Evolution Mining Limited

Thank you for standing by and welcome to the Evolution Mining December 2024 quarter results call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Laurie Conway, Managing Director and Chief Executive Officer. Please go ahead.

Thank you, Harmony, and good morning, everyone. I hope you had the opportunity to get some downtime during the holiday period and wishing you all the best for a safe, healthy and successful 2020. I'm joined on the call today by Barry Gundermurver, our Chief Financial Officer, Matt O'Neill, our Chief Operating Officer, Glenn Marston, our VP Discovery and Peter O'Connor, our GM Investor Relations. The outcomes for the December quarter were excellent in that we safely delivered to plan, which materially increased our cash flow by 54% to $165 million. At the halfway mark of FY25, we are ideally positioned to generate a significant step up in cash flow compared to last year. Our safety performance for the quarter was a real highlight in that we saw our TRIF reduce to 5.44 and all our operations now have single-digit TRIFs. We're on track to deliver our production guidance of 710,000 ounces of gold and 70,000 to 80,000 tons of copper at a very low all-in sustaining cost of $14.75 to $15.75 per ounce. Group production was in line with plan at just under 195,000 ounces of gold and 19,000 tonnes of copper. Our all-in sustaining cost of 1540 pounds for continuing operations was slightly higher than planned, but this is being driven by timing of sales and a lower achieved copper price. For the quarter, cow sales were 8,000 tonnes lower than production, and this will come through in the March quarter. The achieved copper price was slightly below our guidance assumption, but the spot price is now above that assumed price. The charts on page one of our report clearly demonstrate how we're tracking in the key production and cash flow. We have 52% of the midpoint of group production gold guidance, while cash flows are about 55% to 56%. Using the current spot prices, our operating mine cash flow for the year is potentially going to be above $2 billion. Two key takeaways are that this would result in a mine operating cash flow margin of nearly $2,700 per ounce, and the $200 million benefit on that chart only represents a six-month period. So annualised, this is up to $400 million more as compared to where the metal prices were when we released our guidance in August. The material increase in group cash flow to $165 million further reduced our gearing to 22.6% and our balance sheet continues to strengthen. The performance of our projects was also a standout. At Mungaree, the 4.2 processing plant expansion is now scheduled for commissioning in the June quarter, which is about nine months ahead of schedule. Total project cost is forecast to be around $235 million, which is 6% below the original budget of $250 million. For the project, all things that needed to go right have gone right. The arrival of the mill and the HV substation in early December... The continued good progress by the contractor, the mobilisation of the open pit mining and all haulage contractors have all combined to enable the project to advance much better than originally planned. To be delivering a project of this scale and cost in Western Australia early and below budget is a real credit to all who are involved. As we commission the plant in the June quarter, we expect Mungari to move back to being a considerable cash generator the group at cal in december we received new south wales regulatory approval to extend open pit mining by 10 years and the overall operation to 2042. we're grateful for the strong support we received from the local community and all the relevant regulatory bodies we expect to seek board approval in the june quarter for the project Cow's year-to-date cash generation of $366 and $268 million in operating and net mine cash flow respectively shows the real value of this asset, both now and going forward. Yes, I will repeat what I said last quarter. This asset is still a cash cow. Lastly, we also released our expiration update today with excellent results. At Ernest Henry, on the back of the recent drilling successes at Burt Orebody, we have now commenced a pre-feasibility study as an additional ore source at Ernest Henry. At North Parks, we've seen further positive results at Major Tom and we've identified a potential new ore source at the Cowell Underground. We continue to have success at our operations to add into the growth pipeline and Glenn will go through these in more detail soon. I'll now hand over to Matt to provide an update on the operations.

