Ramelius Resources Limited (RMS) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Ramelius Resources 5-Year Growth Pathway and Studies Webcast and Conference Call. [Operator Instructions] I would now like to hand the conference over to Mr. Mark Zeptner, Managing Director. Please go ahead.

Good morning, everyone. Thank you for dialing in this morning, especially those on the West Coast, much earlier than normal. I do have our CFO, Darren Millman, with me in his usual supporting role. We are currently live on the webcast, but also on the normal telephone conference. As you would all be aware, we released 3 documents this morning, the Rebecca-Roe DFS and the results of the Never Never PFS, combined with the Mt Magnet-Dalgaranga Integration Study and our 5-year growth pathway to plus 500,000 ounces, which also includes detailed FY '26 guidance. All documents have been uploaded on the ASX platform and will also be available on the website shortly. Firstly, a big thank you to all those involved in pulling together these very detailed documents, recognizing it's only been 89 days since we closed on the Spartan transaction. Among the documents released today is the presentation, 5-year growth pathway to 500,000 ounces that we will be speaking to. Noting that you'll be happy to hear, I won't be speaking to every slide, and we'll also make reference to slide numbers as we do go. My focus on the call will predominantly be on our 5-year growth pathway, but also the Never Never PFS, along with our planned upgrades to the Mt Magnet Hub, which will need a little bit of explanation. I will also speak to the Rebecca-Roe DFS results, but focus on the key changes from the PFS released in December 2024, along with key milestones and also an update on permitting. So based on the level of information we will be going through, we expect this to run a little longer than our typical quarterly or financial results call, but we'll endeavor to make it as efficient as possible, making sure we don't miss any important detail. So I do suggest you make yourselves comfortable. I think we're starting off on Slide 4. I do encourage you to read Slide 2 as I will be making references from time to time that are forward-looking statements. So on Slide 4, on March 17 this year, we announced the merger of Ramelius, an operator that has a reputation for delivery and Spartan, an explorer with one of the best high-grade gold discoveries in Australia in the past decade. In combining these 2 companies, there was a vision to become a leading Australian gold company with highly profitable operations, supercharged growth profile and exceptional exploration upside. All this remains true today with our increase to our midpoint of our FY '30 production outlook from 500,000 ounces to 525,000 ounces following the delivery of the various studies. With the release of the technical studies today, I can now state with confidence that our pathway to over 500,000 ounces is fully funded. Remember, we do have $827 million in cash and gold and also an undrawn $175 million credit facility and continued strong cash flow generation. Our new group ore reserves are 4.2 million ounces. Our engine room that is the Mt Magnet Hub has 3.1 million ounces in the reserve category, which is a 212% increase on FY '24. Importantly, though, with a 29% increase in grade, driven by the Never Never underground deposit, which is now contributing 1.6 million ounces at an average grade of 7.3 grams per tonne. I'll now jump to Slide 6. Without any exploration success, and I reiterate that we are spending up to $100 million on exploration and resource definition drilling this year, we will deliver on our promise by FY '30, producing 525,000 ounces of gold at the midpoint for that 12-month period. The other key takeaways from this slide, aside from it being a base case are, we have deferred the construction and production at Rebecca-Roe, moving initial production from FY '28 to FY '29 as we want to focus on the upgraded Mt Magnet plant first and foremost. Our all-in sustaining cost remains very low compared to our peer group, in some years more than $500 an ounce lower than the average. In FY '29, Rebecca-Roe comes online with the first year of production seeing slightly lower grades and a higher strip ratio. As operations from