Ramelius Resources Limited

Thank you for standing by and welcome to the Remelius Resources March Quarterly Conference 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. Mark Zeppner, Managing Director. Please go ahead.

Thank you, Ashley. Good morning, everyone. Thank you for taking the time to dial into Ramirez's quarterly conference call. I am joined this morning by Acting PFO Ben Ringrose, who will provide some further detail on the financials after I have run through the highlights. As usual, there will be an opportunity for listeners to ask questions at the end. As you will have seen this morning, we reported record quarterly gold production of 86,928 ounces, and an all-in sustaining cost of $13.44 an ounce, with production well above the implied quarterly production guidance range of 70,000 to 77,500 ounces, with all-in sustaining costs also well below our H2FY24 guidance range of $1,700 to $1,800, whilst the all-in sustaining costs also slightly below the range of $13.75 to $14.75 which we provided in the pre-quarterly released at the start of the month. Remelius' free cash flow after everything was $125.3 million, a super quarter in anyone's language. Now obviously it's a much easier job to talk to a set of numbers like these, but the plaudits have to go out to the operations team for all the hard work put in to deliver them safely. As I said at the outset, Ben will delve into the financials further, but I wanted to highlight upfront that we expect very strong cash flows to continue for the short to medium term, remembering that the quarterly result was derived from an average sale price just above $3,000 an ounce. In terms of group gold production, this was 27% higher than the prior quarter, with that outcome primarily attributable to the increased production at penny. Eridanus, Symes and the Edna Mae Underground. Given that we anticipate strong performance from both our Mount Magnet and Edna Mae hubs and will continue through the June quarter, we have upgraded full year guidance to 285,000 to 295,000 ounces from the previous 265,000 to 280,000. Anywhere in this range would represent a new full year production record for the company. Along with the upgraded production guidance, we have also lowered our cost guidance. We are now expecting oil and sustaining costs for the second half of the financial year to be in the range of $13.25 to $14.25, which should see full-year oil and sustaining costs fall into the $15.50 to $16.50 range. The previous full-year guidance, which was provided following the CVO1 conveyor repair at Mount Magnet in the December quarter, which was an event that incurred some one-off costs and required temporary crushing in a haulage solution had been set at 1,750 to 1,850 an ounce. In terms of the split between Mount Magnet and Edna May, fairly even split between our two hubs, nearly 46,000 ounces poured at Mount Magnet and a touch over 41,000 ounces poured at Edna May. At Mount Magnet itself, lower strip ratios and improving grades at both the Eridanus and Brownhill open pits led to a 62% increase in gold mines compared to the prior quarter, where we mined a total of 588,000 tonnes of oil grading 1.6 for 31,000 ounces of contained gold. Open pit oil mining rates and grades are expected to increase further. at Mount Magna in the June quarter. Touching on penny, we do have multiple stoking areas now available, which helped drive a significant increase in autumns, up 42%, and grade mines up 13% over the period. As a result, contained goldmine from penny increased 60% quarter on quarter. In terms of haulage, movements proceeded pretty much to plan, with only minor inconvenience due to rain. with 52,420 ore tonnes at a grade of 13.74 by truck-to-mount magnet for 22,700 recovered ounces. We do anticipate penny production to continue at similar levels for the June quarter. And you may have noticed in the quarterly a photo of one of the stokes at penny where the team is doing an excellent job of minimising dilution on both the footwall and the hanging wall. as well as retaining the brow and the veranda which is created by the stope itself. I was on site only a couple of weeks ago and saw a number of similar examples in other sloping areas and I would go as far to say that what the team are doing on site at the moment is world class relative to the scale of that operation. Over the haulage at Edna May, all hauled to Edna May from Martyr, Tampion, Symes totaled just over 470,000 tonnes at a grade of 2.24 for almost 34,000 ounces of contained gold. There remains approximately 1 million tonnes of ore at an average grade of 1.62 on stockpiles at those operations as at the end of the quarter. Over to project development, Eridanus and Galaxy continue to be the focus areas at Mount Magnet. Resource development drilling targeting shallow high-grade veining below the current pit design at Eridanus produced excellent results, only recently received, including 14 metres at 6.2 and 20 metres at 14.5. These and other numbers will feed into an updated mineral resource estimate to be released once the model has been completed, which we expect in the not too distant future. At Galaxy, ongoing mine development has reached the sixth ore drive. and the new Mars decline is developing further at depth. Underground diamond drilling targeting the Mars and Saturn ore bodies was completed during the quarter with results including 4.4 metres at 16.6, 5.7 metres at 10.3 and 14.5 metres at 6.7. Resource definition drilling of the Saturn BIF itself began in the March quarter with assays expected to start feeding through this quarter. We've also completed dewatering of the satin pit, which sits above the satin ore body, obviously, and will allow development of the decliner across to the satin ore body itself. Up at Kew, a program of diamond core RC and air core drilling was completed at the end of the reporting period. The program comprised resource definition, some infill, some extension, and also some geotech drilling of proposed mining areas, including Breaker Day numbers, Leviticus, Waratah and the Amarillo open pits, as well as some deeper holes into the Breaker Day underground area. Lastly, we remain on track to deliver a PFS-level study on the combined development of the Rebecca and Roe gold projects and also an update on the Edna Mainstates III project mid-year, which has commenced a review process. As always, further detail on the exploration programs themselves that are underway at our various mines can be found in the quarterly. That covers the highlights from me. I'll now hand over to Ben.

