Regis Resources Limited

Thank you for standing by and welcome to the Regis Resources Limited full year results. 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. Jim Beyer, Managing Director and CEO. Please go ahead.

Thanks Sari and welcome everybody to our call on the full year financial results for FY22. Joining me is Elena McCready, our COSEC, Ben Goldbloom, Head of Investor Relations, Tony Bevan, our Interim Chief Financial Officer and Stuart Guler, our Chief Operating Officer. Alright, so you should see on your screen two things. PowerPoint presentation which we'll step through and a photo of myself unfortunately for you. All right, so turning to page slide two please operator. I'd just draw your attention to the cautionary statement. We do make some forward looking comments and discuss targets later on so I'd just draw your attention to that statement. Slide three, thanks. Look, we've had a year of record production, as we've noted earlier, and it's great. It's been our first full year of production from Tropicana, contributing to our performance as well. At the same time, we've been making a considerable investment in the future and our future production levels. Overlaid with this has been a very challenging environment with the impacts of COVID and the inflationary conditions clearly having an impact on our results. on our financial results. Our EBITDA was $336 million, that was after a $74 million write down, giving us an EBITDA margin of about 33%. Our cash flow is still reflecting the strength I think of our operating business, $347 million. We ended the financial year with 30 June of cash and bullion at $231 million and that's getting an AISC through the full year of 1556, giving us a margin of $756 an ounce, but also noting in there that we had $161 million in growth capital through that period as well, as I mentioned before, considerable investment in our future. That led us after a non-cash post-tax adjustment of $60 million to a statutory net profit of $14 million. Now with this context as I mentioned of the external impacts and importantly a couple of aspects here, the conservative nature of our balance sheet and what we see and our board sees as a positive outlook for our operations, the board had confidence in delivering a full year dividend of $0.02 fully frank shares. So that's a bit of a high-level summary of our financials. If we turn to slide four, and I know that today has a focus on our financials, but there's a couple of things I just wanted to touch on around our ESG front. Slide four, please, operator. So the first thing is I just highlight the fact that our safety, as measured by lost time injury frequency rate, quite a pleasing level. I mean, you're never happy until the number is zero, of course, but we do sit more than 40% below the industry average. Our diversity is very strong, I think. We have around about 23% female as a measure of diversity, which is certainly above the industry average, which is sitting a few percent below that. Looking at our environment, we had zero non-compliances and no significant incidents. Pleasingly, I guess, and the one thing I did want to also highlight on this slide was we've approved and are underway with the construction of a nine megawatt solar farm at Duketon. Of course, this has got two advantages to us. No doubt people are pleased to see the impacts of carbon reduction and reducing our carbon intensity over time with this, but also importantly This has a quite significant impact on reducing our power costs as this will be fed into the power grid that we have down at Tukton South. So a great project that will take about 12 months or so to get that online completely, but we're pleased that we've been able to get that one moving. So what I'd like to do at this stage now is hand over to Tony, who will talk through a little bit more of the detail of our results. and background to the full year. Thanks Tony, over to you.

