean, it's true. I mean, at $39.70 today, that's, as I said, nearly $290 an ounce higher than what we achieved in the first quarter, so that is going to benefit the cash flows. When we look at it on a production standpoint, you know, quarter on quarter, those shuts are done, you'll see an uplift. I think where you'll see the offset is as Mount Rawdon now moves to stockpiles, they're lower grade than what we achieved in the first quarter as we were mining the last stage of the pits. So you'll see some drop off in production there and that's, probably the only sort of main variant we would see in Q2 versus Q1 across the assets. I think in terms of the other one would be Red Lake will be slightly lower as they'll have some shuts in December that weren't in that September quarter. But overall, you'll see an uplift in production in the December quarter.

OK, thank you very much, Lawrence.

Your next question comes from Hugo Nicolese with Goldman Sachs.

Morning, Laurie Barry, Matt Glanpeter. Thanks for the update this morning. My first one is just around North Park. Subsequent to that site visit back in June, can you just give us an update on how the sub-level work is progressing and then maybe also just talk around the significant uplift in material from the open pit quarter on quarter and I guess how you're thinking about that increased material movement relative to the stockpile drawdowns you'd previously talked to for the year.

Yeah, thanks, Suga. I'll hand that one over to Matt.

Yeah, thanks, mate. In terms of the work that we'd outline for the rest of the year at North Parks, we're pretty much on schedule, so if you're talking through the... The pre-fees work for E48. There's some development work that's in line with where we need it to be. The drilling's progressing quite well. We're sort of in line with expectations in that area. In terms of the open pits and the movements coming through there, pretty comfortable with where that sits. We've got some pretty significant stockpiles between the mine and the mill at North Park's. So the only movement that we would see there is what material we put through the mill. So we're doing a little bit of work in that area with the team on site. But at this stage, all the works at North Park are progressing. Well, probably the main one that I think will help us be more reliable there or continue to be reliable is the works in the shaft. All those structural works at the bottom of the shaft have been completed, which was sort of no small feat from the team, and that should see us going well into the future with that aspect.

Great, thanks for that. And then just a second one around the TCRCs across the copper. Producing Assets appreciates you've got your own agreements in place there, so you don't necessarily see the full pass-through, but do you have to just give any additional colour around the magnitude of the cost reduction you're expecting at Ernest Henry and North Park's kind of in the quarter just gone and for the rest of FY25?

Yeah, so Hugo, those TCRCs in our off-take agreements are on a calendar year basis. So as we go into the quarter, that's where we will then set the prices for calendar year 2025, which will have an impact on our FY25 costs in the second half of the year. We had allowed in our guidance for some shift from 24 into 25. So, you know, what we would see is when we get the benchmark prices for 25, we'll inform the market if there's any material shift, but we have allowed for those TCRCs for both operations to reduce.

Thanks for that, Hassan.

Your next question comes from Matthew Friedman with MST Financial.

Sure, thanks. Morning, Laurie and team. A couple from me, maybe the first one on Red Lake, probably Matt's best position to field this one, but can you please expand on the improvements that have been made at that asset and I guess the sort of consistency that we can expect going forward? Clearly in the September quarter, you've milled more than you mined, as you talked about, but you expect those stockpiles will be rebuilt in the December quarter. Just trying to understand, I guess, what's driving that view. Is that because of improved mining rates and availability of blasted stocks, or is that more the shuts in December that Laurie alluded to? So, yeah, I guess talking to the mining consistency, and then secondly, the consistency of the grade profile. Do we expect that that should continue to lift over the course of the year? Thanks.

I'll just make a couple of comments before handing it over to Matt, where he can claim that since he started, the consistencies arrived at Red Lake, but I think, you know, it is on the back of the work that John and the team did in the second half of FY24, which was to get into a lot better sequence around the shutdowns and planned maintenance and aligning the mining and the processing schedules to those getting that stockpile in front so that they've actually got some contingency in the system. I think the other thing is that you know, we've been sticking more to the mine plan, which is then making it a lot easier for the entire workforce to know where we're going day in, day out, and month in, month out. So I think, you know, as we look at it going forward, that's the type of thing that we want to see in there. And I think what it also did as we started this year is that it demonstrated to the workforce that through this appropriate planning and having some contingency there, it gives them the capacity to do their job a lot better. Matt?

I'm still going with your first answer, Laurie. But in terms of, I think Laurie's covered what I was going to talk about. So the key there is the operational discipline. starting to see that really hit home and become more repeatable. And then the second part is the contingency. So there's more than one way to move the ore around in the mine now, but also you're seeing that the plant has some contingency built into it. You will still see sequencing issues as any normal underground operation has in terms of Once you stick to the plan, you're not going to take stopes out of order. So there'll be some variation, but only minor and as per the plan. So, yeah, really quite comfortable from the operational discipline side that that's what's driven it.