Rebecca-Roe ramp up, grade increases and the strip ratio decreases and so all-in sustaining costs will reduce. In the longer term, which we have classified FY '31 to FY '35, the outlook is even brighter with higher production levels and an all-in sustaining cost at under AUD 1,900 an ounce. Put simply, this is a no frills, no smoke and mirrors 5-year plan that would deliver a heck of a lot of value for shareholders. On to Slide 7 of the presentation. This is where we're looking to highlight our sequence plan for both Mt Magnet and Rebecca-Roe, all on one slide, which we believe is both realistic and achievable. A few points to make here. The upgrade and expansion works at Mt Magnet will start in the second half of FY '26, but predominantly sit in FY '27 with the new circuits being operational in the September 2027 quarter. The project team will transition from Mt Magnet to Rebecca-Roe in that December 2027 quarter as plant construction commences at Rebecca. The last point I'll make is that there does remain an opportunity on the Roe mine development to move the time line forward under a Part V environmental approval process as opposed to continuing under Part IV, which is not contemplated in the current production profile in the Rebecca-Roe DFS. I will expand on this point further a little later. Slide 8 is our FY '26 detailed guidance. As you will note, we have provided a further breakdown on growth capital here. But firstly, on production, we are estimating gold production within a range of 185,000 to 205,000 ounces at an all-in sustaining cost of $1,800 at the midpoint, which is broadly in line with the March 2025 Mt Magnet plan. As highlighted in the detailed ASX release, there are 3 areas to note in relation to production, and we mentioned it yesterday on that call. Cue gold overperformance has now normalized closer to ore reserve grades. Production from Penny is moving from the super high-grade Penny North to the lower-grade Penny West deposit, remembering that Penny West still has a respectable 9 gram per tonne resource grade. And thirdly, at Dalgaranga, contribution in FY '26 will not be significant. And we've also assumed a conservative 80.5% recovery through the Mt Magnet plant until the modifications at Mt Magnet are completed. As we have detailed in the Never Never PFS and the Mt Magnet-Dalgaranga Integration Study, the focus in FY '26 will be continuing development of the Never Never underground, along with associated underground infrastructure. From a capital expenditure perspective at Dalgaranga, investment from mine development and PPE perspective at Dalgaranga will be just under $160 million for the year. In terms of the Mt Magnet plant expansion, total cost of that is $223 million, of which $80 million will be spent in FY '26. For Rebecca-Roe, we took the opportunity just recently to execute on 40,000 put options at AUD 5,750 per ounce, the underlying hedge representing the approximate value of the Rebecca-Roe mill and camp spend in FY '28, which is approximately $230 million. As highlighted previously, our exploration and resource definition budget has been increased up to $100 million a year, and I will discuss some of the key exploration targets and their individual spend and also drilling programs in the expanded portfolio shortly. It is also important to highlight some of the FY '26 cash flow one-offs detailed in the 5-year outlook announcement released today. And we do that so that the market isn't surprised by them when they happen. Well, that's the theory anyway. The most notable of these is an income tax payment of $118 million due in December and also the stamp duty payment of approximately $135 million on the Spartan transaction due later in the financial year. Slide 9 is our updated ore reserves statement, a summary of that. It's important given that our total reserves now sit at 4.2 million ounces, putting us in a much better place on reserve metrics with our peers. The big change since we reported our reserves and resources on October 1 is obviously the Maiden reserve declared on the Never Never underground deposit. 7 million tonnes of 7.3 grams to 1.6 million ounces, to my knowledge, is still the highest-grade undeveloped mine in Australia. I will now hand over to Darren, who will take the next few slides. Thanks, Darren.