Thank you, Mark, and it's a pleasure to be here with you all today, especially considering the record quarter that we've just had. These results speak to the strength of our assets, operations and team, with the obvious highlight from a financial point of view being $144 million in operating cash flows. After investments in exploration and mine development, the resulting closing cash and gold balance for the quarter was $407 million, a 44% increase on December. Putting this into perspective, this represents over $1,600 in operating cash flow per ounce produced. During the quarter, we sold just under 84,500 ounces at an average realized price of $3,014 an ounce. which included a mix of spot and committed forward sales resulting in revenue totalling $255 million for the quarter. Gold sales for the quarter were less than gold production with the quarter end falling on the Easter weekend. This resulted in a higher than normal bullion balance at the end of March. This bullion was sold in early April which evidently worked in our favour with the increase in gold price. I realised spot price for the quarter to date in June is $3,600 an ounce, 5% higher than the closing March price. Whilst the gold price certainly impacted the quarter, this is only part of the story, with the oil and sustaining costs also reducing on the improved grades and ore mining rates. As Mark noted, the oil and sustaining costs for the March quarter was $13.44 an ounce, which is 27% lower than the prior quarter, with these lower costs being driven by both production centres. The resulting all-in sustaining cost margin, which is the realised gold price left the all-in sustaining cost, was 55%, a significant increase on the December quarter. At Mount Magnet, the all-in sustaining cost was a touch over $1,000 an ounce, representing a 38% reduction on the prior quarter. This was achieved on the back of lower unit costs, with 33% more tonnes being mined for a comparable cost, as well as improved mill head grades. which were up 27% on the prior quarter. This result has been driven by the multiple stoping areas being available at Penny and mining at Eridanus now having passed through the lower grade section of the ore body and accessing the higher grade ore rich zones of the pit. Moving on to Edna May, the oil and sustaining cost there was just under $1,700 an ounce, representing a 16% reduction on the prior quarter. The lower oil and sustaining cost was driven by the higher mill grade with all projects within the hub reporting a higher grade than the prior quarter. The standout here was Symes, which reported an impressive mill grade of 3.36 grams per tonne. As we have noted in the past, the Edna May oil and sustaining costs include the 319 per ounce non-cash charge for the drawdown of existing Tampia and Marta stockpiles. Ignoring this, the oil and sustaining costs for Edna May would have been under $1,400 an ounce. A total of $21 million was reinvested in mine development and resource definition in the quarter, which focused on the Galaxy underground mine at Mount Magnet, and resource definition works at the Rebecca, Rowe and Kew gold projects. Pleasingly, we have been able to reduce our growth capital guidance for FY24 to $45 to $50 million, which is down from our original guidance of $50 to $60 million. This guidance includes an allowance for the development of Q as we maintain our fast-tracked first order early in the new financial year. In relation to exploration and resource definition, the more astute followers of Remelius will note that our year-to-date investment in exploration is currently at $30 million, which is where our original guidance for FY24 sat. We don't shy away from the fact we are investing more into the ground in this current environment. notably at Kew which was acquired during the year and Eridanus which is presenting very promising drill results with open pit and underground options being considered. This has resulted in our guidance for exploration for FY24 being increased to $40 million. As Mark noted earlier our closing cash and gold position was $407 million which coupled with our $100 million debt facility leaves us with a very healthy war chest. We appreciate that cash isn't the only measure of liquidity. It is worth highlighting to the listeners that we have further reduced our credited days in the quarter, which now sits at 33 days. As Mark mentioned earlier, this is not a one-off quarter, with more like this being expected in the short to median term, which is reflective of the investments we have made over the years which are now coming into fruition. Focusing on the immediate June quarter, we expect this to be comparable to March with respect to production, costs and cash generation. which will leave Remelius with well in excess of $500 million in cash and gold come 30 June. On a personal note, it's been a pleasure to have been able to discuss these financial results of Remelius with you over the past few months and I look forward to welcoming our incoming CFO Darren Millman in May. And with that I'll hand back to Mark.