Yeah, OK, thanks for that. And maybe just... I was just going to hand it back to you.

You also asked about the grade, and I think the consistency of mine compliance is helping in the grade. Yeah, sorry...

Sorry, I'm not sure which maths you're talking. But yeah, that's right. It'll be as per the plan, which does vary. It's not a trend that'll go upwards and upwards exponentially, but it'll continue throughout the year in line with plan.

Okay, I understand. Thanks and apologies there for the name confusion, but thanks for referring back to those specifics that I alluded to. Secondly, on the exploration success and I guess trying to understand where that goes from here, and obviously Glenn's made some comments on this already. Would it be fair to say, obviously the near-term goal is to incorporate that drilling presumably into the next resource and reserve update, but just trying to understand longer term how these various successes feed into the mine plans at three assets. So maybe thinking specifically, so we've talked a little bit about BERT Clearly, Ernest Henry's got the extension feasibility study that's due in early 2025. And then over at North Park, you've highlighted Major Tom, but again, there's some pre-feasibility studies and feasibility studies there underway, including, I guess, how you think about underground materials handling and those sorts of things. So the question is really, this exploration success that you've highlighted, Do these key studies at the assets get reframed to incorporate this exploration success or do Bert and Major Tom form, I guess, supplementary pieces of work that sit on top of those core studies that are expected to be delivered in early 2025?

Thanks, Matt. I'll take the second part first about where this goes in terms of the resources. and reserves. I mean, the thing that we see from this exploration results and the programs that Glenn and the team are running is really it's in areas that gives us further production opportunities. Because if you look at it, at Ernest Henry and North Parks, we've got up to, you know, one and a half to... to 2 million tonnes of latent capacity already existing in our processing and concentrators. So how can we do those, noting that our materials handling systems... And then when we look at cowl, you know, the underground with grades, you know, more than double the open pit, being able to displace that open pit material, and particularly as we go into stage I and you go back to processing some stockpiles, that's what we see as the real benefit. So that's where those programs are targeted at, to say that you can increase the production rate without needing to invest the capital in the processing plant's capacity while those other studies continue. Those other studies are the ones that would feed straight into the materials handling system and the existing base load in the production. So it's really great to have these programs going because they provide further upside that don't disrupt the plans of the other extensions.

Yeah, and just to build off Laurie's answer, Matt, I think what we're looking at is you know, with all of the three opportunities I described this morning, they're supplementary or, you know, they're going to augment, you know, and complement the existing studies at the operations that you mentioned. I think, you know, and that's been the strategy at particularly at North Parks and to a certain extent at Ernest Jenner and Cow, which is, Yeah, how can we unlock value, which is not just building resource at the end of mine life and creating sort of a, you know, it's not just a production target. are there opportunities to bring particular targets forward and utilise that latent capacity that we have in the plants? And so, you know, starting at North Parks, the open pit targets, we've, you know, we've started, you know, we've focused pretty heavily on those throughout the year, you know, mainly because, you know, logically they will not compete with the underground materials handling system and will be able to, of that incremental production growth into the future. Now, we're still at a pretty early stage. We're delineating sort of really the extent of mineralisation. We're still doing the pre-resource drilling at the moment. We'll move into the modelling and estimation phase into the new year when we're comfortable we have sufficient drilling that'll give us some meaningful results there to understand. Similarly at BERT, we'll run, as I mentioned, a resource update, you know, which will be rounded out into the June quarter of next year, and that will then position BERT in a way where we can start to think or study more seriously, you know, where exactly that potential supplementary production fits into the long. At CAL, as Laurie mentioned, this is a, you know, it's, It's an opportunity in the future to potentially displace some of the lower-grade production from either stockpiles or the stage I at E42. And it's really early days. It's one hole into it, but we've found a repeat of the of the same geology that controls grade in the adjacent underground mine. And so it's a new area, a lot of space to grow up, but a lot of work ahead of us to understand it and ultimately develop it.

That's great. Thanks for the detail there, Glenn and Laurie. I guess maybe just to summarise that at a really high level, it seems like the sort of blue sky opportunity for all three of these exploration targets if we call them that is really a bit more about potential incremental production opportunities in time rather than sort of just added resource and reserve and life extension is that kind of at a high level how you're viewing all three of these opportunities i think i think you've summarized it well matt that that's exactly what we're trying to do great okay thanks for that laurie

Your next question comes from David Radcliffe with Global Mining Research.

Hi, good morning, Laurie and team. So I just have a couple of follow-ups on North Park's. So on the comments of open pit mining, obviously a really big quarter. So does that now mean that the E31 north pits are now finished or was there additional material taken? And does that mean that it's now it for open pit mining at this time at North Park? Or have you sort of thought about E28 in a bit more detail?