Good morning, all. On Slide 10, we have incorporated into our technical studies and cash flow projections, the synergies, but I feel it's important to highlight what they are and the quantum. Firstly, there are synergies and then there are real synergies. We haven't simply applied a percentage factor of supplier spend as part of the synergy. On Slide 10, we have broken down synergies into 3 main groups and quantified the value on each. The first being capital savings, looking at the difference in cost between a single plant operation versus 2 separate processing facilities with amounts validated by third-party engineering firms. Secondly, we look at operational savings, quantifying savings on the processing cost under a single plant operation, offset by additional trucking costs from Dalgaranga to Mt Magnet. And the last being the cash tax benefit validated by third-party accounting firms. All this adds up to $1 billion, validating a synergistic transaction with Spartan. For information purposes, we've also quantified the additional working capital required by Spartan, had it remained a stand-alone business. On Slide 11 -- Slide 11 has been a shareholder favorite historically being referred to as the jaw slide. We have plotted the historical gold price achieved from FY '21 to FY '25, along with actual all-in sustaining cost over this period. On a forward-looking basis, we have plotted the midpoint of all-in sustaining cost and used a gold price of AUD 4,500 an ounce. With the inclusion of the high-grade Never Never deposit, the jaws now become more of a whale mouth, but it's important to remember that lower all-in sustaining costs from FY '31 to FY '35 is expected, so the jaws will open wider again from FY '31 onwards as we enter the heart of the Pepper zone. Slide 21 -- Slide 12 provides an indicative look at free cash flow generation going forward on our production outlook at different gold prices. We have purposely sequenced the Mt Magnet and Rebecca-Roe spends to ensure we remain free cash flow generating. And as you will note, it is increasing every year with FY '26 being a higher capital spend year. Mt Magnet will predominantly feature in today's call, but our Rebecca-Roe should not be forgotten in regards to cash flow generation. As you will note on Slide 36, the Rebecca-Roe project will be generating annual free cash flow of $200 million per annum from FY '30 to FY '36 at a gold price of $4,500 per ounce. To my knowledge, there is no other mid-tier gold company out there globally that can demonstrate 107% production growth, the increasing free cash flow generation year-on-year. And once they pass a heightened investment period, be generating over $1 billion annually in free cash flow. A reminder, this is not a new phenomenon at Ramelius. In FY '25, we ranked second in our peer group of free cash flow generation, generating just under $700 million for the year. We're just behind Evolution Mining and considering Evolution produced more gold than us, we have came in at #1 on underlying free cash flow per ounce producing basis metric. We are very proud of this metric as it speaks to the quality of our ounces, the high-grade, higher margin business that is Ramelius. And if you refer to Slide 49 of the deck, you will see the comparison to our peers on this metric. Finally for me, Ramelius' 5-year outlook is fully funded with growing balance sheet after FY '36. And the Ramelius Board has recognized this with a new capital framework to be released in the first half of the calendar 2026 in recognition of growing free cash flow with a focus to maintain and grow returns to shareholders. Just pass it back to Mark.