Thanks Ben. If we can now open the line up to questions please Ashley.

Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Andrew Bowler with Macquarie. Please go ahead.

Hello, gents. A couple of questions from me. The first one, just on EDMA, you know in the quarterly that you expect stockpiles to be hauled there and processed out at the end of calendar year 24. Just concerning that the underground will likely cease at that time as well. And if so, how does the second half of this calendar look in terms of volumes to the underground? Will there be ramp-up in times as we see good buy cuts or will it be relatively flat from here or even see it winding down a bit? Cheers. Cheers.

Thanks, Andrew. It's Mark. You may have missed it, but the Ednamay Underground will finish this quarter. We'd love to be able to mine a bit deeper, but as highlighted late last year, there is high-pressure water that was encountered with deeper drilling, which is really preventing us from going deeper than where we're currently developed to. So from pretty much June onwards, we'll be relying on stockpiles only. And that should see us out to the end of the calendar year, as you mentioned. Oh, no worries. Definitely missed that one.

Thanks very much. And in terms of capital guidance reduction this year, I mean, obviously a positive. There were some comments made earlier, but I didn't quite catch the reason behind that. Is that some spending pushing into next financial year or are things just looking cheaper than what you'd forecast at the start of the year?

Hi, Andrew. It's Ben here. That reduction... capital cost there has been driven by accessing the operating all at Galaxy. So there's no deferral of that into FY25. It's just we're hitting the operating all sooner than we expected there.

No worries at all from me, James. Thanks.

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

Thanks. Morning, Mark and Ben. So in the quarter, yeah, there's a good step up in grade. Just wondering if there was any areas of outperformance versus your plan and should we sort of expect that to continue? And that's noting, I guess, that your cost guidance has come down after going up. So just wondering if there was any surprises on the upside there in that quarter.

Thanks, Alex. I think in terms of grades, Penny's performing as expectations. I think we flagged better grades at the bottom of Eridanus, but I think we're getting some pleasant surprises there in the bottom of the pit. with these horizontal high-grade veins, which we're actually seeing not only in the bottom of the pit, but in deeper drilling. And Ednamay Underground, whilst it's in its last phases, alluding to the point that Andrew was making, we had some better grades there. And I think we've had some pleasant surprises at Symes. And obviously, when you have some high-grade sections in an open pit, you can stockpile them separately and preferentially haul them to the mill separately. and have an average grade stockpile remaining. Yeah, okay, that's helpful.