Thank you, Laurie, and good morning to all. As Laurie's already touched on, we've had a strong second quarter on both the production and cash flow front, and I'm really pleased with the position we're in. For me, the improvement in our safety performance is perhaps the most satisfying aspect of where we sit today. Over the last six months, we've reduced our recordable injury frequency rate by 24%, down from 7.1% to 5.4%. with a special mention here for the Red Lake, Ernest Henry and Mungaree teams who have made significant improvements in this area. As I noted at the last quarterly, whilst I'm very happy with the improvements in our tagging indicators, we continue to focus on the leading indicators, such as critical control verifications and material risk actions, in line with our ongoing commitment to material risk. For the December quarter, we produced just under 195,000 ounces of gold and around 18,500 tonnes of copper, which was again in line with plan. Cowell and North Park succeeded their plans for the quarter, with Red Lake, Mungaree, Ernest Henry and Mount Rawdon all generally in line with plan. As noted earlier, Cowell's production was strong and the operation is in a good position ahead of the planned major shutdown in March. This shutdown will reduce cow's March quarter by around 25,000 ounces. Ernest Henry's production was in line with plan, and for a second quarter in a row, the highlight has been the drilling results, which Glenn will talk to later. Mangari, pleasingly, is back in line with where it needs to be for the year, with the Ray Jacks pit in full production and having commenced early works on our new pit at Castle Hill. As noted earlier, the expansion project is tracking very well, running ahead of schedule and below budget, with commissioning targeted in the June quarter. North Parks had a strong quarter, with the highlights here being the commencement of commissioning of our loader automation in the Block Cave and the completion of the improvement works in the Crushing area. Red Lake really pleasingly was in line with plan, achieving a positive cash flow for a During the quarter here, we completed our normal schedule shutdown works in the processing plants and rebuilt our surface stocks in line with plan. Mount Rawdon continues to process stockpiles with the team on site working through this process well. I'm pleased to be able to report once again that the outlook for the operations for the remainder of the year is positive and we're on target to achieve full year guidance. 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 our exploration announcement, which was released this morning alongside the December quarterly report. As Laurie alluded earlier, we received further exciting drilling results from Ernest Henry, North Parks and Cow, all of which highlight the potential to deliver future incremental production growth from various alternative oil sources. At Ernest Henry, recent step-out results from drilling at Burt highlighted in Figure 1 on page 2 of this morning's announcement, have extended mineralisation to at least 160 metres below the previously delineated footprint. We can now start to see how the Burt Orvoi potentially lines up with other isolated colonies further down Plunge, revealing potential to add future production mine life. Infill drilling results from Burt are also illustrated in Figure 1. We've received strong gold and associated copper grades high up on the bird ore body and adjacent to potential access locations from the pit wall. Metal grades confirm continuity of the higher grade gold domain, which is an encouraging outcome for bird. A PFS has commenced to evaluate options for developing the bird ore body independently of the underground materials handling system. Turning to pages 3 and 4 of the announcement, we highlight new drilling results from North Parks, which focused on delineating lateral and depth extensions of near-surface copper mineralisation at the Major Tom and E51 prospects. Results from Major Tom have grown the mineralisation footprint and, in my view, solidified this prospect as a future open pit opportunity. The top of mineralisation occurs within 40 to 50 metres of surface. and the lateral footprint of mineralisation has expanded to a similar scale as the E31 open pits and remains open. Serendipitously, Major Tom is copper dominant, ideally located on the mining lease, and is within three kilometres of the processing plant. Drilling has also returned further results at E51, which is situated 500 metres southeast of Major Tom. Our exploration team has done a great job of unravelling the complex geology to advance our understanding of where and why mineralisation occurs where it does. These learnings have opened an entire search space along the edge of the Monsonite stock, which is shown in pink in Figure 2. This geological relationship is also high very well in Figure 3. Mineralisation hugs this prospective contact and is yet to be effectively tested along its full length. Our exploration team will continue exploring this concept in the short to medium term with the aim of identifying additional near-surface open pit opportunities that can be brought into the LOM. Work is currently underway to model the geology and assay results to determine if open pits can be optimised at major time in E51. This work is expected to complete in the June 2025 quarter. In our last exploration update at the end of the September quarter, we talked about a new and significant exploration target we had identified at Cow. Just to recap, we drilled a hole into an area situated between the E42 open pit and the Cow underground. where we believe we were exploring a separate repetition of the geological architecture that hosts mineralisation in the adjacent underground mine. The target location is shown in the small inset of Figure 4 on page 5. The cross-section illustrates the key geological relationships controlling mineralisation. The contact between the pink-coloured diorite unit and the surrounding sedimentary rocks is very similar to the geologic setting that hosts gold mineralisation in the underground mine. A new hole was completed in the December quarter from the underground, which confirmed this geological concept and hit two significant gold intercepts, which are each described on page 5. I'm excited about this target because of its large scale implications. It is situated in an area that has not been previously explored and by analogy with the adjacent underground mine, we have a solid geological explanation for why the gold is there and we are confident that the favourable architecture will persist a long strike and at depth. In other news, we recently completed an agreement with Rio Tinto Exploration to acquire a 1,200 square kilometre holding of exploration tenements surrounding our own Asenra mine. This comes on the back of the Cloncurry North earning JV and now cements a significant exploration package prospective for future copper gold discoveries adjacent to Ernest Henry. 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 will continue to grow and unlock resource potential in these well-endowed geological terrains surrounding our mines. With that, I'll hand over to Barry.

