Regis Resources Limited

Thank you for standing by and welcome to the Regis Resources Limited half-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 turn the conference over to Mr. Jim Beyer, Managing Director and CEO. Please go ahead.

Thanks, Andrea, and thanks, everybody, for joining us on this Regis Resources December half-year financial results for FY24. I'm joined this morning by our CFO, Anthony Rakiki, and also our Chief Operating Officer, Michael Holmes. Now, before we kick off, I'll let you know that we'll be referring to various slides that are in a pack that we released earlier this morning. If you don't have the document, it can be downloaded from our website or from the ASX. Pardon me. Well, it's been a satisfying half year across a number of areas in our business. Top of the list has been delivering safe, consistent and on-plan operating performance. Pleasingly, our key safety frequency rate remains well below the industry average as reported by Demers. with an healthy lost time injury frequency rate of 0.66. Gold production and all-in sustaining costs are right on guidance. And for the December harvest, we produced just under 221,000 ounces of gold at an all-in sustaining cost of $2,119 an ounce. And that included just a little bit over $100 an ounce of non-cash stockpile inventory change charges. Our half-year performance reflects the impact of a steady state at our new Gardenwell South underground mine and also the contribution of the Havana open pit cutback, which is still settling into its rhythm but expected to be steady by the end of this financial year. The resulting performance demonstrates the cash-generating capacity of our operating business and our operating assets. This combined with the very significant step of closing out our hedge book in December and breaking free of the milestone means Regus has now very clearly moved into a much stronger state of profitability and cash flow generation at current gold price levels as we're now fully exposed to the upside potential that exists for the gold price. With this major change to our revenue profile going forward, we're expecting strong profits and cash build in the second half of FY24. Further, the balance sheet is solid with low leverage ratios and the consistent operating cash flows will be used to support future growth options. What I'll do now is I'll hand over to Anthony to take us through some more of the detail on the half-year results.

Thank you, Jim, and good morning, everyone. I'll start by having you all turn to slide four of the slideshow that Jim was referring to there, where you can see that the period delivered a solid half year of gold production, well on track to meet our full year guidance expectations. The open pit material movement is as per plan for Duketon, but tracking lower period on period due to the destacking of garden well stage six and the reduction in open pit sources at Duketon North, which has also impacted the open pit ore mine. Lower grade ore stockpiles offset the open pit ore mine for mill feed. Tropicana was slightly below the corresponding period's material movement due to their pit scheduling and ground control for wall stability. Underground development at Duketon proceeded above plan as the mine expands and opens up new mining fronts, which also positively impacted the period-on-period underground ore mine. All mills was impacted at Duketon by throughput rates due to the reduction in the softer material from the ladderite pits and harder stockpile material being processed. The grade of the undergrounds offsets the majority of the impact of the lower stockpile feed. Gold production was impacted by the reduced throughput with slightly lower period-on-period grade at Duketon. Now on to slide five of the PACS. which shows the consistently favourable sales revenue achievement, bolstered by the higher prevailing gold spot prices, but still affected by the 57,000 and final ounces of gold we sold into the hedge book in the six-month period. Statutory cash flows from operations were $126 million. The statutory loss was $92 million. However, the underlying EBITDA was a very positive $167 million. Slide six, that shows the cash and bullion movement during the period. You may be familiar with this chart from our recent December quarterly report. The main thing to note there is that the company increased its cash and bullion balance by $90 million in the half year before hedge deliveries and hedge book buyout costs. Those two things totaling $179 million. Hence why the cash and bullion balance has dropped since June. Anyway, what it's showing us is that there's a profitable... cash generating underlying business. Additionally, $160 million was invested across mine development, exploration, the McPhillamy's development project and other plant and equipment. This meant the company finished the period with a cash and bullion balance of $155 million. Ahead of us, in addition to much better cash generation expected from operating without any further hedge losses, We're also expecting a $20 million tax refund in the second half of the financial year. Now look at the profit and loss over on slide 7. This chart breaks down our income statement and reveals that the underlying business, free of hedging, would have created a $47 million profit before tax or say about $33 million after tax. After the 57,000 ounces of hedge deliveries made in the six months, the buyout of the remaining 63,000 ounces of hedge contracts and then the tax adjustment for the period, the statutory net loss after tax totaled $92 million. For your reference, slide 8 illustrates the differences between the underlying EBITDA and the statutory net loss period. What are those differences? Well, in this slide, you'll see the company made inventory net realisable value adjustments and exploration write-offs of $7 million and spent $98 million closing out those final 63,000 ounces in the hedge book. We did that in December. Looking back on what I've talked to you about this morning, there are some complexities in there that have to be pointed out so that you can see the underlying business is profitable and most importantly, makes positive cash flows. The second half of this financial year won't have those hedge transactions to muddy the waters, and at these production rates and gold prices, I look forward to a simpler way to illustrate good business results. Thank you, and back to you, Jim.