Morning, Dave. No, I mean, the short answer is that as we had the shaftworks maintenance going on, we were feeding from the underground. And so they were one of the primary sources during that period. The open pits will continue through to the end of this financial year. And then in terms of E28, work continues on that in terms of where it sequences in the life of mine plan as far as we're kicking off our life of mine planning right now.

Okay, cool. And then, as you said, you've got lots of stocks ahead of the mill now. Is there any more maintenance sort of planned for the year, or do you feel confident that you could actually sort of fill the mill for the balance of the year and maybe even test the upside potential to that sort of 7.5 million tonne rate?

It's Matt here, mate. Yeah, at this point... We've still got a little bit of work to do on the 180 area in terms of the crushing. So we haven't completely opened up the feed from the open pits to flood the mill. That said, we do have the opportunity to investigate how hard we can run that area. So we'll be looking at that. But at this point, we're still in line with plan. We're not planning on sort of swamping it at this stage.

Brilliant. Thanks. And then maybe just if I can squeeze one last one in on the exploration there. So Major Tom E51, obviously some more good results, and it looks like Major Tom's been pulled to the south. So have you ruled out that they could potentially join? And then on the resource side, obviously it'd be great to get that maiden sort of number, but it looks like the draw spacing is still quite wide, so it needs some infill. So is it fair to say you're still going to be well into sort of FY26 before you're sort of close to thinking about whether these could be a new they hang together and could be a new ore source.

Dave, that's probably a fair assumption. What I would say, though, the reason we would advance to targets, and as you correctly point out, the drilling space is quite wide, but in porphyry systems it can be, as Dave as the grade variability is so much lower than what we've seen in gold systems. So the wide spacing as we have today will enable us to move to classified and inferred resource. So we're reasonably confident about that. And then obviously, depending on the scale and where we think the opportunity fits into the life of mine plan, we can accelerate the drill program to bring that forward and sooner than FY26 to sort of advance the mining studies in parallel with that The other, you know, to go back to your earlier question on whether the two join up, that is actually the million-dollar geology question. What we're doing at the moment is we're delineating. We think they are discrete resources because these pencil porphyries tend to be as, you know, discreet, if you like. But what we do understand, and if you go to the figure two in the expiration announcement this morning, you'll see where both of these targets are located with respect to a pink unit that we've outlined there or delineated, which is, you know, one of the monzenite intrusions What we're seeing is that these pencil porphyries are coming up around the edges of this or the shoulders of this intrusion. And that contact there, which is up against the host volcanics, has been relatively underexplored around the edge, particularly as you come south and then move back further to the east and northeast. So there's a fair bit of opportunity for us. We're going to get to that in the future, but the first step is to understand sort of what we've got with these two targets.

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

Your next question comes from John Sharp with CLSA.

Yeah, good morning, Laurie and team. Just continuing on with Matt Friedman's question on Red Lake. Matt O'Neill, that is. I'm sure you've had a real good look at the operation now, but maybe more specific than operational discipline, which is obviously very important, but What are the key areas of focus that you see there maybe over the next 12, 24, 36 months? You know, what are the low-hanging fruit? What are the longer-term targets there that you see?

Yeah, so for me, the key focus in the next 12, 24 months is around drilling in terms of making sure that we continue with the consistency of what we've been able to deliver by getting in front of ourselves in terms of the grade control drilling. So that's probably the key focus to ensure the consistency that we've seen. And then from there is around what the life of mine tells us to do. So we're doing some work through this life of mine process of, I think, the operational discipline and the basics of operating a mine system. are in place now and starting to show some benefit. We now talk about what are the strategic decisions you make with those ore bodies to get the next step in performance out of that business. And for me, that focuses around cash and making money and margin. So what that looks like, we'll work through over this life and mind process is probably where I'm at. So without saying this is the the direction we would go through that process and begin a better place towards the end of this year to give you a proper answer on what that next step is.

Okay, thanks. And just given the recent strength in the gold price, if we see a continue in this trend throughout FY25, should we expect to see a bit of an upward pressure on the oil and sustaining cost guidance? What are your expectations there?

I think, John, the only link I draw there is, you know, if the gold price continues at where it's at and goes higher, is the impact of royalties on our all-in sustaining costs. That's the only sort of thing we'd see there. I think, you know, where we sit in terms of our other input costs in the market, you know, the higher gold price is being predicated on, reducing interest rates and inflation, stabilizing more and trending down, which would then see that input costs don't move as they had in the last two to three years.

Okay. Okay. Thanks all. Pass it on.

Your next question comes from Tan Prenderville with Canaccord Genuity.