Thank you, Glenn, and good morning, everyone. During the December quarter, the business generated significant cash flow, setting several new financial records. We are delivering on our deleveraging plan strongly while investing in the business and increasing share returns, as evidenced by the final FY24 dividend of $0.05 per share, which was paid during this quarter. delivered all-time record operating and net mine cash flow of $561 million and $263 million respectively. As Laurie and Matt explained, this was driven by our continued production performance being on plan, as well as capturing the benefit of high metal prices. Group cash flow of $165 million was 54% higher than the September quarter. This cash flow included the $27 million tax payment, related to the FY24 return, which is due each December. Tax payments in the second half will return to $25 to $30 million per year. Our cash balance increased by $36 million to $520 million after paying $99 million in dividends and the $15 million scheduled debt repayment. Gearing reduced a further 1.3% to 22.6%. It is now the fifth consecutive quarter that we have reduced our net debt, while at the same time we are reducing gross debt with a commencement of scheduled debt repayments. Cost performance for the quarter continues to track well, with an AIC per ounce of $1,533, which is slightly improved compared to the September quarter. This is for continuing operations, as Mount Jordan is now processing stockpiles. They are well-placed to achieve full-year cost guidance for AISC of $1475 to $1575 per ounce. Our disciplined approach to capital expenditure continues by only spending capital on projects when it is required. The earlier commissioning of the Mangari 4.2 project will bring forward major project capital from FY26 of approximately $80 million, with the overall project expected to come in under budget. In order to meet the accelerated mill ramp-up, major mine development capital of approximately $25 million will also be brought forward. Mangari's major project capital will therefore be between $190 and $210 million, and major mine development capital between $55 and $70 million, FY25. The rest of our capital expenditure guidance remains unchanged. We have only $60 million of scheduled debt repayments in the remainder of FY25, of which $28 million falls due in the March quarter. Considering the very good first half to the financial year and continuing cash generation momentum, including the potential upside, the current gold spot price that's about $400 per ounce higher than that achieved for the year to date. We are tracking very well to reduce gearing to 20% or less by the end of FY25, at the same time as investing in the business and continuing to grow shareholder returns. I will now hand back to Harmony to 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. And if you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Kate McCutcheon from Citi. Please go ahead.

Hi. Good morning, Laurie and Barry. Well done on Mangari being ahead. Maybe a good market to sell a gold mine in. I see that there's capex for the mill and mine that's pulled forward and Barry just gave us those updated numbers before. Group guidance is the same, I guess. Are there assets to call out that will perhaps be a bit light on their spend this year?

