Ramelius Resources Limited (RMS) Earnings Call Transcript & Summary

Thank you for standing by. Welcome to the Ramelius Resources Rebecca-Roe Gold Project Pre-Feasibility Study Investor Conference Call. [Operator Instructions] I would now like to hand the conference over to Mr. Mark Zeptner, Managing Director. Please go ahead.

Thank you, Rachel. Good morning, everyone. Thank you for taking the time to dial in this morning. In addition to the announcement, we have -- which does include a 40-page exec summary. We've also released a presentation that we will largely speak to this morning. All documents are on the ASX platform, and we'll also make them available on the website shortly. I am also joined by our CFO, Darren Millman. Darren will provide some detail on the financials after I've run through the highlights of the results. As usual, there will be an opportunity for listeners to ask questions at the end. So for those who have downloaded the presentation deck, I'll be speaking initially to Slide 2. Firstly, I'd like to recognize all the hard work from our technical and operational teams in pulling together the Rebecca-Roe PFS. I stand by this end product with confidence that we can deliver on both the technical and financial parameters. The Rebecca-Roe PFS has demonstrated strong economic returns, supporting our original acquisitions with a final investment decision targeted for July 2025. The Rebecca-Roe project will provide us with a new mining hub in an under-explored mining region in which we plan to take advantage of with our proven hub-and-spoke model. I won't be speaking to each point on this slide, but would like to highlight the after-tax NPV of $332 million at a base case gold price of $3,500 and at a gold price closer to the current, being $4,000 an after-tax NPV of over $600 million. The project will generate an IRR of 26% after tax at $3,500. The hub will produce an average of 130,000 ounces of gold per annum over an initial 9-year life of mine at an all-in sustaining cost of AUD 2,346 per ounce. On to Slide 3, where we lay out the key milestones for the project. I'll be speaking to the permitting process separately, but the key milestones in the short term will be the completion of the definitive feasibility study by July 2025. This will form the basis of a final investment decision along with conversion of underground resources to reserves at Roe. The key activities in the PFS phase will be progressing the environmental approval processes with Rebecca's Part V application already submitted and completion of geotechnical and hydrology work for the Roe underground. Other key targeted physical milestones are Rebecca mining to commence September '26. Plant construction through FY '27 production of first gold to commence July 2027 and row mining to commence shortly thereafter in October 2027. Just on Slide 4, a reminder of the project location and the resources on the various deposits. As you probably well know, Rebecca is located approximately 150 kilometers northeast of Kalgoorlie. The Roe Gold project, including the Bombora deposit, is situated a little closer, 105 kilometers east of Kalgoorlie by road. The Bombora deposit is located 50 kilometers directly southwest of Rebecca or 70 kilometers via existing tracks. As noted in our resources and reserve statement released in September, the Rebecca project contains a total of 1.4 million ounces, mostly in the indicated category, as you can see in the table. The Roe project contains a total of 1.8 million ounces, made up mainly from the Bombora deposits, both open pit and underground with categories you can see in the table also. For those who haven't followed the Rebecca Roe story, we acquired Rebecca in December 2021 through the takeover of Apollo Consolidated Limited and Roe in May 2023 through the takeover of Breaker Resources. We set out to combine the deposits to form a new mining hub with gold production over 1 million ounces with decent returns for our shareholders. With today's announcement, I think we have demonstrated that this can be achieved, but we still have some work to do to make it a reality. On to Slide 5. As noted in the covering release, we have declared a maiden ore reserve on the open pits only of 20 million tonnes at 1.3 for 850,000 ounces. For the Bombora underground resource, which currently sits at 9 million tonnes at 2.3 670,000 ounces, we have set a production target of 5 million tonnes at 1.4 million for 290,000 ounces, noting that the bulk of this already sits in the indicated resource category. The final technical work required to be completed is of a geotechnical and hydrology nature expected to be finalized by July next year. On to Slide 6, permitting process. We have a dual track process separately for Rebecca and Roe. We have determined that Rebecca will be managed under Part V of the EPA Act. We have allowed a conservative time frame of 12 months to work through the works approval with construction commencing soon thereafter. At Roe, given that we will be mining on the Salt Lake and therefore, the project is expected to be referred to the EPA for potential impact to inverted commerce inland waters, we still expect to secure approval by September 2027. Slide 7 shows the site layout, two diagrams, the Rebecca site layout as well as the Rebecca to Roe haul road. To join the two sites together, we will need to construct a 65-kilometer Haul Road. At Roe, the infrastructure will be limited to supporting mining administration for the 3 open pits and underground mine. For productivity and safety purposes, we have elected to construct 112-room camp at Roe. At Rebecca, a 240-room camp will be constructed along with an air strip, a 3 million tonne per annum processing plant and supporting power station along with obviously a tailings storage facility. Slide 8 lays out the process flow sheet for the new 3 million tonne processing plant along with key elements. All that I would add here is that the process is pretty standard with no complicated processing components. We have undertaken a lot of metallurgical testing on both Rebecca and Roe to come up with an overall recovery of 92.9% that is targeted. On Slide 9, in terms of the layout, you see a birds eye view there of the processing plant, tailings storage facility, waste dump and the Rebecca deposit alongside. As seen on the slide, the TSF will comprise two-cell paddock storage formed by multi-zone earth fill embankments. The facility is designed to store a total of 30 million tonnes of tailings. For power, it will predominantly be a combination of gas and solar. From an overall perspective, we are planning to source approximately 30% of our energy needs from that solar power generation. Gold production profile on Slide 10. The end result is that we will produce just over 1 million ounces, 1.063 million ounces over the long with the first pour starting at the beginning of FY '28. In the first 4 years, material will be sourced from open pits only with blending of underground deposits expected in FY '31. In FY '31, the processing head grade does decrease quite significantly due to mine sequencing with limited stockpiles on hand during that year, which we will obviously look to optimize through the DFS process. In FY '32, gold production will peak at 170,000 ounces when we have both open pit and underground mines in full production. With that, I'll now pass over to Darren for a few comments on the financials.

