Regis Resources Limited

Thank you for standing by and welcome to the Reduce Resources Limited quarterly update briefing. All participants are in listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you'll need to press the star key followed by the number one on your telephone keypad. I'd like to turn the conference over to Mr. Jim Ayer, Managing Director and CEO. Please go ahead.

Thanks, Nick. Good morning, everyone, and thanks for joining us on the Regis Resources September 2022 quarterly update. First of all, I'd just like to introduce who else is sitting around the table with me. We've got Ben Goldbloom, Head of Investor Relations, Stuart Goula, who is our Chief Operating Officer, and Anthony Rokicki, who is our newly minted CFO three and a half weeks into the role. Welcome to everyone, and a special welcome to you, Anthony. Thank you. Look, the September quarter was another one of reliable and planned business performance for Regus. First, if we look at safety, a lost-time injury frequency rate reduced to arguably a sector-leading level of 0.6. A pleasing result, but look, as we reflect on the tragic industrial fatalities that have occurred in recent weeks in the mining industry, This is a very clear reminder that as individuals and as an industry, we have to remain vigilant. We can never afford to rest on our laurels. We need to be proactive and even more so now as we see the potential for elevated risks where access to experienced and skilled personnel remains tight. On another front, we released our 2022 sustainability report a few days ago on the 25th. And also on the sustainability front and cost reduction front, we approved a nine megawatt solar farm at Duketon earlier in the September quarter, and we're expecting that to come into service middle of next year. Across the business, we saw gold production and costs delivered to plan as the improvements made in FY22 continue to be realised. For the September quarter overall, we produced 114,831 ounces of gold, at an all-in sustaining cost of $1,782 an ounce. Now, while labour availability and inflationary cost pressures have shown some stabilisation, they do remain at elevated levels and remain an area of risk in our business and the broader industry, of course, as we all know. And we continue hard to work on managing these risks. Notwithstanding these, we've maintained our guidance for the year noting a number of factors that are planned to deliver a stronger second half performance. In line with this outlook, cash generation is forecast to increase in second half, and with this positive outlook and a comfortable balance sheet, the Board was pleased to declare a fully franked dividend of $0.02 per share back in August with our full year accounts, and this will be paid this month. In fact, I think it gets paid tomorrow. Looking more closely at the operations, Duketon was on plan at 78,000 ounces, all in sustaining 1,996, while Tropicana delivered its best quarter since Regis' acquisition of 37,000 ounces at an all-in sustaining of 1,243. Duketon North improved production to 23,000 ounces at an all-in sustaining cost of 2,042. and this was driven off better oil presentation from Coopers, Gloucesters and the Mullart Pits. All things being equal, we expect to see cost decrease at Duketon North through the year as the total waste movement starts to reduce in the second half. Duketon South delivered 55,000 ounces at 1977 oil in sustaining, in line with expectations. Production was lower than the prior June quarter with a couple of factors impacting the short term. one being rosemont underground mining lower grades as it mined through sections of low-grade stopes this is all part of the planned schedule we also experienced consistent not really deluge type but consistent wet weather which caused some delays to surface haulage but this is very short-term impacts however what we did see was that this weather caused some geotechnical instability in oxide transition zones in our rosemont north pit which required some rescheduling of production and moving working around that This has delayed some ounces, but only to later in the year. I would comment, as I think I have in the past, the Rosemont Underground, and in fact Garden Well will see the same when it comes online over this year, will see mine grades move up and down as schedules dictate. However, over the medium to longer term, the grades will revert back to reserve grade, as you'd expect, over the life, and our grade control, which is performing well, is reinforcing this view. Most pleasingly, our drilling to extend the Rosemont underground is returning results that support potential lateral as well as depth growth of that underground mine. Later in November, we will be putting out our biannual exploration report, which will have considerably more discussion on this and some of the other points which I'll touch on today. At Tropicana, as I mentioned before, we delivered our best quarter since Regis acquisition. 