Morning, Kate. Some of the sites will, but what Barry's saying is that all of the other assets remain per the original guidance. And for Mangari, we're bringing forward that 80 further project and 25 into mine development. I think when you look at where each of those projects are, you wouldn't be assuming that that's offset by the other projects. All those projects remain on track.

Okay, got it. Then maybe a question for Barry with the upcoming financials. Are there any one-offs to call out or exceptionals? And then that net debt number that you presented, just confirming that's using the end-of-year FX for your U.S.-denominated debts.

Okay, so as we said in the quarterly report, there's only that adjustment for the Edna May Royalty. Of about $17 million that will be written off because that project has gone on to care and maintenance and the receipt of that royalty is uncertain. And then with respect to the debt, so the USPP debt is all it's hedged and the debt numbers we report in the quarterly at the hedged rate. of 71.5 cents. So there won't be any revaluations of the debt that will come through in the financial results. That's not already in the quarterly number we reported. So the debt number will stay unchanged and the gearing will stay unchanged when we report the half-year results.

Excellent. Thank you, Admiral. Cool.

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

Good day, Laurie and team, and happy new year to everyone. Maybe just following on from Kate's questions there, sort of, I guess, cash looking forward. Is there anything else you can call out over the next 12 months? And I'm specifically thinking about the stamp duty, which we keep asking about, but also contingent payments related to... to North Park, anything else there other than a $60 million debt repayment?

Morning, Levi. Yeah, so in regards to stamp duty, nothing still on the one for Ernest Henry. So we wait as long as we can to get that. And in terms of the contingent, that will be assessed at the end of the financial year with payment in the first quarter of next year. As at the halfway mark, we're probably sitting in between sort of our $1.2 to $1.5 million US contingent payment that would have been earned in the first half.

Right. Okay. Yep. Small numbers. Thank you. And Mungar, are you keen to get a bit more detail, I guess, Matt? So what's it look like on site? What happens over FY26 if you're commissioning in the June quarter? Obviously, we're probably bringing a bit of production forward out of the mines already. How quickly can you feed the plant? What's the ramp-up expectations look like?

I'll do one bit first, Levi, and then I'll hand it over to Matt because they're very good questions. They're the same I've had for Matt recently as the project. But, you know, when we look at it, we'll go through the commissioning and the ramp up and, you know, therefore, because we're nine months early, you'll expect that production will trend up towards the 200,000 ounces for next year. the time it takes us to commission and fully ramp up to 100% production rate. Matt, do you want to explain what we're seeing on site?

Yeah, so I think Laurie's covered off the commissioning period in the quarter. On site, in terms of probably the key thing that we were working through is making sure we've got enough material to feed the mill. And so with the pits coming on quite well, Ray Jack's running quite well, Paradigm was doing well, and then Castle Hill... I was there last week, actually. Castle Hill is starting to look like it should in terms of a long-term pit that we'll continue to produce from. So when we run through all the different numbers and the operations, we've got more than enough material to feed the early start-up. And then over that period, over the first couple of years, we were building stocks. So there's not a lot of risk around us running ourselves out of material to feed that mill at the moment. Yeah, like you said, we'll work out once we go through the commissioning process what next year looks like, but it's obviously pretty good news and we'll see some uplift from that.

Yeah, thanks. And just in a bit more detail on that, I assume ramping up the underground is a bit of a grey driver. How does that fit into the picture?

Yeah, you're right. Exactly right. That's probably the key area that we're working on from an improvement point of view. We're on track with where we need to be there, but I do believe there's some opportunities and Scott and the team at Mongaria are chasing that. But the underground is the grade sweetener and that's the area that we're really pushing. Probably the key thing we've worked on in the last quarter has been the development and getting ourselves in front. And the team have done a really good job last month with a fantastic result from development and that's what we need to get going to make sure we get ourselves in front there. So, yeah, you're right. At the moment, it's in line, but I'd like us to get a bit further in front.