Thanks, Mark, and good morning, all. On Slide 11, the table breaks down the material components of the capital spend with AUD 190 million for the process plant, including contingency allowance and water management being the other material item of AUD 35 million, which includes a pipeline from Roe to Rebecca. The bar chart notes the CapEx profile with the infrastructure and equipment spend predominantly expected to incur in FY '27 with the process plant construction. On Slide 12, we highlight the various units applied in the financials. The open pit mining costs for Rebecca reflect budgeted pricing from experienced contractors as of June 2024. The open pit mining cost per BCM moved increases over the life of the operations as the pits reach depth. Mining costs for the Roe underground are based on existing contractor rates in effect elsewhere within the Ramelius Group. Underground operations commenced at Roe in FY '30 with higher costs expected initially with the development of the mine as developed meters naturally decline over the life of mine, the mining cost per tonne of ore reduces. The processing cost of $28 per tonne is based on the optimal 3 million tonne per annum plant and costs have been based on our power requirements, existing consumables and labor rates used at Mt Magnet and metallurgical test work. Admin costs include flight and village costs, HS&E and mine management. Costs have been based on our operational experience at Mt Magnet and can be seen to increase with the introduction of the underground mine operations from FY '30. The resulting all-in sustaining cost for the project of AUD 2,346 does not fluctuate over the life of mine sequencing. Does -- sorry, fluctuate over the life of mine. Notably, spike in FY '31 is materially driven by the lower mill grade in that year. Looking at the all-in sustaining cost on a per tonne basis, so ignoring the impact of grade and focusing on the cost driver presents a more stable cost profile averaging at $100 per tonne over the life of the project. Slide 13 provides an annual cash flow breakdown over the life of the project. I would highlight the following in the table. Cash outflow peaks in FY '27 at approximately $300 million, including both infrastructure and mine development. The overall project inclusive investment becomes cash flow positive in FY '30, utilizing a gold price of AUD 3,500 per ounce. In FY '31, mine sequencing and utilization rates in lower grade ore processed reducing the margins and in the same year, development of the underground mine at Roe resulted in effective breakeven cash flow year. Average free cash flow generation from FY '29 is AUD 130 million per annum and undiscounted cash flow before tax of AUD 688 million at $3,500 per ounce of gold price. Reflecting on current prices, the project will generate over $1.2 billion in cash flow, net of the initial investment. With that, I'll now pass back to Mark.

We're on to Slide 14 now. In the short period of ownership of both Rebecca and Roe, our focus has been on establishing a project, which we have proven up today. As we move forward, we'll be looking to expand our mining inventories with targeted exploration efforts as well as identifying and executing on external opportunities that will enable us to utilize our hub-and-spoke model. For the remainder of FY '25, we do have an exploration budget a little under $5 million for the Rebecca area, which will be focused on the Rebecca deposit and Duchess along strike and also the Cleo deposit. At Roe, we'll be targeting pretty much north and south of Bombora, but also to the West and Northwest on different geological features. We'll also be stepping out to the north at Roe on the Indie project. On Slide 15, we provide a more detailed breakdown of what is required to elevate the study from PFS to DFS. As noted, the key areas for completion are approvals processes, noting once again that Rebecca Part V has been submitted. past drill and native title agreements where we are working with the relevant groups currently, completion, as mentioned before, of the geotechnical and hydro geological work for the Roe underground and further exploration and obviously, refining of capital and operating costs. Slide 16 is the final slide. We have overlaid the existing Mt Magnet mine plan, which was released in March of this year with the results of the Rebecca Roe PFS. The key takeaway is at a consolidated level from FY '26, Ramelius will produce an average of 220,000 ounces of gold per annum at an all-in sustaining cost of below $2,050 an ounce. The other important study work underway is the Eridanus Mt Magnet mill expansion study, which is yet to be incorporated into this production profile. This complete picture is planned to be shared with the market in the March 2025 quarter. That concludes the presentation. Can we now please open the line up for questions, Rachel?

[Operator Instructions] Your first question comes from Hayden Bairstow with Argonaut.