Thanks Jim and if we could turn to slide five please. So this is just a highlight summary and some of the further slides will talk in more detail around the net profit and cash flow but I'll just highlight there the increase in production and revenue. Revenue increased by about 24% over the year and cash flow from operations also increased as well as 347 and I suppose that's largely as a result of the impact of the full 12 months of operations of Tropicana. Just the other point I'll make on figures on this page are that EBITDA for the current year of 336 that's after a $74 million non-cash adjustment for NRV write downs. So if you could just turn to page 6 we'll go into more detail on the net profit result. Profit was obviously below expectation and I suppose that's been impacted by two significant events or two factors. The first is the non-cash write downs and impairment which total $85 million before tax and cost increases that are particularly felt in the second half of the year with fuel and I suppose effects that it has on the broader business as well. So just in terms of the non-cash write downs and impairments totaling $85 million, $74 million of that was a write down of net realisable value of the four stockpiles and the two major factors contributed to this write down. When we reviewed the life of mine in the second half of the year we pushed out the timing for when we were going to process those stockpiles. So as a result by pushing the timing of that processing further out the gold price used in the NRV assessment is slightly lower because it's based on the consensus price. So that has an impact on the NRV assessment. So that was the big factor in the write down and also the other factor is the cost to complete So that was the other factor. So as I said that NRV write down was $74 million and it's a non-cash adjustment which is included in the EBITDA. I'll also just on that slide point out the significantly increased depreciation and amortisation associated with the tropic counter purchase. This obviously does have an effect on net profit but does not impact cash or EBITDA. If we could turn to slide 7. So this is a summary of a waterfall of the cash flow for the year. You can see we started the year at $269 million of cash and bullion on hand and finished the year with $231 million. cash from operations of $378 million. So the operations generated a very healthy cash flow. And then those next three bars, the 219 mine development, the 56 million exploration and McFelineys and the 78 million of other CAPEX, they're all investment in future growth. So we generated $378 million. and we spend $353 million on the future. So I think that's a very positive message. So really that's the cash flow summary for the year and that includes the dividend of $22 million which is paid during the financial year. So if we then turn to slide 8. The cash and bullion balance as I've mentioned is $231 million. In our quarterly report we did highlight the fact that since year end there have been some significant one-off payments which have reduced this cash balance and that related to the payment of the stamp duty on Tropicana and also a property purchase in New South Wales and the total of those two transactions was about $60 million. which has reduced the cash balance since year end. Our net debt is $69 million as of 30 June, so that's made up of the $231 cash and bullion on hand, less the $300 million syndicated finance facility giving you that net debt of $69 million. That $300 million finance facility matures towards the last quarter of FY24 and we're obviously looking at refinancing options associated with the McPhillamy's development. Our hedge book, we reduced the hedge book by 100,000 ounces during the year and so there's 220,000 ounces remaining as of 30 June and that hedge book will be closed out in the next two financial years. So currently 75% of our gold ounces sold are unhedged and exposed to the spot gold price. I'll now hand back to Jim.

Thanks Tony. Okay well look if we just turn to slide 9 there's not a lot to point out there. That's our guidance which we've already noted earlier this financial year. Our group guidance in total between 450,000 and 500,000 ounces all in sustaining sitting between $15.25 and $16.25. Our growth capital, as noted, $145 to $155 and our exploration, including McPhillamy's, is around $72. So no change on that front. If you could turn to slide 10 please. So this is, again, something that isn't new, but it's just a good point for us to show this is where we're heading. And when we talk about the investment that we've made this year, or sorry, in the prior year, it's helping us to, it's all part of our plans and our approach to target this 500,000 ounces per year by FY25. We see that by our two operations, Duketon, Wick and We see our target there is to get that up to around 350 and at Tropicana we're anticipating the target there of 150 is quite eminently doable. The key change coming through Tropicana this year is actually the Havana cutback. While it will continue as a pretty significant area of activity for the next year, it will start to be a significant contributor to production as we expose a lot more ore and can really start feeding that into the mill and displacing some of the lower-grade feed coming off stockpiles at the moment. So this plan, of course, as you can see, it does involve a steady reduction in the growth capital, decreasing through FY24. And as you look out to FY26 and beyond, It's sort of a hazy, sort of bluey mixture of colours. We do look at the potential out there for McPhilomys, although we obviously haven't included that in that growth capital from Duketon and Tropicana. But we see that there are a number of options for us to be able to get to 500, our target of 500, and also to be able to certainly maintain that going forward from FY25. If I could just turn to slide 11, please, to wrap it up. Thank you. So what we see here is, just as a reminder, we have a strong financial platform. Tony just talked through the net debt position and we're certainly in a position to start being able to generate more cash in the future as we move from this capitalisation phase that we've been in. We are generating, from an operating point of view, strong cash flows long reserve life with a production profile that does grow, as I've indicated. We do operate clearly in a Tier 1 location. We have a progressive and measured approach to ESG, and by that means we are moving forward, but we are making appropriate—we're not making outlandish comments or commitments. We're being steady and considered but also we are making very strong progress as identifying and highlighting in my earlier points on ESG. We are looking at our businesses to return to a more consistent plan in delivery although we do continue to see as you normally get with a bit of ebb and flow with movements from quarter to quarter but we are getting our operations back on a more reliable basis from where we were at the end of calendar 2021, which is very pleasing to see. We don't touch on it, but I have mentioned earlier some of the very exciting exploration results we're starting to see come through from our exploration program from the last couple of years that we've been stepping up, particularly around areas such as Maverick and the like in that Rosemont-Banago trend. Anyway, we'll pull it up there. Today was about the financial results, so I'd like to hand it back now to Sari and open it up to any questions.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you are on a speakerphone, please pick up the handset to ask your question. Your first question comes from Daniel Morgan from Baron Joey. Please go ahead.