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

Hi, Laurie Berry. Matt Glenrocky. Happy New Year. A few quick questions for me, please. Just firstly, on North Park, just observing the lower underground volumes in the quarter, You noted the haulage was down for eight days. The production impact looks bigger than just that disruption. Can you just clarify if that's the deliberate decision to take higher grade open pit material or whether there are any other issues there in the quarter?

Yeah, that was the major interruption, which was the winder and the transformer at North Parks. We did take a lot more open pit, which is obviously where the gold grade has originated from. So there's nothing else material there. The only minor impact, and you wouldn't see it in the numbers that we're talking about today, was around the commissioning of the automation fleet. We had a couple of teething issues in the first few weeks, but outside of that, there's nothing material there impacting that number for the quarter.

Excellent. Thanks for clarifying that one. And then just one on Mangari, maybe for Matt. Obviously, congrats to the team for tracking ahead of schedule and budget there. you've historically talked to the potential of divesting that asset. Does the performance improvement there make you more inclined to keep that in the portfolio or does it potentially mean you can look to start a process on that sooner?

I'll take that on behalf of Matt. I don't think Matt wants to sell an asset that he's just built a new plant ahead of schedule and under budget. I think he wants to operate it a bit. But, you know, from our perspective, Hugo, we've talked about this over the last six months, you know, Selling an asset when you part way through a project, you wouldn't get value. I think the other thing that we've also said is that when we commission this plant, a brand new plant at 4.2 million tonnes right in the heart of the eastern goldfields, it's a great asset to own. It goes to 200,000 ounces, generating a lot of cash for us. I think there's a lot more opportunity there. The only thing you'd add is that if someone wants to walk in and give us a large check that gives us something that we can't resist. We'll always look at that, but we're not actively looking to sell the asset.

Great. Good to know. And yeah, current gold pricing environment, obviously supportive there. And then just last one quickly, like the addition of the project summary table in the release, just noting Mount Rawdon pumped hydro not on there. Can you just give us an update on where the prospect of the pumped hydro piece is following the change of government there and what options you have to continue to process there and defer starting the rehab work ahead of any decision on the pumped hydro piece.

Yeah, thanks, Hugo. Jake will be glad you asked the question. There is a small bit in the actual Mount Rawdon section. We haven't sort of deemed it as a project, but the change of government has worked well for us. Jake and the team have engaged with the new government and it's continuing to progress well. With the completion of mining there, that's allowed some works to be done on site in terms of drilling and everything that would need to be done to finalise the technical study. And then the ongoing negotiation with the government agent that's been appointed to own renewable projects is progressing and we'd like to see an outcome through the course of this year. But it still remains very positive there. And in terms of then that closure and rehab, I mean, that remains unchanged in terms of the way the project would be structured, that closure and rehabilitation costs is the first part of that divestment of the project, and we still manage and maintain that actual closure and rehabilitation obligations.

Great. Thanks for clarifying. I'll pass it on.

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

Hi, Laurie, Barry, Matt and Tim. First question just on North Park's Major Tom E51. It looks like, can you just clarify, are you looking to declare a resource in June 25? And if these open pits hang together, when could that potentially be brought into the mine plan? And just a comment about, you know, does that... Ideally, does that push out the decision for the E22 block cave, which I thought you might need to make circa 2027? Thank you.

Thanks, Dan. I'll hand that over to Glenn to talk about the major tom where it all fits in. I think, you know, what... The second part of your question, you wouldn't see that Major Tom pushes E22 out because we need that bulk tonnage. Ultimately, at some point, Major Tom doesn't fill that void. It obviously would supplement like we've got with E31 now.