Sorry. Yeah, so I already got your comment on NMA winding down FY25. Just if you had any sort of preliminary idea about cost, putting it onto care and maintenance, and if there's any sort of nasty surprises around non-cash accounting components with the stockpile, just if you had any idea to sort of guide us ahead of that. Oh.

I'll let Ben answer the accounting one. Look, we think it's pretty minimal if we are faced with a care and maintenance scenario at Edna May. In terms of people, we'll obviously redeploy them and we're in a little bit of a process of that with Marta and Tampia prior to that, redeploying people, obviously minimising redundancies where possible. We don't see that there'll be a big number involved in the ongoing care and maintenance costs I would imagine less than a million dollars a year in terms of that carry maintenance. In terms of the stockpiles and your canning treatments, Ben?

Yeah, there's no nasties expected there going forward. We keep a pretty clean set of books there and the grade supports the value we've got on the balance sheet. And with the current gold price, there's quite a bit of headroom there, to be fair.

Yeah, okay, sure. Thanks very much, guys. Thanks, Alex.

Your next question comes from Paul Caner with Ord Manette. Please go ahead.

Yeah, hi Jens. Thanks for taking my question. Just a couple from me. Just firstly on penny and that grade, how much variability do you see sort of quarter on quarter or do you expect it to, I guess, remain fairly consistent now given the increased stoping fronts?

Yeah, without looking at, Paul, sorry, without looking at some of the quarter-by-quarter grades, I think they'll vary a little. Within, obviously, what's hold to the plant, you'll get variability from as low as 7 grams and as high as 20, depending where you're mining and if you're mining stoping or development ore. But I'd like to think you'll see... average grades there or thereabouts in terms of the reserve and what did we do 13.7 I think we're in an area where ideally it sits between sort of that 13 and 15 grams but there might be a little bit of variability depending on where you're mining.

Yeah understood and then maybe just following on from From Alex's question on Edna May and thoughts maybe around stage three and maybe not going on care and maintenance. Obviously, a completely different economic environment now. So I just wanted to get your thoughts on how you're thinking about that.

Yeah, we've commenced the review. We've gone back and we're going to look at our numbers, check our resource. We've obviously mined some voids below the open pits. Now that we've got our Mount Magnet mine plan quarterly out of the way, the team has got some bandwidth to look at that and we've commenced that process. So probably a bit early to say much more at the moment, Paul.

And when do you have to sort of make a final decision on that to sort of avoid, I guess, a production gap?

I think being up front, there's a production gap no matter what you do from this point forward, given that... The cutback is, let's say, 18 months. So even if you started tomorrow, you're looking at a production gap. But I suppose we're more concerned about making a sound decision with the right returns. And if there's a production gap, I'd like to think that the Mount Magnet production and the cash flows there can more than adequately get us through any production hiatus at Edna May. But we want to do Edna May for the right reasons.

That makes sense. That's it from me. Thanks Mark.

Your next question comes from Rob Walsh, a private investor. Please go ahead.

Mark and Ben, congratulations. Not enough said and well done on the quarter. Fantastic performance. A couple of quick questions. Q approvals, what's the progress and when do you see access to the sort of top of the break of day ozone in the open cut?

Thanks, Rob. It's Mark. I appreciate your comments at the outset there. In terms of Q, we've done about three lots of back and forwards with the department. We think we're pretty close to getting approvals. We've got some of the approvals through, but obviously the main mining proposal approval is the key one. In terms of access to the sweet spot of Q, which you're obviously very familiar with, assuming we get started early in the financial year 25, we probably expect to see that early calendar 25, so sort of January 25. To that point, we're actually looking at what we need to upgrade. It's a nice problem to have in terms of the Mount Magnet gold room. gravity circuit, electric running circuits, because if we have the break of day, you know, white heat, high-grade zones coming in with penny in full cry, we need more gravity and gold room capacity, if you like.

Yeah, good position to be in, I think. So that was it. Well done. Thanks, Rob.