37,000 ounces at 12.43 an ounce all in, sustaining. Open pit mining had clean access to high-grade ore at the bottom of the Boston Shaker Pit, and the underground once again delivered to plan. We know Boston Shaker Pit will finish up in the December quarter. The next key ore source from open pits, the Havana area. Havana cutback has continued well and progresses, and we'll see increased gold production ore from Havana with greater presentation of ore as the year progresses. Tropicana just continues to deliver reliable and strong cash flow. We're expecting this to continue for many years and remain excited about its growth prospects, particularly laterally across the Havana underground and down plunge from the existing underground ops. On the financials, We sold roughly 106,000 ounces at an average price of $2,294, and that's after taking into account the impact of hedges. This generated a total of $76 million in operating cash flow with approximately $19 million from Duketon and $57 million at Trott. The reduction in operating cash flow relative to the prior quarter was primarily driven by the lower production. Capital expenditure. was $68 million and we saw 52 of this on growth. Approximately 35% of that 52 was underground development, mostly associated with development at Garden Well South and associated infrastructure. The remainder of the growth capex was predominantly around Havana. If you look at Figure 2, Sorry, I forgot to mention at the start, if you have access to the quarterly report which we released, I'll make reference to some of the diagrams. In Figure 2, the cash waterfall, you'll see that during the September quarter the company paid significant one-off costs equating to $60 million, totaling $60 million. These related to the stamp duty for the Tropicana acquisition of last year and also the purchase of a rural property related to the development of McPhilemys, both of these which were flagged in the June quarter results. It's worth noting that the rural property has since been sold last week for $20.5 million, with funds from the sale expected in the current December quarter to be back into our accounts. The property purchase was undertaken to lock in a key high-voltage line easement required for the McPhilemys project. The rural property came on the market midway through our negotiations for the access easement. So we undertook to purchase and subsequent sale to lock in the easement and avoid what we considered to be a material risk of a costly negotiation for the easement with the new third party owners or alternatively having to go a much more expensive reroute. On growth, growth projects made good progress during the quarter. Garden Well South, our new mine starting up, progress was made with raised boring, raises, ladder ways and level development. First ore from development was delivered to the process plant in the September quarter and pleasingly performed as expected. This new mine is in its very early stages and the experienced team is working through the usual start-up learnings. Gardenwell South has included considerably wet ground requiring well planned dewatering and also we see buggy ground in some areas which just requires some learnings as to how to safely mine through that but the team's getting on top of that and while the team works through these protocols and learnings I'm pleased to say that we're still expecting first stoke production later on in this December quarter with commercial production expected in the second half. Also at Gardenwell Underground, the exploration decline into the Gardenwell Main area, which I previously highlighted as an opportunity, was approved. The prep work commenced and, in fact, mining development of the Stage 1 of that is underway. Figure 4 in our release shows the planned decline, schematic, roughly, approximate design, but it also shows the proposed drilling program. The key thing to note in that is, as you can see, the drilling program extends all the way across. We think that whole area from the underground south area all the way through to the main underneath the deepest part of the pit is all high potential exploration area. This decline will be used to establish drilling platforms and undertake exploration drilling to target these potential areas. The first area we should be getting an assessment of within the next six months. That decline can then be used as the initial access for new mining areas as they get delineated. We view this area as having some of the best, most exciting prospects in the potential to build on our existing underground production plans. At Tropicana, the Havana underground pre-feasibility study and Havana link continued. Figure 5 shows you the general layout of that link drive. The link development will extend from the existing Tropicana undergrounds towards Havana and will be used, one, to access high-grade mineralisation between Tropicana and Havana. It will allow infield drilling, once it gets there, to inform on the Havana PFS and also provides in the future potential additional infrastructure benefits Tropicana underground. Just like Garden Well and Rosemont undergrounds at Duketon, we view the undergrounds at Tropicana as having very exciting potential to grow on the existing plans, both laterally and down plunge. Regis will provide more information and context on this in the biannual exploration update that I mentioned earlier that will be later in November. Finally, at McPhillamy's, I'm pleased to say we've now completed all outstanding requests for information and our application now sits with DPE Planning for final consideration. So pleasing progress there as well. So wrapping up, before I hand it over for Q&A, the September quarter, what did the September quarter bring us? A solid start to the year, reliable production at Duketon, increased production at Tropicana. Look, with inflationary cost pressures have sown some stabilisations. They do remain at elevated levels and, as I mentioned before, remain an area of risk in our business and for the broader industry that we continue working hard on to manage. And whilst costs were elevated in this first quarter, we remain on track to deliver full production and cost guidance in FY23, noting, as I did, a number of factors that are planned to help deliver that stronger second-half performance. Finally, we had good progress on our growth projects at Garden Wall South. Exciting start to Garden Well, Maine. McPhillamy's progress as well. And also, last but not least, very pleased that we approved and installation is underway at the solar farm at Duketon. So on that note, I'll hand it back to Nick and open up for any questions. Thanks, Nick.

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