So maybe it would... Yeah, that's right. And that's the way we're looking at both Major Tom and E51, Dan. I think just back to the beginning of your question around... Are we running resource models, et cetera? Well, look, I'm going to make the site very nervous by answering this. They rightfully say to me, we need to do the modelling work to understand whether open pits were optimised. And that's really the stage that we're at. We've got a sufficient amount of drilling. to start sort of, you know, connecting the dots between drill holes and putting shapes around the mineralisation footprints. We'll build resource models and then, of course, we need to optimise them and see if they will pull pits, et cetera. What I'm liking is the scale that we're seeing. They're not super large, but we're talking in the range of, you know, millions of tonnes. But the grades are pretty healthy and, you know, we're looking at, you know, sort of, you know, in some areas, particularly at major time of, you know, 1% copper grades, quite low on the gold side. And, you know, pleasingly, these, you know, both... Major Tom and E51 are pretty close to the processing plant. So that's the work that's going to happen in the next six months, and we'll have more of an understanding of where these things are going by way of resources towards the end of the June quarter.

Okay, thank you. Moving to Carl, good to see the OPC approval. Could you just maybe update us on whether the timing of the approval has led to any disruption at all to open pit operations, you know, continuing? Like, is there a potential hiatus at all? What do you need? Or is it seamlessly going to move from stage H and, you know, the trucks and the people keep working? Is there anything outstanding you need for the board to make FID possible?

Yeah, Dan, on that one, there's nothing outstanding really to take that to the board. We will get the final federal consent conditions in February is what's expected. Then we'll take it to the board. When we look at it in terms of the actual open pit at E42, we've been fortunate that the weather that we've had over the last 18 months has meant we've had to process stockpiles for a probably extended periods more than we had planned. And therefore, we'd expect that as stage H finishes through FY26, we roll straight into stage I with no hiatus in mining in E42.

Yeah, that's good news. Just last question for, probably for Matt. You know, Red Lake, good to see free cash flow for two quarters, but more interested in just the operations, which seem to have achieved some stability there. Can you just talk through what is working there and just maybe an update on what's expected for the rest of what you can see in front of you?

Yeah, thanks, mate. The stability is really coming from sticking to a plan and getting a little bit in front of ourselves with some of the development. We've had some challenges around the pace which the team have overcome and so the next two quarters look pretty much the same in terms of going forward. There's nothing materially different it comes forward. But it's really around operational discipline and sticking to the plan and not springing surprises on ourselves every now and then. So that's probably been the key thing that John and the team have been working on. That said, they do have some areas where they've got some contingency that if something does go wrong, we can go and get it. Whereas I think that was probably one of the key areas that we were short on previously. It's not to say we've got 100% contingency, but At this point, I'm comfortable with where that sits. So yeah, more of the same for the next couple of quarters is what we're expecting. And then we're doing some work around really understanding what that looks like longer term. And the primary driver for us on that is going to be cash in terms of making sure we're getting a good margin and generating some good cash out of that business. That's probably the key aspect of what we'll look for in our long-term plans.

Okay, thank you very much for your team's perspectives.

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

Sure. Thanks. Morning, Laurie and team. And Matt, maybe just continuing on from that discussion and that question from obviously good mining and cash performance at Red Lake, but grade does appear to continue to be a little bit variable. Obviously, some of that's just sort of quarterly noise, but Is there anything you can tell us specifically about the grade profile in future quarters? I guess presumably bringing in more upper Campbell material into the mix. And then I guess bigger picture, you know, is grade tracking as you are expecting versus the reserve and versus the grade control drilling that you're doing? Or is there some further rethinking to be done there around, I guess, what actual mine grades look like under the more productive sort of mining methods that you're implementing at the moment?

