Regis Resources Limited

Standing by, welcome to the Regis Resources Limited quarterly update, followed by a question and answer session. If you wish to ask a question, you'll need to press the star key for Managing Director and CEO. Please go ahead.

Thanks, Rachel, and thanks, everybody, for joining us on this busy day. Look, I'd just like to introduce around the table. Joining me is John Latto, our CFO, Stuart Guler, our COO, and Ben Goldbloom, the head of IR. Look, so we'll run through the March 22 quarter results and then open up for Q&A at the end. Well, March has certainly been a quarter for us of progress. We saw the LTI FR rate reduced to one and pleasingly remaining below, or pleased to see it reducing, but also seeing it sitting below the WA gold industry average, which is a pleasing result. We also saw a number of improvements at both Duketon and Tropicana that have now been completed, and we're now preparing for a strong June quarter to finish off the financial year. At Duketon, the oxygen addition plant modifications have finally been installed and commissioned, enabling increased feed of the previously stockpiled high-grade but metallurgically complex Toohey's Well Ore. We've improved grade control and model reconciliations at Mullard, allowing us to mine the high-grade oak pit with more confidence. And finally, we've returned to stoping in the high-grade main zone at Rosemont Underground. At Tropicana, our material movements continue to, total material movements increase with a 13% improvement over the quarter. Mining at Boston Shaker Pit in the quarter was focused on waste stripping, setting up this quarter for improved access to higher all-grade feeds to the mill. So overall, a combination of these improvements will see us deliver a lift in performance for the June quarter and meeting our FY22 guidance. For the March quarter overall, we produced just over 103,000 ounces of gold at an all-in sustaining cost of $1,574 an ounce. That's Aussie dollars. At Duketon, we're steady at 75,000 ounces for an all-in cost of $1,672. And Tropicana... 28,000 ounces at an all-in cost of $1,216. Now, I just want to make some comments here on some of the COVID-related delays and impacts that we did experience. And there are a number of different areas. But look, in the quarter, we completed the installation of the additional oxygen sparging and various process control improvements in Garden Well. And this was great. But unfortunately, While it's now commissioned, these quarters did experience some COVID delays. Some of them were originally scheduled to be completed in the middle of the reporting period, that is during February, but they were completed much later in the quarter, in part due to labour and in part due to materials. And further, the final element of our Oxygen Enrichment Programme has been the high shear reactors and those modifications were delayed until mid-April. This project was delayed approximately a month as specialist installation couldn't enter the state following the delayed forwarder opening from February to March. Now whilst the impact of these delays on the quarter was disappointing, we are pleased the modifications are now complete and performing as expected. Also, overall, ships at Duketon during March, now this is during March month, not the March quarter, were reduced by approximately 4% due to COVID-related absenteeism. In most cases, apart from what I mentioned before, and they were delays really because of the special nature of the people that we lost access to, but in most cases across our operation, we were able to manage the absenteeism in the short term. But, you know, these things have a build-up in impact. Looking more closely at our operations now, Mullard improved with production of around 20,000 ounces at an all-in sustaining cost of $14.99. And the lift was greater all presentation coming from Coopers and from the Gloucester pits. The increased grade control and geological modelling, as I mentioned earlier, has improved the predictability and given us the confidence that we expect further improvements over the current quarter. Garden Well produced 32,000 ounces at an oil and sustaining of 1678. As oil produced from stage five started to increase and we saw that improving. As I mentioned earlier, the high shear reactor was commissioned in April and is currently running at the required throughput and recovery rates, which we're really pleased to see. These plant modifications, as I said, are now complete and we have been increasing the high grade to ease well feed and