Hi, Jim and Tim. Excuse me. Just on the stock files under the impairment, could you talk about maybe what the break-even gold price, you think you'd need to process that? Just to help us think about if the gold price goes up or assumptions change, might these come back into the mine plan? Thank you.

These are in the mine plan, Daniel. From a cash point of view, these stockpiles are actually quite valuable. The write-down was because the way that they are done from a statutory reporting point of view, those stockpiles carry a cost, if you like, of history. And when we sat down and looked at the timing of it, As Tony said, we've pushed some of those stockpile treatments because we've been able to reschedule things. We've pushed them out in time a little bit. We also see some increased cost to processing. From a profit point of view, they were in the red, which is why we had to take the right down. From a cash flow point of view, those stockpiles are still highly valuable and the gold price would need to be considerably lower than what it is today for them to be not worth the price of processing. They're actually quite valuable to us because from a cash point of view, they're basically all paid for. All they've got to cover going forward is the cost to pick it up and process it through the mill. So any gold price involved in not processing those stockpiles would be pretty low and understand they've been written down from an accounting point of view. They are still stockpiles that sit in our mine plan because they add considerable value from an NPV basis.

And just further on that, when do they roughly sit in the mine plan and does it relate to Mill Art Well or is it throughout the business?

Thank you. It's throughout the business. So it's varying between At Mullart at the moment, it could be a couple of years out, whereas down at Duketon South, it could be certainly four or five years out.

Could you refresh us on Mullart? What is the plan on mining, processing and life there or life extension there? Sure.

At Mullart, at the moment, Based on our reserves, we will be mining ore and direct feeding into the mill this year and into part of next year. After that, we start to deal with some of those stockpiles that we've been talking about. However, we have some growth opportunity there in an area called Commonwealth, which is sitting well and truly within the the isopack of distance from the Moulart Mill and we haven't finalised our reserves on that but they certainly, we've been out there drilling over the last couple of months and the results there are particularly encouraging so we're anticipating that as those come through that that life at Moulart will gain something from that and we've got a few other things that are interesting there that we're not quite ready to break cover on. So as a minimum We see probably, including the stockpiles that we've got there, I think Mullard will be around for at least another three or four years, so there's a couple of years of stockpile treatment. But if we manage to deliver on the plan that we're following, we'll be able to feed in some good material coming from deposits such as Commonwealth, which will add another, well, as many as we find it'll add, I guess.

Thank you. And then just switching to Tropicana, there's an asset review called full asset potential. What does that involve? How are you, are you providing input into it? And what do you expect the timing will be on that? I know you said first half of this fiscal year, but just wondering if it's later or, thank you.

Yeah, so the full asset potential is something that Alberto's got running right throughout Anglo Gold. And it's actually quite similar to a program that was running in Newmont back when Goldberg took over. So that was several years ago now. And it basically looks at the business, looks at each site, looks at their bottlenecks, looks at opportunities for how's the place been run. I guess it's one of these activities where long-held sacred cows might get questioned, for example. There's also an examination and looking at how the mine, is the mine being run at an optimum point. I would describe it as a great opportunity where the can gets kicked over and and everybody has a look and sees whether it's actually, there's a more valuable way of running it. It's a well-structured process. It's Bain, the group that are partner with that. Our role is the same as management's role. It's really a senior management's role. It's an oversight to see what happens. The team, there is a very well-structured process that basically breaks down cost mapping exercises and things like that. So we watch and provide a bit of input and maybe suggest areas to look at, but it's a pretty thorough process on its own. It also looks at other elements of the cost to see whether there is opportunities for the more general cost reduction of Do we need to use as many post-it notes as we do? It's obviously a lot more serious than that. It's a really quite well-structured approach that comes in from both ways. How's the business run? Has it got the right mine plans? Where are there cost-out opportunities to make the business more efficient just running with the existing plan? Time-wise, it's underway at the moment. We won't, you know, nothing's changed from the timing expectations that we've given before. So, you know, I think there's an update due, you know, in the next couple of weeks, I think. Don't hold me to that. I can't remember exactly what that date is. Actually, I think it might be after the Denver Gold Show. And, you know, there's a program where there'll be some quick hits, but there's also anything that does get worked on will probably take... several months to follow through. But we're particularly pleased that it's being done early in the cycle. It's running right across Anglo. And the feedback from other operations that has been done already have been very positive. So we look forward to talking about the results in due course.