Okay. We're looking at Mt Magnet. We're on Slide 14. And this slide is a key slide from a COO or an engineer's perspective. You may have heard me say in the past that this is the best Mt Magnet mine plan since I started with the company back in 2012. And I think on this occasion, I can say the same thing again. And those -- for those who have followed the company for some time, 100,000 ounces out of Mt Magnet used to be a good outcome. Over the past few years, we've elevated that production to over 200,000 ounces, almost 250,000 ounces in FY '25. But with the inclusion of Dalgaranga, we're even above 350,000 ounces, within reach of 400,000 ounces possibly from one hub, and I'll talk a little bit more on what that means in terms of Australian gold hubs shortly. So as you can see in the bar charts, the contribution from Dalgaranga is obvious as the mine ramps up. And as discussed earlier, we're looking to have the expanded Mt Magnet plant operational at 4.3 million tonnes in September 2027. The all-in sustaining cost is peer-leading for the next 5 years, averaging less than $900, post FY $1,900. Post FY '31, the average all-in sustaining cost reduces to less than $1,600. With gold obviously moving around a bit, but I believe currently trading around $6,000 an ounce, that's a margin of over AUD 4,000 an ounce. And if gold prices hold into the future, Mt Magnet margins will increase to over AUD 4,500 an ounce, truly incredible. Great time to be a gold miner. In terms of reserves and resources specifically at Mt Magnet, this slide also captures the impact of Dalgaranga. We've gone in terms of total ore reserves up to 3.1 million ounces. But importantly, there is a 29% increase in overall grade compared to FY '24. In terms of the mill, obviously, there's a lot of work. There's a lot of detail in the releases, but the metallurgical aspects of the Dalgaranga ore body were key to all of this work. And we have mentioned before that we wanted to make sure we made the right decision on the final plant design, whether it be at Mt Magnet or Dalgaranga or a combination of the 2. As you can see, no matter which way we went, the final option requires a 53-micron grind size to maximize recoveries at 93.3%. We might have mentioned 75-micron in the past, that will give you something closer to 90%. We think it's worth going after that extra 3.3% on the Never Never and Pepper ore. We also ran test work with residence times of 24 and 48 hours. Important to note here at the very right-hand side of the chart, there is no material difference assuming you're at 53 microns. That's another very important point. So with this information in hand, we moved to assess the best option between Mt Magnet and Dalgaranga. So on Slide 17, happy to share the final option that we have selected did originate from the Mt Magnet operations team in consultation with our technical team in Perth and also external consultants. Firstly, while upgrades are underway, we will, as we've said before, be running Dalgaranga ore through the current Mt Magnet plant, which is currently approximately 2 million tonnes per annum capacity at 175-micron grind. And we'll take the hit on recovery for Dalgaranga, which, as mentioned, is just above 80% for that time period. The ultimate plan is to reconfigure the Mt Magnet circuit to enable it to run at 1.3 million tonnes per annum, so downgrading the throughput, but at the optimal 53-micron grind size processing Dalgaranga ore. Later in the mine life, we do have the ability, this is the flexibility that this plant option gives us, to increase capacity back to 2 million tonnes per annum by relaxing the grind size out -- back out to 175-micron, and that's post depletion of Dalgaranga ore sources if and when that occurs. This is Circuit 1 as labeled on the plan. In parallel, we will install a new circuit, Circuit 2 with a nameplate throughput of 3 million tonnes per annum and a grind size of 175 microns, which basically suits the current grind size for Mt Magnet ore. We'll do that by refurbishing and repurposing various pieces of equipment from the Dalgaranga plant, including the largest SAG mill and gravity circuit. And as you can see, we will be adding some new items such as a new crushing plant, ball mill and some tankage. Total CapEx on the Mt Magnet plant upgrade is $223 million. Increasing throughput from 2 million tonnes potentially all the way up to 5 million tonnes, we believe this is quite capital efficient as opposed to the option of having 2 separate processing facilities at Mt Magnet and Dalgaranga with the same 5 million tonne processing capacity. The cost of this option, and it is detailed in the releases, is $327 million. So we are banking a CapEx of just over $100 million on the option we've chosen. One of the reasons why the Mt Magnet option is superior is the leverage to lower power prices. And that's further exacerbated by the Mt Magnet hybrid power station that we're partway through installing. You can see here a picture of our solar farm, which will continue to expand. But probably more