Ramelius Resources Limited ($RMS)

Thank you for standing by, and welcome to the Ramelius Resources March Quarterly 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. In addition to the quarterly report, we have released a presentation that we'll speak to during this call. Noting that it also includes information from our Dalgaranga exploration update released last week. Both documents have been uploaded on the ASX platform and will be available on our website shortly. This morning, I'm joined by members of the executive team, our COO, Tim Hewitt, CFO; Darren Millman; and our EGM of Exploration; Peter Ruzicka. Initially, I'll be speaking to highlights for the quarter, and we will then pass on to Tim, who will speak to the operating highlights. Peter will obviously talk to the exploration results, and Darren will speak to financial highlights before I close out with our priorities for the remainder of FY '26. While the presentation is relatively high level, I do note a lot more detail can be found within both the quarterly report released today and the Dalgaranga exploration update I just mentioned. As usual, at the end, there will be an opportunity for listeners to ask questions, whether that be through the teleconference or the webinar depending on how you have joined the call. So assuming you have the presentation deck handy, I'll initially be speaking to Slide 3. Gold production for the quarter was 38,093 ounces at an all-in sustaining cost of AUD 2,211. This was a solid result, generally in line with our expectations given the planned 6-day mill shutdown and weather-related disruptions late in the quarter. This has resulted in some production moving into Q4. But importantly, our FY '26 production guidance is unchanged with a strong fourth quarter expected. Tim will talk further to mill grades and expectations for the remainder of the financial year. It was exciting to see the processing of the first ore from Never Never in the quarter, marking a significant milestone as we transition Dalgaranga into the Mt Magnet hub mix. We look forward to a more significant contribution from Dalgaranga in this current quarter. For full year guidance in terms of all-in sustaining costs, we have updated the range to $1,900 to $2,050 per ounce, reflecting three things: the earlier-than-expected declaration of commercial production at Never Never, which Darren will talk to shortly, diesel price escalation and higher royalties from stronger gold price. I will note that the $175 increase in the all-in sustaining cost midpoint is pretty much accounted for by these three items alone. Work on the Mt Magnet plant expansion has accelerated across the quarter with a strategy to front-end load the engineering design work. We have commenced preliminary site works and the establishment of the project execution team. There are 2 areas of focus for the engineering design. Firstly, the existing 1.9 million tonne ball mill drive train refurbishment is underway, and we did appoint a third-party contractor subsequent to the end of the quarter, who will oversee the project, and we're referring to this project as Stage 1. And secondly, the new 3 million tonne circuit, we are focused on the Front-End engineering & Design, FEED. And then the EPC contract is targeted to be awarded early in the September quarter, and we're referring to this part as Stage 2. On the financials, we have completed $110.2 million worth of share buybacks, equating to 44% of our announced share buyback program, which I know is one of the largest amounts by value spent in the quarter by any Australian gold producer. But in addition to this, we closed out our FY '27 hedge book and pre-delivered the Q4 FY '26 hedge commitments. And despite this, we still finished the quarter with a very strong cash and gold balance of $606.5 million. Our growth projects are fully funded, and we remain focused on increasing returns to our shareholders as we grow the company. And Darren, obviously will talk to this in more detail a little later. On Slide 4, we'll see a breakdown of ore sources during the quarter. What you can see here, as mentioned, that Q4 will be our strongest quarter with Dalgaranga expected to contribute over 30% of production. Haulage to Mt Magnet is expected to materially increase in the June quarter with haulage rates ramping up as we speak. The 56,000 ounces planned for Q4 puts us right in the midpoint of FY '26 production guidance and with no further hedge commitments leaves this strong quarterly production 100% exposed to the current strong A dollar gold price. With that, I will now pass over to Tim.