Okay. Thank you Jim and Tim. Thanks Andrew.

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

G'day. I've had a couple of mine answered already. Just after a bit more colour on how you're thinking about divvies over the next couple of years, just obviously given the potential for Phil and his spend to start in the next little while. Cheers.

Yeah, look, it's a good... Thanks, Andrew. Good question. You know, I think the idea that Obviously there's a fair bit of discussion about it but it's as much a recognition of how confident we feel about all the work that we've been doing not just in the last year but the last couple of years really is starting to set the business as how that's looking. What we will do with dividends we will consider at the time as we're asked on a number of occasions do we have a policy and we don't but we also recognise that the intention of a business is to make profit and return a combination of that profit to shareholders while retaining some of it to continue to build the business in the future which of course is so critical for mining resource companies. I think the payment, Regis has got a great history of paying a dividend. We're certainly well and truly well over half a billion dollars in dividends being paid since we kicked it off. We will look at the future as to a combination of both the profitability of the business over the next 12 months and also what the demands might be for capital around Macphilemys and its timing and also how we would whether we would decide to take an approach to try and fund that all out or look to fund that all out of cash flow or whether we'd do it with a combination of a bit of cash and a bit of debt, which is probably more the way we're thinking at the moment. So it's not a flash in the pan. It wasn't a decision that was made quickly. It was a recognition that both a position where we could pay, but also where we were confident with the way that the company was going to be performing over the coming 12 months in the future.

No worries. Thanks. That's all for me. Cheers. Thanks, Andrew.

Thank you. Your next question comes from Peter O'Connor from Sean and Partners. Please go ahead.

Hey, Jim. Hey, Tony. Congrats on the results. Some random questions, Jim. Firstly, back on the dividend. Do you have a must-pay view at the board level?

No, because that would be a policy.

Let me put it another way. Do you think that shareholders would expect you to continue because of your continuity of dividends? Is that something that's front and centre of discussion when you have those deliberations?

I think the payment of dividends is front and centre of the conversation. I mean it's a reason to be, right? Why does a business start? There needs to be a combination of growth and return but ultimately you've got to look at your return. We've done some, you know, it's certainly, we've had a great record of that in the past. It's pretty safe to say that over the last couple of years It's been a little bit harder for us but that's also in part because we've been dealing with some of the historic hedges which have had an impact on our ability to pay dividends at the levels that they were before. I think the fact that we've done it and the fact that it hasn't been a great, from a pure statutory accounting point of view, it's been a challenging year but we still feel that it's appropriate to be paying dividends. combination of where we currently sit and how we think we're going to be in the future. So the board certainly takes a very strong consideration as to our ability to pay dividends, certainly in the full year, whether you're talking interims I guess is maybe a different question, but certainly every full year at least and it will continue to do that. If it means putting balance sheets at risk, then I think just for the hell of paying a dividend and effectively if you're saying, would we pay a dividend if we didn't think we could afford it or the business was positioned right, I don't think we'd be pressuring ourselves to do it just to continue to feel good.

Thanks, Jim. Back to the impairment. You make a really good point that you said to Dan about the non-cash impairment and these stockpiles are actually very valuable. Could you just put some numbers So you've got to pick it up, a couple of bucks a tonne. You've got to process it, 20 bucks a tonne. Is that kind of all I'm looking at from a cash perspective when I process that material? Pretty much. Pretty much. So to better a gold price of $2,500, $2,600 Aussie, I've got a pretty solid cash margin on those ounces, despite the fact from an accounting perspective they may be more marginal.

Well, as you say, it's a couple of bucks to pick it up. Processing costs per tonne are probably mid to high 20s. So you've got to put a little bit on for tailings, the cost of putting a tailing. The tailings dams we always estimate at 50 cents a tonne, you've always got to put it somewhere. So it's low cost stuff. Some of the stockpiles are actually quite low grade, but I've always said we put the We just make... Some stockpiles are very low grade and we specifically, from an accounting point of view, we don't put any... They don't carry any value because they're the ones that you just... You know you're going to get caught up with. These stockpiles where we took the write-downs on, they were sort of middling. I don't know. Stuart, I guess the grade would probably be sitting about 0.4 grams, something like that.