we'll continue to do this now through the quarter and beyond. One thing around the Garden Well plant that I wanted to mention was we had the gold bar outturn experience a short-term issue, and this related to the elution circuit at Garden Well, and this in turn resulted, it meant that there was a delay in being able to extract that final step in the extraction of gold and turning it to gold bar and we saw an abnormal build in golden circuit at the end of March. This was to the tune of about 9,500 ounces higher than what the GIC was at the beginning of the month. Now, this didn't impact on overall recoveries, but it did impact on the timing of gold bar pouring. The issue was relatively quickly resolved, and the ounces have been stripped and outturned now, and they've been stripped during April in addition to the normal rate of production and GICs. are heading back to their normal levels. Now, the reason that this is noteworthy, even though it's really, in the grand scheme of things, not a particular consequence to our overall production, it is noteworthy that these ounces had an approximate value of $25 million that don't show in the March financials due to the timing. We, of course, will see them in the June quarter. Look at Rosemont. We produced 23,000 ounces at an all-in cost of $1,820 an ounce. We do note that mining ceased in the Rosemont main pit, as previously noted geotechnical issues. Pleasingly, we've recommenced stoping from the higher grade main zone in accordance with our plan, and that'll drive higher feed grade to the mill in this quarter. Turning to Tropicana, we continue to deliver as planned or as expectations, producing 28,000 ounces of gold at an all-in sustaining cost of $1,216. Mining, they're largely focused on waste stripping, both at the ongoing prep work at the Havana cutback, but also in Boston Shaker as it prepared for good access to high-grade ore. Boston Shaker's in this interesting space now where it's quite tight down the bottom, and rather than being smooth ore, it tends to go in surges. And we saw during the March quarter a particular focus on waste movement, and as I said, it's now shifting to poor-grade ore production. We will see Boston Shaker Pit completing this calendar year, and we're currently expecting the last of the ore to be mined late in the September quarter or early in the December quarter. Now, the underground mine continued to produce and perform well with no standout points, which is great. That's what we like to see. The Havana cat-back is on track to access high-grade ore in the second half of the calendar year, so that's next financial year for us. And as the proportion of Havana ore feed For the mill increases, as we expose more ore, we will be seeing a return to historical production rates of the 450,000 ounce plus per year at 100%. We remain very excited about this asset, very pleased with the way it's performing, and it continues to grow as a reliable producer and cash engine that we bought it for. On the financials, we sold 76,000 ounces of gold and an average price of $22.60. Now, that $22.60 is after the impact of our hedges. This generated a total of $55 million in operating cash flow, approximately $11 from Duketon and $44 from Tropicana. Now, I would note that all of the hedging does get attributed to... For historic reasons, it gets attributed to the Duketon sales, so there is a skew on that impact, and it's one of the reasons why Duketon is... is low relative to Tropicana. The reduction in the operating cash flow also was relative to the prior quarter, was primarily driven by a reduction in the gold sales. And I noted earlier the timing issue of the gold pause at the end of the March quarter, which saw $25 million in gold sales, effectively the equivalent of sitting in GIC that we couldn't get out before the end of the quarter. And as I mentioned, that's all been recovered now and we've moved on, but it did impact on the quarter reporting. Our capital expenditure was reasonably consistent at $59 million, largely relating to underground development associated with Rosemont, Garden Well South, and the Havana cutback, and also some other deferred waste mining costs in our other open pits. Other notable cash movements were $13 million invested in exploration at Duketon and at Tropicana, and along with the McPhillamy's project. And we also obtained a net tax refund of $10 million in the quarter. And we're undertaking some more work to quantify potential additional refunds that are due, that may be due. All of these movements resulted in cash and