Thanks, Mark. Good morning, all. Moving on to Slide 5 to discuss the production metrics. We mined 550,000 tonnes ore at a grade of 2.45 grams a tonne, with both metrics being comparable to the prior quarter. Open pit tonnes mined for Cue were 26% down on the prior quarter with a focus on Stage 2 cutback of Break of Day and the commencement of Big Sky pit. Both of these are in a higher life-of-mine strip ratio for the quarter. This was offset by increased tonnages from the higher-grade underground operations from Galaxy, Penny and Dalgaranga, all increasing quarter-on-quarter. Mined grades, while marginally down on the prior quarter, were in line with the model expectations. At the Mt Magnet processing plant, tonnes processed were down compared to the previous quarter due to the planned 6-day mill shutdown. Grade was similar to the previous quarter, resulting in the gold production of just over 38,000 ounces. Moving on to Slide 6. We take a more detailed look at the Mt Magnet operations. Open pit mining continued at both Cue and Dalgaranga with operations impacted by significant rainfall associated with Cyclone Narelle towards the end of the quarter. All underground mines delivered strongly on development meters with focus on capital development at both Galaxy and Dalgaranga. Significantly, production commenced at Dalgaranga with the first stope fired in Never Never. Galaxy's ore delivery was much stronger in this quarter compared to prior. Looking forward, production is expected to be significantly higher in Q4 with increased haulage of high-grade ore from Dalgaranga. The team's focus will continue for the remainder of the year on operational excellence, safe production and cost management. On to Slide 7 and Penny. Mining at Penny totaled 80,000 tonnes at a grade of 6.33 grams per tonne. However, given the weather-related events late in the quarter, not all of that material made to the processing plant, with 74,000 tonnes milled at a grade of 6.72 grams a tonne for just under 16,000 ounces of recovered gold. Production has now commenced in Penny West and stoping at both Penny North, and Penny West will deliver similar ounces in Q4. On to Slide 8 and Galaxy. Here, we combine both the operational statistics and some recent drilling results. We saw improvement in both tonnages and grade at Galaxy in the quarter with Galaxy delivering their best quarter this year. 145,000 tonnes of this was processed at a grade of 2.24 grams for just under 10,000 ounces. Peter will speak to Galaxy exploration plans later. But as noted on the slide, we continue to see mineralization at depth within the target zone. Some of the high-grade drill results to highlight are 4.1 meters at 22.4 grams per tonne from 463.9 meters, 8.1 meters at 10.3 grams per tonne from 109.7 meters and 14.2 meters at 3.07 grams per tonne from 473.8 meters. Now moving on to Cue. As mentioned earlier, the focus on Cue the quarter has been on the development of Stage 2 cutback at the Break of Day pit and Big Sky. So we did see that reduction in tonnes mined. Of the 253,000 tonnes mined, 128,000 tonnes were processed at Mt Magnet at a grade of 2 grams per tonne for 7,900 ounces. Haulage was down in the prior quarter, with the fleet prioritizing the additional high-grade ore from Penny. And the reduced mill requirements with the planned shutdown. The photo there shows Stage 2 cutback. And in the background, you can see some of our recent progressive rehab on the waste dump. Moving on to Dalgaranga, Slide 10. The image on the left shows the current underground development, both the incline and decline positions on the Never Never deposit, with the right image showing progress made to date on the paste plant. You can see the paste plant in the background. Total lateral development at the underground was 1,690 meters, which is largely in line with the prior quarter, while good progress was made in the open pit. Still with Dalgaranga on Slide 11. As you can imagine, there's a lot going on at that site besides the underground and open pit mining, including the paste plant and workshop construction and the completion of the first underground pump station. The team fired their first stope successfully mid-March, containing just under 41,000 tonnes at a grade of 7.41 grams per tonne. At the end of the quarter, there's a total of 58,000 tonnes of ore at a grade of 3.23 grams per tonne, ready and awaiting haulage to Mt Magnet. Haulage is expected to increase notably in the current quarter. With this, I'll now pass over to Peter.