Yeah, I'll probably answer a couple of those questions in one. The grade is the key focus for us at the moment. And for me, that's around the predictability of where we're operating. So we're not seeing material variances between what we thought was going to be there and what is there. A lot of times previously, the grade variance was driven by where we were mining. So it wasn't necessarily a model discussion. It was more of an operational issue. In terms of going forward, probably the key thing for us will be grade and some of the aspects that go with that, which everyone's aware of around dilution and mining practices, but also looking to make sure we're targeting the higher grade areas. Obviously, that's what's going to be generating us the most cash. So a lot of those discussions around cut-off grades and where we are in discipline are happening now and in a life of mine process. So my expectation is I'd like to see the grades start to go up, and that's what we're working towards. We're obviously generating cash at this point with these prices, but I'd like to see us trying to work through that that starts to go up a little bit from where it is today, but we'll see how we go with the planning process.

Yeah, and just to add one thing to Matt, though, that when we look at it as a combined operation and when we get material through from Koshner, which is lower grade and gives us a base feed, that does bring the overall grade down. So you do see periods where the grades are in the 5.5 to 7 grams, but when you've then also got that base feed for Koshner, that is bringing the... Matt's saying is right. We want to get more material from the higher grades and then reduce the reliance on the cautioner to keep the plants filled.

No, that makes sense. Thanks for that. And then maybe another quick one for Matt. Might be a bit of nitpicking, but I did think that Ernest Henry could do a little better in the December quarter with obviously throughput and production were basically flat quarter on quarter. But thinking back to the September quarter, that did include some scheduled maintenance that was called out. So anything in particular to highlight there for Ernest Henry during the quarter, or is that just sort of business as usual? And obviously you've got another sort of round of scheduled shutdowns in the March quarter.

Yeah, there's probably minor issues there. Probably the key thing for us, I'm looking for a bit of a step up at Ernest Henry over the next half. And one of the key drivers of that will be the ventilation works that are ongoing now. And they've delayed a little bit from where we wanted them to be. But looking to complete in the quarter, in the next quarter, that should open up a couple other areas. Obviously, it's a pretty hot part of the country. And through the summer periods, there are some areas where we've been in areas where we couldn't continue to work. So looking for a step up over the second half and that ventilation works is probably the key to that.

Right, so the December quarter, from a mining perspective, might have been a little bit constrained by that sort of lack of fresh air.

Yeah, more, yes, to a degree. We were able to do works in other areas, but there were some areas that were in withdrawal and we couldn't work in them. So that's where I'm looking to see the step up. So, yeah, we'll have all the areas available once we get that network running. Got it.

OK, thank you very much for the detail, Matt. Cheers.

Thank you. Your next question comes from Paul Caner from Ordmanet. Please go ahead.

Yeah, hi, Laurie and team. Thanks for taking my questions. First one just on cow and following on from Dan's line of questioning. How should we, I guess, think about that grade profile as you transition from stage H to stage I and the use of those lower grade stockpiles, I guess, given... given there's no production hiatus? Should we just assume it's similar to, I guess, previous stage transitions?

Sorry, Paul. Yeah, so what happens, it is fairly similar. So as we came to the end of stage G, the grade, we got to the good grade, then we went back onto the stockpiles. We'd expect the same as we go through stage H and then into stage I, processing those stockpiles. I think that the one difference here for cow now versus that last cutback is that we've got the underground in place. We move up to 2.4 million tonnes in FY26 at sort of two, two and a half times the grade that we will mine out of stage H. So That's what we sort of see as we go into next year. I think the thing as we finalise the plans for FY26 and the sign-off on OPC is looking at that sequence in FY26. When do we finish that? When does the underground ramp up to that 2.4 million tonnes? That will drive the production. But what you'll still see is, you know, production in similar ranges this year to next year, probably a little bit lower as you get some lower-grade stockpile material coming through in the second half of FY26 that can't be completely offset by the underground.

Yeah, no, understood.

Thanks for that. Just as we take the OPC through to the board and get approvals, that's when we'll be able to outline exactly what you'll see going forward.