gold on hand at the end of the quarter of about $167 million. But again, I remind you that this excludes those 9.5 million ounces that got caught up in GIC with the extra $25 million. On growth, our growth projects made good progress during the quarter. Gardenwell South, the primary pumping station was commissioned and First Oil, which came from development, was delivered to the mill. Now, the team are encountering the typical challenges we'd expect with new start-ups, but we are anticipating stoping to commence late in the June quarter, although I would note that our guidance these stope tons are not critical to meeting that guide so they don't sit on that critical path. But we are still chasing that as an opportunity nonetheless. At Gardenwell Main, the potential underground project under Main Pit, we completed the planned additional drilling. However, we saw the study here was delayed. Again, we saw general challenges around access to specialist consultants COVID and really the labour shortages at the moment having an impact. The team there is still evaluating optimum extraction methods. We do now expect the results of this study later in the June quarter. Now I've got no major news on McPhillips but we do continue to see improvement in the engagement with key departments which is very encouraging and we see that positive progress is being made. At Tropicana We saw an updated resource and reserves, which delivered a maiden reserve for the Tropicana underground mine area, which is obviously a new area relative to the Boston Shaker, and we're very pleased with that. It's another step forward in a new additional underground mining area to the Boston Shaker underground, which also continues to grow, and that whole area is continuing to grow as we put more time and money into the exploration and development of it. As I said before, each time we look at the Tropicana asset, we see more and more potential to grow the reserve base with each of these main areas still open at depth. With a strong history of reserve replacement, we're looking for this asset to be producing good cash flows for the JV for another 10 plus years. Regis will provide an update on our group resource and reserves, specifically around Duketon and the consolidated rest of the group in this current quarter. Now, the last point today is about John Latto, our CFO, who has given notice after three years in the role and will leave later next month. I'm very pleased to advise that Anthony Riccici has been appointed to the position of CFO. Anthony is a chartered accountant and is an experienced CFO who spent 15 years working with the ASX listed companies in the gold sector. Prior to joining Regis, Anthony was CFO at Wallooner Resources for five years and spent more than 10 years with Resolute in senior finance and accounting positions, including the last couple of nearly two years as GM finance. Before moving into commerce, Anthony commenced his career with PwC. He's a great addition to the Regis team. Now back to John, I'd just like to take this opportunity on behalf of the board to sincerely thank John for his financial leadership of the company over the past three years. And in particular, his focus on improving the financial systems and procedures and his role in leading the financing of our acquisition in the Tropicana joint venture last year. Thanks, John. John will finish with Regis later next month, and Mr Tony Bevan has been appointed the interim CFO, while Anthony will then transition into the role by the end of the September quarter. So wrapping up, as an overall comment on risks, look, I think even more comes out this morning on the risks around COVID. It's clear the broader general labour shortages and the ongoing COVID-related impacts and inflationary impacts on our input costs remain a risk to overall performance. But I don't think my comments are any surprise, and they're certainly not the first to make that observation. It is a common ongoing theme across the industry at the moment and something that we are all working hard to manage. On the positive side, we see good progress at our growth projects at Gardenwell South and also our assessment of Gardenwell Main as a potential future production source. And pleasingly, there's a huge amount of work that's been done at the end of March and very early in April to position Duketon and Tropicana to prepare them for a strong June quarter. So, look, I'll hold it up there. I'll hand it back to Rachel and happy to work on any questions that anybody might have. Back to you. Thanks, Rachel.