Morning, Laurie and team. Thanks for taking my question. Just a question or a bit more detail on the balance sheet and gearing. So maybe a question for you, Barry. Clearly, the portfolio is benefiting from strong gold and copper prices. You're seeing strong quick de-gearing and you're spitting out some decent free cash flow. Gearing is now below 24%. You de-geared by 1.5% in the quarter, which is a great result. I know you sort of touched on this in your presentation, but maybe you can just talk in a bit more detail around the optimal gearing level for AVN over the short to medium term. And the reason I ask is I'm just thinking about it in the context of capital management optionality or capital management upside over the near term. Thanks, Gasp.

That's great, Tom. Thanks for the question. As Laurie outlined when he presented, we've got very good momentum in cash generation and expect that to continue throughout the year. We've seen the impact on gearing just in the quarter coming down 1.5%. We've been quite transparent saying we're pushing towards that 20% level by the end of this year. And then in the medium term, 15%. So we're quite comfortable when we get to that 15% level. On the way getting there, what's important to us is to continue investing in the business and in the great CapEx opportunities and project opportunities we've got. um together with that as we said at the full year financial results in august as as gearing comes down we'd look to increase shell returns through dividends and if you if you look back at that we we had a chart in the full year financial results That clearly shows that in the past, we've got the gearing coming down. You see dividends going up. So if we put all of that together, that's the intention with a capital management strategy going forward. It is generate the cash, continue investing in the business, and as the debt comes down, increase the shareholder returns through dividends.

Great. Yeah, now that's clear. Thanks, Barry. I'll pass it on.

Thanks, Tom.

Your next question comes from Kate McCutcheon with Citi.

Just a quick follow-up, the CAL OPC approvals, is it still fair to expect those this CY? And just remind me what your assumptions were in the outlook for CAL that were outlined in the site visit deck around the approval timing.

Yeah, Kate, so the OPC approvals we were expecting in this quarter, the December quarter, to get the consent conditions and then respond to those and then pen the formal approval from the regulator. That continues on track. We've had really good information providing that and positive responses from the different departments. So that is continuing. What we had included for in this year was no commencement of Stage I. We had allowed for approvals of the OPC from the regulator and then take that final fee study to the board and maybe in the back end of the year some... some costs associated with the consent conditions around permitting and the like. That's sort of what we've allowed for. And essentially into FY26 is when we would start moving into stage I cutback and the other works associated with the continuation of the open pit mining.

Okay, got it. So all on track at the moment?

Yes, it is, thankfully. Okay.

Once again, if you wish to ask questions, 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.

Yeah, morning, team. Maybe one just stepping back at Red Lake, thinking about the Canada opportunity longer term. I guess you guys noted that there was some exploration done at Lake St. Joseph and the October Greenfields Project. Just kind of wanting to get a sense of, you know, their proximity to Red Lake, what works are going on there and, you know, target scale and I guess how you're thinking about opportunities longer term in North America.

Yeah, that one's for Glenn L. And, you know, our view there is... is really those opportunities that Glen and the team are identifying that could give us new production fronts in Canada. But do you want to outline where we're at with both of them?

Yeah, absolutely. Thanks. Oh, yeah, as Laurie mentioned, it's really looking at that sort of, you know, seven plus, ten plus year timeline as to sort of what comes into the portfolio from a production perspective. So, yeah. Sort of rounding out on Lake St. Joe and October, so they're both fairly early stage projects. We've sort of completed some of the field programs, which largely comprise of geochemical sampling. So we're looking at using sort of old methodologies in areas that haven't really been tested previously. And we're shoving up some actually pretty exciting targets at Lake St. Joe. I haven't seen the data for October, although the field season has been completed. There's a little bit of work ongoing, but we'll have a look at that data when it comes in. And essentially what we have is we'll come to a decision point on both of those projects if there's a compelling opportunity and then the next step would be moving to drilling if there's a compelling opportunity. I'll have a conversation with Laurie and Barry about whether or not it's going to justify or warrant some investment to drill it. While I've got the mic, though, we have been doing a fair bit of similar regional work at Red Lake, and we're starting to see some really exciting developments there in terms of that. So I think... you know, in terms of the GECAM we're getting there. So we're doing the work not just on greenfields but around our mine sites as well. And obviously the mine site works when we generate those targets. We'll be first in line for, you know, for whatever investment we're able to attract to them.

Great. Thanks, Glenn.

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

Thank you, Kayleigh, and thank you, everyone. The September quarter was a very good start for FY25, and it did build on what we'd set out to do at the end of FY24. So it puts us on track to deliver guidance, which ultimately gives us materially higher cash flows than where the... prices are today that gives us even further upside and opportunity if we can deliver and do deliver to that plan. And on top of that, seeing some really good exploration successes that gives us new opportunities for mining fronts and puts us in a spot going into the second quarter and also with the balance sheet in good shape. So thank you for your time today and we look forward to update you again soon.