Once again, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. Your next question comes from Ashley Chan, a private investor. Please go ahead.

Thanks, Ashley. Cheers, Mark. Cheers, Ben. Thanks for another great quarterly report. As a shareholder, we certainly appreciate the well-run company. I've just got two questions. The first one concerns about the leverage of the Remelius resources, now that gold price is getting above $3,500 Aussie dollars. What is the leverage of the resource size to the gold price, specifically from your last presentation or in Mount Magnet in, say, Eridanus, the two options, and Hill 50? At a high gold price, does the $2,500 to $3,000 shelf, $3,500 shelf, do they provide arithmetic increases in resource size, exponential increase in resource size, if you can provide some colour on that.

Thanks, Ashley. I did receive your email on some of these questions earlier. In short, it's a bit early to make comments about pit optimisations and resource conversion at higher gold prices. What we did is really run a $2,500 an ounce shell recognising that we were still drilling the resource. We had exploration target in there. We've only just completed the number. So we really just ran one scenario. And so I wouldn't even say it's at scoping study level. So you need to let us convert the drilling to resources, ideally indicated. And then you'll see the full suite of analysis in terms of the open pit and underground. potentially a pretty big decision to make there. It's, again, another nice problem to have. What you'll also see, in addition to the drilling below the pit, which is pretty exciting, we need to do more drilling around the periphery of the pit, which we can do now, but the drilling, more drilling from the bottom of the pit, obviously we can't complete that until open pits mining is finished, which is in another couple of months' time. We obviously want to be finished mining so then we've got free access to the pit. So that drilling around the periphery of the pit will obviously inform what the cutback looks like. So there's not much point going off doing a lot of detailed analysis, various gold prices when you're still drilling out a resource and adding ounces and ideally upgrading the grade, which is what we're also hoping for.

Thanks Mark for your response. My second question is on the standard question around hedging policy. Has the company, sort of at $3,700 gold price now, you have about $180,000 hedged at $3,000. So it's about $120, $130 million out of the money. Does the company actively seek shareholder feedback on what the hedging policy should be with its major institutions? And if so, what is the feedback of your major active fund managers, whether they're on the hedging policy? Are you looking at alternatives if it's a risk management strategy in this tent so that the higher gold price maybe out of the money puts are quite cheap to buy? And is there any plan to have an independent review of the hedging policy? Because in your quarterly report you say that as part of the risk management program you're fixing the diesel price, but that sort of implies that the forward gold sales are not part of a risk management program?

Firstly, they are. In terms of getting feedback from shareholders and institutions, we don't actively ask that, but rest assured we get feedback and it's many and varied. We have flagged to the market that we'll be running off our books more aggressively. Sort of at the current rate, we'll be at about 160,000 ounces in June. Fast forward another 12 months at the current trajectory, it'll be about 100,000 ounces in June 25. In terms of options, we are looking at options.

Ben, you might want to... Yeah, thanks, Mark. Yeah, we definitely are looking at whether we use put options, zero cash flow collars, which both of those, as you mentioned, are quite meaningful at these prices. So that's something we're currently looking at for sure.

And just lastly, we do have regular conversations with an independent consultant on hedging and on options. So it's not something that we're hitting the sand on to any degree, Ashley. Alrighty.

Thanks, Mark, and thanks, Ben. Thank you.

Once again, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. We'll now pause momentarily to allow questions to be registered.

Doesn't look like there's any more, Ashley. So before we finish up, I'd just like to summarise with two points. Firstly, Remelius managed to produce record production whilst many others were impacted by weather interruptions. And cash flows going forward are expected to be exceptionally strong. As Ben mentioned, with our cash and gold forecast at June 30, we'll earn in excess of $500 million. And secondly, watch out for updates with respect to our Edna May Stage 3 review and the Rebecca Rowe PFS in the middle of the year, not forgetting exploration drilling results and mineral resource updates at our growing Eridanus project at Mount Magnus. Thank you for listening in. Enjoy the rest of your day.

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