importantly, we'll be soon adding 14 megawatts of wind power in FY '26. These renewable sources will predominantly power the Mt Magnet mill over time and have, as I mentioned, further enhanced the overall economics of the Mt Magnet option. which already enjoys an advantage having piped gas versus trucked gas that Dalgaranga would require. In terms of our mill benchmarking, we always believed that Mt Magnet and further to that, our Edna May mill run at a very competitive cost per tonne through the mill, and that's borne out in this slide here. As you can see on the chart, Mt Magnet running at an average around 1.9 million tonnes per annum is one of the lowest cost mills of that size compared to peers. And as we look to increase tonnage, that cost per tonne, as you would expect, will decrease. And as evidence, it might be a little hard to see as the arrows go from the blue dot to the yellow dot at 4.3 million tonnes and ultimately on to the orange dot at 5 million tonnes. So what you actually have as a result is the option we have chosen has both a CapEx and an OpEx advantage over the alternative, plus a number of intangible benefits that we have listed in the release. These include doing CapEx projects at one location rather than having 1 ops team rather than 2, et cetera, et cetera. Where does that put Mt Magnet? We're on to Slide 20 now. Here, we actually have an overview of the top Australian gold production hubs. And as you can see, once in full flight, the Mt Magnet hub will be producing 360,000 ounces of gold at an average of AUD 1,585 per ounce. So based on comparative FY '25 stats, it will be the fifth largest gold production center in Australia with the second lowest cost profile, truly amazing from modest beginnings when Ramelius involvement in the project back in 2011 and also remembering that there's 100 years or so of mining history at Mt Magnet. Moving on to Slide 22, the Never Never production schedule. Point I'll make here is, as opposed to Penny and to a lesser degree, Cue, Never Never has grade, but it also has life, 11 years in the first instance. The Never Never mine will provide the horsepower we need to become a 500,000-ounce producer. As you can see in the schedule, at peak mining, we'll be mining approximately 1 million tonnes per annum, with grades increasing in time as we get into the heart of the ore body, especially when we get to the point of combining ore from the Pepper zone with Never Never. For comparative purposes, Penny over its life of mine to date has contributed 456,000 tonnes at 12 grams. Never Never is expected to contribute 9.3 million tonnes at 6.45 grams over its current life of mine. We no longer have to require high-grade supplementary feed for the Mt Magnet Hub. We have a high-grade baseload and high-grade prospects on our own ground to add further ounces. Not surprisingly, the PFS results for Never Never are pretty impressive. At first glance, this is inclusive of Pepper, I'll also point out, will contribute to the Mt Magnet Hub from a PFS point of view, 1.8 million ounces in gold produced at an all-in sustaining cost of $1,128, an NPV of $3.5 billion at a gold price of AUD 4,500 and free cash flow ranging from $4.6 billion at a gold price of $4,500 up to $6.4 billion at a gold price of $6,000 an ounce. And this is based on only what we know today. With 75,000 drill meters planned for Dalgaranga in FY '26, there is scope to derive significant additional value from places like Four Pillars, West Winds, and Applewood and in time, look to extend Never Never at depth, remembering there's some very good deeper hits at Never Never to follow up on. Moving ahead to Slide 27, which looks to highlight simplistically the upside potential we see on our 5-year plan, which we claim as a base case in which production year -- and in which production year that upside could eventuate. We do remain optimistic that there will be an extension to our existing Penny North high-grade deposit to the Southwest. As everyone would know, Penny is our highest grade mine in operation. So any extension will add value and production ounces as early as FY '27. See Slide 28 of the deck for our detailed underground drill program, which, as Tim mentioned, Tim Hewitt, our COO, mentioned yesterday, has recently commenced. Cue underground is the next target with potential additions to production in FY '28 and '29 on success based on known high-grade mineralization below the existing mine plan. Our interest here particularly stems from the deeper intercept of 6 meters at 60.3 grams per tonne. So see Slide 29 for the target areas, noting we have already drilled a number of holes and are just waiting for the assays to be returned. The Galaxy mine has 2 operating areas with depth extension potential as well as recent drill results at Hesperus and Perseverance South, suggesting the potential for new underground mines relatively close to surface. The impact to production here, given existing mining plans would be as early as FY '29 and then beyond, Slide 31 shows our drill plans that