Thanks, Anthony. Now I draw you to slide nine. You can see, as we've mentioned already, the production and our cost guidance remains unchanged. Of note here, we make a couple of observations. While the first half has been solid, we are expecting a slightly softer Q3 as Tropicana, in particular Havana, still settles into consistency. But Q4 will be back on song. But we are maintaining our guidance there, so nothing to get concerned about. Looking a bit further out, I draw your attention now to slide 10. which outlines our pathway to 500,000 ounces per year, which is really our target from organic growth. And that production level is a combination of the steady state that we see for Duketon and Tropicana, along with our major project at Philomys. At Duketon, we're excited to see our potential underground projects at Rosemont Stage 3, which we've highlighted before, and also Gardenwell Main, which is at the end of our exploration decline underneath the Gardenwell Pit, both move into the final evaluation stages. This work is progressing our plan of seeing more life in rolling reserves in the undergrounds and also increasing the proportion of production that comes from underground. We expect a final decision on these projects over the coming months and if all goes to We anticipate starting these great capital projects within the current financial year. If you move to slide 11, our large Macphilemuse project progresses with the DFS due for completion in the coming months. The section 10 assessment is still in its final evaluation and while we continue to be frustrated with the delay, we remain optimistic as a positive outcome. On slide 11, we've also highlighted some of the real value that we're seeing in McPhillomys. It's not just the pit itself. It's some of the resources and the potential resources and reserves that are sitting in the area around it. We just think this is a great region for this project to come to fruition. The timing of the final investment decision on McPhillomys will be dependent on financing considerations and also any further discussions modification approvals that may be appropriate for us to pursue for capital efficiency. Closing now on slide 12, overall, while the headline profitability for the first half is less than inspiring, the fact is our business was being held back by the hedge book. And if I can borrow some words of the very talented Freddie Mercury, we wanted to break free. Now, with the closeout of the hedge book, we have broken free and the cash flow generating potential of our business will transition from going to do to real outcomes. We're now in a position moving forward where our strong underlying business performance will be clearly reflected in our financial results. We're very excited about this new phase we've entered as we are now very well positioned, if not perfectly positioned, for a significant turnaround in profitability as we look more at the global environment and the global financial environment where the value of gold can only be seen to be improving. What a great time to be in gold. All right, I'll hand it back to Andrea now and we'll answer any questions that you may have. Thank you.

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

G'day, Jim, Anthony and Michael. Just a bit of an update on your growth capital expenditure guidance for this year. I remember back on the quarterly call, you noted that you know, projects are ahead of plan and you might be exceeding that over this year, just given the rate of development you're seeing at the moment.

Yeah, look, there's a couple of things at play on this one. We're still closing the loop on that question, but also I guess the other thing that sits there will be the decision that we are approaching on stage three and the garden will main because... We do think that the timeline that we're looking at there will be within the next couple of months for a decision to proceed, which has also got the potential to impact on growth. So we're not really seeing anything material that's impacting on the unit costs of our growth capital. Some of it now is likely to be driven by maintaining that speed of growth You know, being ahead of plan, as we highlighted before, what we're just trying to balance now is as we come to make these decisions on assuming that we proceed with Stage 3, which we've got to make that call on Rosemont and also on Gunwell Main, we've still got some balancing there or do we keep pushing on hard? So that's... We'll make that... Decision, obviously, pretty shortly, and once we've done that, we'll update the market on what that impact that has on growth capital guidance for the rest of this year.

Thanks. And I have to ask, just on the royalty claim by South32 on TROPS, number one, have you got an idea of sort of how long all these processes might take? And two, I guess, is there any change in your position or any advice you've received from lawyers, et cetera, since that announcement that you put out in early Feb?

Yeah, thanks, Andrew. You'd have to ask. Look, the royalty, our position is unchanged, right, from what it was before. In fact, This potential was identified back when we acquired or went through the process of acquiring Tropicana and we did the due diligence. At that time, we got advice on the situation and the circumstances and we came to the conclusion that there wasn't a case for the payment of the royalty. We're still of that view and that's the position that we still hold. Anything else around that? this question, I think it's probably appropriate that we just leave it, the response that I just gave you.

No worries. Fair enough. That's all for me. Thanks, guys. Thanks, Mark.

The next question comes from David Coates of Bell Securities. Please go ahead.

Thank you. Hi. Good morning, Jim. Good morning, Anthony. Thanks for the call this morning. Just, that's covered off a couple of my questions, but I might just go on a couple of other details. Can you give us, you mentioned Tropicana, might be sort of slightly style quarter in Q3. So I just didn't quite catch the drives of that. Is it grade or more material movement? What was the key kind of drivers there, please?

Yeah, look, it's just, I mean... What's the best way to describe it? There's probably a couple of parts here. Anglo run on a calendar financial year and as we all know, when you get towards the end of your financial year, you push pretty hard and you pull a few levers to make sure you get things done and there can be a little bit of a hangover for the first month or so of the following year and then you make it up over the rest of the year. That's part of what we're seeing here and it's You know, it's just, we know that's all part of the scheduling that we see. And so, you know, bottom line is the pits, that's part of it. The other part is that there's just some scheduling as Havana pit, as I said, is still getting into its rhythm. We had a while ago, there was some, geotech issues in one of the wall that was a... It's a short-term issue. It's actually a wall that gets taken out in the long term. But that just had some impact on, you know, moving the plans around. Nothing that... Nothing that spook us at all. It was just well managed. It just impacts on timing. So there's really two things that are driving that, both of which we expect to be out of probably, you know, by the time we get into March, as we come through March and into the next quarter.

Right. Thanks, Steve. Can you just give some indication, Anthony, on DNA, just which way that's heading relative over the next couple of halves, perhaps, relative to the current level?

Yeah, thanks, David. Same as last time, like I said, although we don't typically give the DNA guidance, there's no reason at this stage to believe it's not going to track any differently materially to where it currently is. So we expect it'll maintain at similar levels going forward for those couple of periods that you're talking about.

No worries. That's it for me. Thanks so much, guys. Cheers.

Thanks, Dave. Don't forget, when you're modelling the profit, you don't have to include the edges anymore, just in case.

Yeah, no, they're gone.

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

Thanks, Andrea. Thanks, everybody, for joining us this morning. As always, if you've got any questions, please drop us a line and we'll do our best to get back to you with the answers as soon as we can. All right. Thanks very much and have a nice day.

That does conclude today's conference. Thank you for participating and you may now disconnect.