Yeah, about that sort of grade.

So, you know, they're not... you know, if they were ripping tons, we'd have put the damn thing through the mill already. You know, it's all part of the classic Ken Lane cut-off grade theory of, you know, grade management. So, yep, but they will still make reasonable cash.

And the recovery declines with grade? Is that how I should think about it as well? When you put that 0.4 grams through the mill, what's the recovery?

Oh, yeah, we adjust it, you know, as you quite rightly point out. Recovery is usually related as much to, there's always a bit of gold that goes out in tails that you just can't get, and therefore your recoveries drop as the grade goes lower. Yep, that's well noted, and that's all taken into account.

Okay, and I'm just intrigued about the use of a consensus price deck. I'm sure your audits must have had some flexibility in what you presented, but why wouldn't you have presented a forward curve?

Yes, it's a good question and it does become a point of discussion. I guess the more conventional way to run it is with a consensus price deck. Arguably, if you're going to use a forward price deck, you could use that if you actually had locked everything in, which we haven't. you know, we use data from the consensus price deck, which is pretty conventional.

So just think philosophically, you're using data from a bunch of Muppets like us instead of a forward curve, which is a much deeper liquid market. Seems odd. Okay, my next question is corporate and admin costs are up about $5 million. Is that just Tropicana additional costs or what's that?

Sorry, what was that last question? I was still trying to come to terms with you describing yourself as a Muppet, Pete.

No, I was speaking in the third person, not me. Corporate and admin costs up $5 million year-on-year. Is that Tropicana and just the additional work with that or is that the ongoing rate going forward?

It's a little bit. There was a little bit of spillover, a last bit of cash that had to be paid out for some fees for the Tropicana deal, which is sort of a non-recurring piece that pushed it up a bit. I think that was about $6 or $7 million sitting in there. So what should we think about long-term? $20 million, about $20 million? A little bit more than that. From a total corporate, maybe $20 million, $24 million.

Okay. You had another impairment, a non-current asset impairment of $11 million. It was below the EBITDA line. What does that relate to?

Yeah, so the stockpiles are actually not impairments. They're write-downs. I mean, having just spent the last two weeks discussing this in some reasonable detail, as you could imagine, with the auditors. They did get technical on the title. So the write downs were on the stockpiles and the majority of that was non-current meaning that it was in the future, expected to be in the future. That impairment was related to, it was about $10 million I think, $10 or $11 million. It related to some exploration ground that was dropped. that had some value that we had to impair and take that. And for impairments that have taken off, you know, in this below the line terminology, whereas write-downs are incorporated and have taken off even if they're non-current.

Got it. And Tim, on DNA, clearly the big step up, we know it's Tropicana. How you review your mineral reserve and resource position, or Anglo does as part of the JV every year, So when do we expect the next meaningful review of that and when could we expect that unit depreciation charge to step down as you extend the reserve basis? Will they drip feed you on it so it'll never really change or do we get a large step at some point in that DNA charge because of that?

Yeah, good question. Look, I don't think we're going... I mean, we'll see steps here. I think last year in the resources, I think the... Sorry, in the reserves at TROP, It went backwards a little bit but it did include the first reserve statement for the Tropicana underground. I think what we're going to see, understanding the mine plan and the timing, I think it will be, it's probably more likely to be steps than a little bit dribbling in every year. We've just got to wait and see how that plays out. I think the extension of reserves, for example, at Boston Shaker are likely to maybe be a reasonably steady rolling addition because it's got well established development and it's an extension of known geology. Whereas when we look over at Tropicana, There's areas there that have basically historically had no drill holes in. Now we're putting them in. As we were expecting, we were finding mineralisation. They've got a plan and put the development in to make sure they can access that. It's a bonus that it's being found, which is what we think is great. It's not quite as smooth in its ability to roll forward. So I think that might come in spits and spurts. And then the other area that they're looking at over there is the Havana underground which I think, well there's nothing in the plans for that, no reserves there at the moment for the underground but we've already got the, I can't remember what it's called now, the link drive isn't it? The link drive that's been commenced where there's a drive that heads out there and we'll be doing some resource and drilling there for the next phase of a of a feasibility study on that area. So, you know, I think there are some sections of the ground that will roll quite steadily and the others will come in steps and not quite so smooth while they get into the rhythm.