are upcoming, utilizing new underground drill platforms put in this year as part of our increased exploration budget. Finally, we have Dalgaranga in the area below the Gilbeys pit, which you can see on Slide 32, where there is underground potential to the south with 3 key prospects, West Winds, Four Pillars and Applewood, which will be the focus of this year's resource extension drilling as well as obviously carrying out a lot of grade control drilling into Never Never and Pepper. We'll now jump on to the Rebecca-Roe DFS, initially speaking to Slide 35. Firstly, I want to recognize the hard work from the technical team in preparing the updated technical studies that we refer to as the Rebecca-Roe DFS that has formed the basis of financial investment decision approved by the Board. Now if I can just touch on the key changes rather than running through the whole detailed document, changes from PFS to DFS, remembering the PFS was delivered back in December 2024. As discussed earlier, we have pushed construction back by just over a year to allow us to focus on the Mt Magnet plant upgrade firstly. We have declared a Maiden Ore Reserve on the Bombora Underground of around 260,000 ounces. This follows on from the technical work, geotechnical and hydrology work undertaking that was identified as needed doing from the PFS. We also have consolidated mine villages from 2 separate villages into 1 larger camp and increasing the overall room numbers to 460 to account for construction. peak periods as part of that. And we have also slightly increased the throughput of the processing plant from 3 million tonnes to 3.25 million tonnes. Not unlike others, we have also seen some mining cost increases, both due to total material move going up, but also higher mining contractor rates, somewhere just above 5% is the sense that we're getting in terms of those cost increases. Factoring in all items, we have seen a modest cost increase in both operating and capital costs. However, the project, as you can see from the numbers, remain highly profitable and importantly, it's perfect for us to take advantage of our hub-and-spoke model in what we believe is an underexplored mining region relatively close to Kalgoorlie. So Slide 36 does have these results. And on the back of strong economics displayed, the Ramelius Board has made a positive financial investment decision, subject to certain milestones being met. This is a real endorsement of both the technical work undertaken by the team, but also our commitment to moving this project forward. A few points quickly to highlight here, 26.3 million tonnes at 1.4 grams per tonne for 1.1 million ounces of recovered gold. PP&E growth capital of $340 million, $1 billion in cash flow generation at a $4,500 an ounce gold price. Production over the life of the project averages around 130,000 ounces a year, but closer to 140,000 ounces between FY '30 and FY '36 at an all-in sustaining cost of $2,625 an ounce. And whilst we can acknowledge that Rebecca-Roe will be a higher cost operation compared to Mt Magnet as most are, it does compare pretty favorably to our peers at this cost level without naming names, which generally sit between $2,600 and $2,800 per ounce. We have a few key milestones on Slide 38 for the Rebecca-Roe project, I'd just like to run through. Probably a little-known fact, we haven't really made a large fuss of it, but Rebecca has received environmental approval under Part V of the Environmental Protection Act, given the company confidence around this Part V process. We are requesting Roe's application also to proceed under Part V to potentially advance the Roe project earlier, and we should have clarity from the regulators on that request in the coming months. And we're also working with our traditional owners, the Kakarra Aboriginal Corporation to complete a Native Title Mining Agreement, which we're at the final stages of which. Okay. We're on the last slide. Firstly, we are a reliable team. We've demonstrated that with our last 5 years of delivery to guidance, both from a cost and production perspective. We believe that's a peer-leading track record. Our balance sheet proves our position as a sector leader in cash flow generation. We're confident that this will continue for the next 10 years. In terms of dividends, our dividends are well above mid-tier gold producers with our Board committed to going forward, maintain and grow shareholder returns in the future as our cash flow, particularly as our cash flow generation increases. We have mentioned that we have a production growth plan with significant growth that importantly is fully funded. This has all led to our inclusion in the ASX 100. And last but not least, we have exceptional exploration upside at all of our sites with a real focus in the short term of both Mt Magnet and Dalgaranga to enhance our base case production profile. Thanks for listening. That concludes the presentation. Let's please move to Q&A, if we could, [ Harmony ]. We'll initially go to the audio questions or the phone questions first.