Thanks, Tim. On to Slide 12. This is the 5-year production profile for Mt Magnet, and we wanted to highlight a few key points from an exploration perspective. Firstly, Mt Magnet's growth profile, significantly increasing to up to 400,000 ounces per annum by FY '30. On the graph on this slide, at the bottom of each year, you'll see the low-grade ore currently planned to be processed in that year, especially in the years FY '29 and FY '30. So you'll see in those years, FY '29, 1.9 million tonnes at 0.8 grams per tonne. And in FY '30, 1.8 million tonnes at 0.6 grams per tonne. Exploration opportunities in each year are highlighted at the top of the graph and are clearly linked to improvement of our future production profile at Mt Magnet by replacing that lower-grade material. We currently have 10 surface rigs and 4 underground rigs devoted to the Mt Magnet hub. Our exploration commentary today will focus on Galaxy and Gilbey's. Moving on to Slide 13. The Galaxy mineralized system is open at depth with both the depth host and the controlling structures continuing undisrupted at depth. I'll draw your attention to the ounce per vertical meter profile on the left of this figure. The drop-off below around 320 meters below surface is a function of drilling density only, continuation of geology, just not enough drilling. In January, we released an exploration target below the current classified resource based on a continuation of geology and assumptions around the average ounce per vertical meter profile of around 2,300 ounces per vertical meter. That work saw an exploration target of 400,000 to 600,000 ounces defined. Current underground programs are looking to achieve 3 objectives: identify relatively shallow lateral resource opportunities, increase resource confidence for resources to reserve conversion, and upgrade the exploration target below the classified resource. This is a real opportunity to displace lower-grade ore in the mine plan for FY '29 and FY '30. Moving on to Slide 14, Gilbey's underground. We've highlighted results from the Dalgaranga exploration update we released on the 22nd of April. Conceptually, we're looking to add minable ounces to the production profile again in FY '29 and FY '30. Additional high-grade drill results from Gilbey's underground drilling include 3.9 meters at 21.2 grams per tonne, 6.1 meters at 10.4 gram per tonne and 7.7 meters at 5.94 grams per tonne. There's currently a mineral resource of 6.9 million tonnes at 1.9 grams per tonne to 380,000 ounces for Gilbey's underground. We're trying to add to this with conversion of an exploration target below the current resource. That exploration target set at 2.1 million to 4.7 million tonnes at a grade of 1.5 to 2 grams per tonne for 100,000 to 300,000 ounces. That exploration target is based on existing sparse drilling data, which confirms extension of the mineralized shear zones and the same host rocks at depth. Again, looking to displace low-grade 0.6 to 0.8 gram per tonne ore in FY '29 and FY '30 with Gilbey's underground material grading at 1.5 to 2 grams per tonne, this will have a meaningful impact. Moving on to Slide 15, Dalgaranga open pit potential. From an exploration lens, Dalgaranga remains the corridor for future discoveries both to the north and south of the Gilbey's mine area. Surface drilling during the quarter has evaluated a number of targets in the Southern Gilbey's area, at Plymouth-Sly Fox and Gilbey's South. Last quarter, we reported a result of 4 meters at 42.6 grams per tonne gold from Plymouth, highlighting the high-grade potential. More recently, we've recorded a number of encouraging results from Sly Fox, including 16.5 meters at 2.5 grams per tonne gold. And with that, I'll now hand over to Darren.