Okay, my last question, page 10, the growth outlook, plus 500,000 ounces, you talked about myxilomies and other internal sources. Is that other internal? Is that Havana? Is that the underground? Is it that middle ground? that you talked about at the quarterly in the Dugden area that you're looking at at the moment, are they the type of opportunities you're thinking about?

Yes, certainly we see opportunities in, like Gardenwell Main is probably one of the, from an underground point of view, is one of the more exciting areas we see significant potential in. We're just working through the process of finalising the details of that. big exploration or not big but an exploration drive we want to put out there. We see some rolling additions for Rosemont underground as well beyond the existing reserves life. We also see, as I mentioned earlier, there's deposits like Commonwealth. Ben Hur, we see extensions of it. They've got potential there. And then a little bit further afield, we've got underground potential at Gloucester. which is some great intercepts but complex geology that we're trying to work on as well. So we certainly see the potential. Getting to the 350 at Duketon is really squeezing some of our assets just a little bit harder and we're a bit wary of being too quick to run into that. But we also see additional production coming from new production sources, like Garden Well Main, like Commonwealth, and a couple of other areas that we're just working our way through that we'll let people know about when we're a bit more clear on their contribution. Thank you, Jim. Thanks, Peter.

Thank you. Your next question comes from Elizander Papayawanu from City. Please go ahead.

Hi, Jim and team. Just one question from me. One of your peers has reported easing input costs since they'd set their initial FY23 guidance in July. Have you noticed any easing at your costs at your operations?

Well, yeah, look, probably the most obvious one is fuel. You know, fuel was actually quite significant. I mean, it was amazingly, FY22 was like the, the year of two halves, the average fuel price that we paid in the first half of last year was probably mid-80s and then the fuel price that we paid in the second half of the year was probably $1.20 or something like that. If you look at our sensitivity to fuel, in rough terms a 10 cent movement in fuel price is worth about $15 an ounce, something like that. We have certainly, in our All In Sustaining Costs guidance, we were assuming that the fuel price as it was back in June would stay that way for probably at least a quarter and then some easing back to $1.40. So I think the average fuel price we used for AISC was about $1.47 and a half, So has it moved? Fuel's actually softened a little bit, I think, in the last month, which is nice. Not enough for us to charge out and restate our guidance at this point in time. We'll probably wait and see what happens. Other costs, less so. Fuel is clearly the one that has the biggest impact, representing I think around about 20%, 25% of our costs. So that is a single point that is probably the most leveraged. And that's direct. Fuel then has other flow-ons too, everything from how much it costs to move things to site to how much it costs to run planes and all those sorts of things. So we have seen a little bit of movement, but nothing at the moment that's caused us to go back to our guidance and say we're nervous about the runs that have already been expressed.

Yep, perfect. Very helpful. Thanks. Thanks, Ellen.

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 Patrick Collier from Credit Suisse. Please go ahead.

Hi, Jim Dean. Patrick? Two for me, please. Firstly, on the stockpile write-down, are you able to give any insight on what the split was between the gold price assumption change versus the processing costs, just knowing those are the two main factors?

No, we haven't got that detail to go into. I don't even know what it is off the top of my head, but there was a reason. The gold price that we were seeing, certainly for the DSO, stockpiles was at least a couple of hundred dollars lower because it was pushed further out in time and the operating costs were, I don't know, I'd be guessing if it was half and half but we haven't got the breakdown and it's probably I think getting into a little bit too much detail but both of them were significant contributors to the outcome.

Okay, that makes sense. Both significant. Thanks. And then just looking at the refinancing and looking at funding with Philomies, are you able to comment on what level of debt you'd be comfortable with and just any metrics that you're using to assess that when the time comes?

No, we haven't. Well, there's a couple of things that we've actually got to be thinking about. One is the... obviously what's the capital cost going to be and we've done quite a lot of work on that as you can imagine and there are certainly in the last six to 12 months have been significant pressures on the cost of building anything both in terms of the availability of people and the raw inputs although we do note that things like steel and some of the others have dropped in price a little bit which is helpful. What we do need to consider when we're with our funding is, as Tony said, we have about $300 million worth of debt sitting on the balance sheet that's due for the bullet in a bit over two years' time, a bit less than two years' time I should say, and that no doubt would form part of how we would restructure our debt around that and incorporating the FILMIS. We haven't set ourselves any metrics and the likes of debt ratios and the like. We're just starting to turn our mind to how that looks, but obviously also wanting to understand what our cash flow generating is as we get closer to the time will be an important one as well. When we bought Tropicana, one of the things that we liked about Tropicana was once it got through this high pre-strip phase at Havana, which it was last year and continues this year and starts to drop off from next year, it then moves into a much more significant cash generating phase. For the right gold price, if we wanted to, we could potentially fund it out of cash flow. There's a lot of levers and a lot of moving parts in that at the moment, Patrick, so I can't... That's probably the best I can give you on context.