Can I ask just a couple of things. Firstly, for Darren, just on the cash drawdown, can you just confirm what the actual max cash drawdown is, including all the pre-stripping before the mine turns cash flow positive? Because you've obviously given us an annual, but just trying to work out over that last '28 fiscal year when that happens.

So the initial, I guess, call it, cash out the door is approximately $400 million at the front end.

Yes. Okay. That's what I had. And then Mark, just on -- I mean, obviously, playing with Level 4 approvals can take a hell of a long time. I mean what's the strategy around exploration? If Roe underground gets delayed a bit, then you'd start having issues with scheduling and trying to fill the mill or keep the mill full, I guess. I mean is there scope to either mine the underground at over 1 million tonnes if it was delayed a bit? Or have you -- what are your most likely targets to extend open pit mining?

Yes. Hayden, it's Mark. We think we've been appropriately conservative with our permitting time lines. We talk about 12 months in the plan with -- in the time lines for the Part V, if we talk about Rebecca firstly. That's from June next year. So technically, we've actually given ourselves a little over 18 months. We've already submitted. Final designs of the tailings dam will be complete March, April, and that's why we've given ourselves a little bit of extra wiggle room. In terms of the Part IV at Roe, because we are mining on the edge of the Salt Lake, we're assuming that we'll be in Part IV, and we've already had -- we've already lined up a meeting with the EPA in January. The reality is there are other miners in the area who have gone through similar processes with successful outcomes. And we believe, given that we've actually gone through Part -- Part V, sorry, process in the past that we're confident on the Part V. In terms of the Part IV, we take some solids from other miners in the region and the fact that they're mining and they have approvals. And we think we're being conservative with that 2-year time frame from June next year to give ourselves the room we need and not set overly aggressive expectations in that aspect.

Okay. And just a final one on water. What -- you obviously, you've got some CapEx in there for water management on the underground. But in terms of securing water for the mill, is that something that you're confident you can get? And is it sort of fresh water? What's the water quality?

Unfortunately, it's not fresh. But again, in the region, there is a bit of a lack of fresh water. We've done a lot of work at Rebecca in the last 12 months, basically establishing ball field. So the results look quite positive there. There are Paleo channels in the area. So for mill feed water, we're very confident there. The work we need to do at Roe Underground is ensuring we haven't got too much water in that underground mine. Given that we're mining an underground on the edge of a Salt Lake and some of the experience at places like [indiscernible] is that you need to do the work on permeability of the rock expected inflows, et cetera. So plenty of water for the mill, hopefully, not too much water for the underground, if I can summarize.

Your next question comes from Alex Barkley with RBC.

A question around the resource conversion. You talked about when the underground might come into reserve and also expanding inventories and looking at around the region. What about the current large resource you have there and much of it is indicated? Is that likely to come into the reserve at some point? Or is there like an economic component why you've excluded it from the current reserve?

We would expect on the underground, and as I mentioned, Alex, there's a large proportion of that already indicated. So we would expect a lot of that to come in, and it's just ticking all of the boxes from a reserves publishing point of view, and that's geotech and the guys are pretty conservative on our side. Others may have actually declared a reserve at this point, but we like to do all of the work so that when we declare, we're very confident in that. In terms of conversion, it is a horses for courses approach. There's a higher conversion of the Rebecca open pit, for example, because the resource that was originally reported by Apollo that we adopted or inherited was inside a pit shell. The conversion at Bombora and Roe is a lot lower because there was no constraints on resource. And this is where you might have heard me talk before about not all resources are the same if they haven't got an economic lens applied to them or they're not within a pit shell because depending on the location, they may not make it into open pits. They'll just be above a cutoff, but they can be too deep, too far away -- so the conversion is what it is, and part of that is due to the resource that we inherited. 30% conversion is typically what we get at Mt Magnet in saying all of that, but it does depend on the actual deposit, the geometry and how the resource was created in the first place.

Okay. So you wouldn't necessarily expect a wholesale conversion coming up preproduction. We just do the work and see where we end up.

I think that we would like to think that we're more at the 1.1 million production target or mine plan target is where the reserve sits at that point in time. Notwithstanding, we'll be drilling areas like Cleo, Copa and that, which aren't in there, just doing reserves. So it will be in that order of 1.1 million, 1.2 million in terms of where I think it will be at, excluding any other discoveries in the area.

Sorry, I got some questions on the environmental permitting. Just on the heritage and native title, you talked about there's multiple parties. Is that -- I'm not sure the terminology is sort of a contested or combined land area with multiple indigenous groups? And have they been involved with any previous mine permitting or operations in that region?

I don't think I mentioned multiple parties. I'm hoping I didn't, but there is just one party, the KAC. We're dealing with them. They also cover the area where GL1 are to the south. And I don't believe that they have any other mining on any of their country. And therefore, they're a relatively new group, so working through them is a little bit of a process given that they're not established. As it turns out, operations to the north are dealing with different groups. But -- to sum up, we're dealing with one group, and we may be the first miner that has a native title agreement. So you can expect that, that's something we're having to work through with them every step of the way.

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

Okay. Thanks, Rachel. If there's no further questions, thank you all for listening in today. Have a great day.