[Operator Instructions] Your first question comes from Hugo Nicolaci from Goldman Sachs.

Firstly, congrats on the update. No doubt, a lot of work has gone in from the whole team. So well done. First one for me, just more on the cost and CapEx piece, and thanks for setting out sort of the underground mining costs and growth CapEx piece. Just noting in the Mt Magnet study, you've highlighted that you need further tailings from 2028. Are you able to just step through what the plan is there and what the associated capital cost and timing of that would be if it's not included in that 5-year CapEx outlook, please?

Hugo, yes, it's all included in that 5-year plan. I guess I'm probably referencing at Slide 22. It's more I think classified as sustaining capital in that instance. I think our plan isn't probably out until 2028 from memory and then it starts to kick in some rises for that to occur. So it is included in that -- in the profile. I can dig in further after the call if you want to try and find that.

Yes, it's definitely in there, Hugo. I think we get to '28 on sort of a super cell over the current and then beyond that, we move forward, but we've accounted -- we like to think we account for everything. We're reasonably conservative in my plans, base case, everything should be in there.

Yes. And it's still PFS level as well.

Yes. No, fantastic. That's great. That's all in there. And then in and around the recycling of Dalgaranga plant and then taking some equipment across the Mt Magnet expansion, what equipment would that leave you with? And is there a scope to potentially monetize that to potentially further increase the cash piece and derisk the CapEx further?

We're taking the SAG mill and the gravity circuit, remembering that the Dalgaranga plant, the front end is not really fit for purpose. So it doesn't leave a lot, and there's no ball mill there because remembering that Spartan to process hard rock needed to install a ball mill. There's obviously the gold room and the tanks, and we'll be taking those as well. So we'll take what we can. It won't leave a lot. But I think one point to make is that the mill is fully permitted. And there's a footprint there that on the basis of significant exploration success, then you retain that option. But we will take what we can. And the most significant part of that is the SAG mill. It may not be well understood, but that SAG mill was considerably larger than the one we have at Mt Magnet and much better suited to running at 3 million tonnes per annum than the current one at Magnet. So the fact that the Mt Magnet circuit as it stands is basically going to treat Dalgaranga ore and the Dalgaranga circuit in parts is going to treat Mt Magnet ore might sound a bit of odd, but there's some really sound logic behind it.

Your next question comes from Andrew Bowler from Macquarie.

Just looking at the Never Never underground outputs of around about 1 million tonnes per annum. Just wondering how notional that figure is. Is there a potential to flex that up as the strike extents increase as you head more into Pepper? Or is that something you've looked at closely in that sort of 1 million tonnes per annum is a pretty sticky number coming out of Never Never?

Look, I'd like to think that our guys, when they give us a number both in terms of production and then also in terms of grade, it's a number they can deliver on. So there's been a lot of work. We've had to put in extra work into the ventilation piece to make sure that you can get the number of pieces of kit down the hole, so when you actually hit the wider parts of the ore body, you can capitalize on that. When you start looking 5 years out, whether this mine can go, I know Spartan had aspirations to go to 1.25 million tonnes per annum, 1.3 million tonnes per annum potentially. It's just not in our guys' nature to put that on the table in the first instance. We'll see how we go when we get there, but possibly. The similar thing applies to grade. We have a 9-gram resource at Penny West, and we've got a 7-gram reserve. The reason I mentioned that is because you've got some parallels here. You have a 9-gram resource and you've got about a 7-gram reserve. Is that conservative? Potentially, but I'd rather have a number that I can deliver at least rather than coming back and explaining why we're not delivering to a reserve.

Understood. And also, just obviously, this study is based on Never Never only and Pepper as well. What's the potential for a restart of the Gilbeys pit now that you're looking to truck material the way to Mt Magnet? I mean is that sort of that decision to go with the unified processing option at Mt Magnet pretty much preclude a restart of Gilbeys? Or is that something down the track that could be explored?

We will -- thanks, Andrew. We will try to exploit the Never Never pit on the top of the Never Never ore body, and that's in the -- in one of the documents. That's important. It adds a few ounces, but it's quite important from having another access, another ventilation access into the top of the ore body. In fact, we'd like to have that now according to the team. But the reality is that even if we wanted to mine another cutback at Gilbeys, there's a number of things preventing that. One is that it's still got a considerable amount of water. Probably more importantly, our portal access into Never Never underground is in the wall of that pit. And the third thing is that it's somewhat restricted on both sides, a cutback that is from the waste dump on one side and an old tailings dam on the other side. So we see that as pretty impractical. We'll access pretty much that ore where we can from underground, particularly to the South. Based on drilling success, we do see potential for a second access into a southern part of the mine whilst we're concurrently mining in Never Never and Pepper ultimately.

[Operator Instructions] Your next question comes from Alex Barkley from RBC.