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 Peter O'Connor with Shore and Partners. Please go ahead.

Hey, Jim, John, Ben. John, was it something I said or something I wrote? Firstly... OK, good. Tax refund. Just remind me, what are you digging again for? And what sort of content would that be? Sorry, Peter, what are we digging for, did you say? The tax refund. You said there's potentially more to come?

Oh, yeah. So, look, we... We are still working with PwC to quantify what that is. I think in the last quarter we said, you know, it would be somewhere in the region of circa sort of 12 million. You know, we expect it to be at least that. In fact, you know, it could be north of that, but we are continuing to... We're continuing to work with PwC on it.

OK, thanks. Jim, we've been discussing it this morning, the COVID impact, but just to take it on the call... Is it site-specific in WA? Is it broad-based WA? Is it gold? Is it lithium? Is it iron ore? It just seems to be mixed messages we're hearing out of your peers over today and the last few days. And I know you've talked through your experience, but how do you see this play out in the June quarter?

Mixed messages. Mixed messages, what, in terms of some people not seeing any impact at all?

Yeah, look, some are saying they're not FIFO, so it's not a deal. Others are saying they're withdrawing guidance for this quarter because it's all too hard. So just that way, mixed messages. I'm wondering what your perspective is.

Yeah, look, I mean, I'm seeing different messages, but on the same theme. I think we're all seeing impacts. They're either in the short term, certainly in March, when the borders opened up, we lost a number of not necessarily because of the contact rules in WA. We lost a lot of people, not because they had COVID themselves, but because they were deemed to be close contact. So it's a bit like a nuclear sort of reaction. One person gets it, but 10 people around them are deemed as close contact, which I'd point out in New South Wales, I know because we're dealing with some of the coal mines over there just related to water and the like, that the resources there were deemed a critical industry. And if you were a close contact, you could continue to go to work as long as you weren't exhibiting symptoms. Now, we couldn't do that. You couldn't do that in WA. And as a result, during March, we had about 1,000 shifts that were lost across Duketon due to people being either with COVID or more the point being in their room wondering whether they're a close contact and having to isolate. Now, that sounds like a lot, right, 1,000. Now, it represents about 4% of the shifts that would actually work, but it's still a lot. You know, 1,000 people, you know, your mining engineers are short. You know, you can always figure out how to cover them in the short term, but these things can have a compounding impact if it continues. And we're keeping a very close eye on that. You know, we're conscious of the fact that the rules for mask wearing and controls are changing later in the week and the rules for close contacts have shifted. So I think the risk is still there now, probably more around potential for people that possibly catch it rather than be tied up because they're a close contact. But we're watching that closely. And I think more broadly... There's a lot of activity going on in the state. There's a boom in inverted commas, a lot of movement of people going on. And the borders have, up until recently, the borders have been a part of a problem of getting people to relocate. they're down now, but I think it's probably safe to say that it wasn't like dropping the floodgates. People haven't rushed across here. Frankly, people on the east coast who stopped working in WA probably found other jobs. They weren't sitting around waiting to come and take the honour back of working for us. So there's labour availability. We had materials became harder to get hold of. We needed specialised stainless steel for our our slam jet installations, and normally you'd be able to find that pretty easily. We couldn't. It took us a few weeks to find it because there just wasn't any supply. So we're seeing, we've certainly experienced those impacts during March. I'm not sure they're going to go away. They might take a different form. Labor is still particularly, it's getting a little bit easier. You know, we saw a 10% kick-up in applications as soon as the borders went down, but still, you know, it all takes time and there's risk and there's demand for good people. So there's plenty of challenges around. There's no doubt. I mean, you know, the risk is there. We do our best to manage it.

Tim, just on that, when you talked about going, well, main study and access to consultants, is that... Do you need, like, bums on seats in WA or is this desktop work and... Is it a dollar value issue that you're just not getting people because of what you're paying or the industry's paying?

Well, it's sort of that bit relates to there's a bit of a boom going on. You know, you can't, you know, once and we're all, you know, we all know the story of, you know, a couple of decades ago, all the geos were driving taxis and now you can't get them for love nor money. It's the same with consultants. You can't turn them on and off like a tap. You want to You know, you want to use specific consultants that you trust and rely on, and just because you want them doesn't mean that they're necessarily available at the moment on your timeframe. So you've just got to, you know, that's the sort of thing that as well causes delays in some work being done, right?

Last one, cost. Can you give any more granularity about the cost pressures that you're facing, be it diesel, consumables, freighting material in?

Yeah, look, I mean, diesel's a great one. You know, look at how much it's gone up over the last three or four months. It's gone from what was probably circulating at about $1 a litre or something, and it's up at, what, $1.38 or something at the moment, I think. I think, John, $0.10 a litre movement is the equivalent of about, what, $0.10 is the equivalent of about $20 an ounce, wasn't it?

About $25 an ounce.

About $25 an ounce. So, you know, you've got diesel price pressures. And I know that things, other consumables, grinding media, I just can't remember off the top of my head what that's gone up, but I know that that's increased and cyanide's increased by at least 50%. So there's a lot of things that are putting pressure on across the industry. You know, it's not just us. And the pleasing thing for us is that all the modifications that we've done you know, while it was a pretty modest capital, we've actually been able to improve the dissolved oxygen efficiencies in our circuit. And as a result of that, we can now back off on some of these chemicals that we've been using for the last three or four months to keep our recoveries up. We can now back off on those. So we're pleased with... That's a bonus that we're seeing from completing the commissioning of the oxygen... modifications that we've done for oxygen enrichment through the circuit. Thanks, Jim. Thanks, Pete.

Again, if you wish to ask a question, please press one on your telephone and wait for your name to be announced. There are no further questions at this time. I'll now hand it back to Mr. Beyer for closing remarks.

Yeah, thanks, Rachel. Look, we know it's a particularly busy day. People are moving from one of these to the next, I'm sure. So thanks, everybody, for joining us. Please, if you've got any questions, feel free to drop us a line, and Ben and John and myself will do our best to answer them. So thanks, everyone. Have a good day. And once again, thanks very much, John. Good luck with the future.