Yeah, perfect. And then just, I guess, another one on Mangari, that being brought forward now, when, I guess, should we expect commercial production from that asset just for capitalisation and accounting purposes?

Yeah, I'll hand that to Barry. But essentially what we need to see is we'll be running through on lower-grade material through that case. So we've just got to see it to be able to get up to a processing rate, see those recoveries come in, and through that period, there will be some costs that we have to look at in terms of commissioning, Barry.

Yeah, I mean, just confirming that. So we'll follow the usual practice with ramp-up of any mining assets. So we'd probably look at a throughput of 80% and getting to kind of a high level of recoveries of where it should be and then... Depending on when it actually starts ramping up in the quarter, we'll then see where we are and look at putting some of those processing costs on the balance sheet and look at the ounces going into the AIEC calc as well. I don't have the details of that yet because it's not happened, but the usual principles will be applied for.

In short, Paul, we're allowing a three- to four-month commissioning phase, and that's sort of the base load, and then we'll just see how it ramps up.

Yeah, no, they're great. Thanks. Thanks, Laurie. Thanks, Barry. Appreciate the call. I'll pause it on.

Thank you. Your next question comes from Andrew Bowler from Macquarie. Please go ahead.

G'day, Laurie and team. Sorry to harp on about Mongari, but noted the bringing forward of the capex of 80 from next year into this year. Is there any capex that will be brought forward from 27 into 26? Like, for example, you know, an open pit you need to bring forward to obviously feed, you know, the hungry mill that starts nine months sooner than expected.

No, so Andrew, as Barry outlined, we've got to accelerate that mine development and fortunately with the award of the contract and the mobilisation is allowing us to time that with the plant. So what you would see is that next year we would have been ramping up the mining anyway and getting ready for the plant. So 27 versus 26 doesn't look much different. We've got to be mining at a 4.2 million tonne rate in 26 as we would have had to in 27. So we don't expect there to be anything extra coming into 26 from 27 because the project capital for construction will be finished.

Yeah, copy that. I was more referring to sort of, you know, new pits that you need to bring forward. From memory, I think it was sort of eight pits across the, you know, the mine plan. I thought maybe there might be some coming from 27 and 26, but it sounds like it's not. All good. Thanks.

Well, Castle Hill gives us the base there, Andrew. So that's the one that Matt said we're ramping up the others in the other mining centre. So of the three mining centres, the other one provides additional material and then you've got the underground.

No worries. Thanks.

Thank you. Once again, to ask a question, please press star one. Your next question comes from Al Harvey from JP Morgan. Please go ahead.

Yeah, morning team. Policy is unrelated to quarterly, but just wanted to get a better understanding of the release you put out mid-December around the class action filed by ECHO Law. Just any incremental info there on timing and impact that you're potentially looking out for.

Yeah, look, I mean, what we put out on the 12th of December outlines the case. We believe we've met our continuous disclosure obligations and are going to defend that case. It will run through the courts in the next few months and it's not appropriate to make any further comment other than that we believe we've met our obligations and we're going to defend it.

Yeah, understood. Thanks, Laurie. That's all from me.

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

Thank you, Harmony. Look, the results for the December quarter really were built off what we've been trying to do over the last six to nine months in becoming more reliable. That's now given us four consecutive very good quarters and we're very focused on maintaining that as we go. A few things just to leave you with, you know, what you can take away from it is that we are safely delivering to our plan The cash generation is building with $273 million. Further upside in the second half is spot prices around $400 million above what we've achieved year to date. And also noting that we have very limited hedging that we have to deliver in the second half at around 25,000 ounces. So our achieved price... is going to be fairly close to the spot price. We're maintaining the discipline on operating costs and capital investments so that we can actually bank and capture the benefits of the metal prices. And these projects are delivering better than we'd planned and we're getting excellent drill results that really can support sustainable incremental growth and deliver upside for the portfolio. So thanks for your time today and look forward to updating you in a few weeks with our half-year results.

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