That's been very helpful. Thank you. That's all from me. Thanks. No worries. Thanks for your questions.

We have a follow-up question from Peter O'Connor from Shine Partners. Please go ahead.

Jim, just with that last question in mind and looking at slide seven, I was trying to think about the cash flow generation going forward as you're probably doing every board meeting. Mine development, exploration, McPhilomines and other CAPEX. Can you just walk us through how those numbers will look? I know you've given this guide in spread by 23, but more like a 24, 25. You talked about the drop-off at Tropicana and the drop-off at Duketon. It's a big step down in mine development.

So, yeah, I'll give you the guide. I'll give you some context around that. and using the guidance that we've already provided. I'm not in the position or desire to continue to expand on that at the moment. But you can see what our cash flows are going to be roughly looking like over this coming 12 months. It's the whole idea of AISC and growth capital and the other key elements that we give there. If I look a little bit further out, and I don't think they've certainly made no secret of the fact that At Tropicana, Tropicana's total material movement last year was a little bit lower than we were all planning on, and there was some significant impacts on there from COVID-related labour availability. I think the site's back running on its plan now, which is great to see. We'll see total material movement levels, I think, are roughly the same this year as And then after that... What's that number, Jim? How much TMM? I think it's about eight or nine million. Actually, that might be 30%, I think, at 30%. So it's going to be a similar level. And, you know, we outline that. If you look at our physicals, In our quarterly reports you can see how it's been travelling so it's probably continued along those lines for the next 12 months and then it starts to drop down by at least 10% or 15% depending on their performance this year and then as you do with open pits it starts to drop away and then any of the real growth work then just sits in underground development which is more routine in nature as we just continue to roll down plunge. At Duketon, as these things are, if you look at the plan at the moment, for example at Mullart at Duketon North, the total material movement, we're moving almost half as much material, a little bit more than half as much material this year at Duketon as we did last year. So that's obviously quite a reasonable drop in material. But that's on the basis that we don't bring in any more new open pits. If Commonwealth comes in then we'll see some pick up. You've got to do a little bit of pre-mining before you get into that. But that's not part of our guidance at the moment. So as they come in we'll provide an update and if that has an impact we'll give an indication of what the impacts of that are at the time. The short, in the near term, Tropicana levels of activity on site are probably staying pretty much where they were last year, at least for this year, and then they drop off. Duketon has already started its drop off because of a lot of the capital work from last year we see, as I said, the physicals drop off. Unless we find and incorporate into our plans new open pits then that will continue to drop off but obviously what we'd like to do is to not have it drop off to nothing because that's the least desirable outcome. So we're expecting that we see some easing this year but not a complete drop to zero in the following years. It will stay at the levels and depending on how successful we find more material it might lift a little bit. Don't have a clear picture on that to give yet.

There's another way to think about it, Jim, that over the next year or two, your capital total will be close to depreciation, but post that, it drops away quite sharply.

Uh... What are you saying?

So the capital... Depreciation is about $300 million, and your capital spend last year was about $300 million. It sounds like this year is going to be about the same, $300 depreciation versus $300 capital. It's similar. And beyond that, when you get the things you just talked about coming back, you'll be spending less than you're depreciating, so you get that tax benefit and the P&L, and it's your cash flow benefit as well.

Yeah, so, I mean, for the current year, you might be right, but beyond that, it's not too complicated. It's just that we... We don't give guidance that far out. Thank you. Thanks, Pete.

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

All right. Thanks, everybody. We appreciate you joining. We realise it's a very busy time. As always, if anybody's got any follow-up questions, please touch base with Ben and we'll do what we can to help you from there. We do appreciate everyone coming on the time and especially the questions. It helps to expand and elaborate. So I hope everybody has a good day and we'll hopefully catch up with people soon. Bye.

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