Thanks, Peter, and good morning, all. I'll now be speaking to Slide 16. For the March quarter, we generated $101.9 million of free cash flow. This is up on the prior quarter, even in a period of reinvestment into the business. The all-in sustaining cost for the quarter was $2,211 per ounce, and we've driven higher -- driven by higher maintenance costs associated with the planned mill shutdown in the period and associated impact on mill throughput. Also impacting the all-in sustaining cost was the higher gold price, which increased royalty costs and added approximately $20 per ounce for the quarter. The year-to-date all-in sustaining costs of $1,987 per ounce remained below the $2,000 and leaves us well placed compared to our peers. During the quarter, we sold 38,150 ounces at an average realized price of AUD 5,795 per ounce, which included a mix of spot and committed forward sales. We pre-delivered 8,000 ounces of the June quarter hedge book commitments, which leaves us unhedged position for the remainder of FY '26 with full upside to this remarkable gold price. In total, sales revenue for the quarter was $221.1 million. The realized gold price for the quarter was up 12% on an average improving spot price and also included the impact of the hedge commitments. The Aussie gold price itself improved over the quarter by 5%. The resulting all-in sustaining margin, which is the average realized gold price less the all-in sustaining was $3,584 per ounce, our best on record and represents an all-in sustaining margin of 62%. Moving on to Slide 17 and the cash flow for the business for the quarter. Operational cash flow was $171.3 million, an increase on the prior quarter despite the lower production. After taking into account the cost of the Q3 hedge book deliveries of $16.1 million is reduced to $155.2 million, which is still an increase quarter-on-quarter. This operational cash flow funded growth capital investment for the quarter of $51.2 million, which mainly related to underground development of Never Never, the Stage 2 cutback at Break of Day and infrastructure across both Dalgaranga and at Mt Magnet. Our investment in exploration and resource definition for the quarter totaled $26.4 million and was focused on Dalgaranga, Mt Magnet, Cue and Penny. As highlighted by Peter, we're seeing the returns on investment in our exploration results to date. Resulting underlying free cash flow for the quarter was $101.9 million. This underpinned our ability to make a total cash payment of $110.2 million in share buybacks to reward shareholders. This equates to 44% of the $250 million share buyback program announced back in December last year. Lastly, we closed out FY '27 hedge book and pre-delivered the June 2026 quarter hedges. The FY '27 hedge book closure costs equated to $28.4 million, and pre-delivery of the June quarter hedges in this quarter totaled $30.6 million, assuming these ounces were sold at the average spot price for the month. The remainder of FY '26 is unhedged and no further forward contracts are currently being considered. The result in closing cash and gold position was AUD 606.5 million. On Slide 18, we provide a table noting key updates to FY '26 guidance. We have increased our all-in sustaining cost to $1,900 to $2,050 per ounce, still remaining in the low-cost quartile with the 3 main drivers of this increase being one, the declaration of commercial production at the Never Never underground, 1 quarter earlier than planned, resulting in an additional $100 per ounce in all-in sustaining. It's important to note that this is merely a reclassification of costs from growth capital to sustaining, aligning with the fact that the mine is now profitable earlier than we expected with high gold price at high initial grades initially modeled. So all in all, a positive for the business. Secondly, higher gold price, resulting in higher gold royalties, which is expected to increase all-in sustaining by approximately $40 per ounce in FY '26. And thirdly, diesel costs, which at current prices are estimated to impact the all-in sustaining by $35 per ounce or $20 after factoring in our diesel hedge book. On growth capital, as mentioned earlier, we have updated our Mt Magnet plant construction strategy to front-end load engineering design work, which has resulted in some expenditure originally planned for FY '26 to be now incurred in FY '27. But importantly, there is no impact on our overall project timing. Overall, at the group level, we have revised PP&E growth capital from -- for FY '26 to $90 million to $100 million. On growth capital mine development, the reclassification of mine -- of Never Never mine development from growth to sustaining that we just discussed has resulted in reduction in mine development growth by approximately $20 million, which is the midpoint of our production guide and equates to $100 an ounce impact. Again, I can't stress enough, overall, the sustaining and mine development costs for the Never Never underground are unchanged and it's just a classification of costs for this in the fourth quarter. On depreciation and amortization, the earlier-than-expected commercial production from Never Never underground has resulted in utilization of the mine property, which resulted in the acquisition cost of the project commencing sooner than initially expected. Revised guidance for the depreciation and amortization for FY '26 is $310 million to $330 million. On Slide 19, we are highlighting our historical returns to shareholders, predominantly in the form of dividends with buybacks added to the mix in FY '26. As previously disclosed, the Ramelius Board wants to ensure shareholders' returns are maintained during our investment period in FY '26 and FY '27, then we grow the returns. In FY '26, we have already exceeded FY '25 returns with interim dividend of $0.03 per share paid in the quarter, along with the $110 million share buybacks made. We look forward to continuing this trend as we move forward. I'll now pass it back to Mark to wrap up.

Thanks, Darren. We're on Slide 20, where we have summarized our key focus areas for the remainder of the financial year. At the corporate level, we will continue to drive improvements in our safety performance and also closely monitor diesel fuel supply and usage whilst continuing our share buyback program. Our exploration team will remain focused on high-grade targets as discussed by Peter, particularly at Mt Magnet and Dalgaranga. We'll continue to ramp up at Dalgaranga underground and also ramp up the ore haulage quantities to ultimately match production levels. On the Mt Magnet plant upgrade, we will continue with both Stage 1 refurbishment of the existing plant and complete the front-end engineering design and award the EPC contract for Stage 2. Lastly, we expect to hear back from the EPA on our Roe environmental approval during this June quarter. These key focus areas will drive our next phase of growth and value creation. We'll now open up the line for questions if we can, please, Katie.

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

Just a couple for me, Mark. Just on the drilling and doing at Mt Magnet. I mean how quickly do you think you can start defining some of those open pits because pushing that Eridanus feed into stockpile rather than through the mill would be obviously pretty material on a 3-year outlook. And then also, can we just have an update on where the Edna May process is at too, please?

Thanks, Hayden. Unfortunately, bringing in new open pits that aren't currently in the mine plan that may be a longer lead time to bring those in than we'd all like. And I'm thinking you're thinking Hesperus, maybe Windbag, maybe a bigger Franks Tower and those sorts of things. There is an investment at Eridanus, which we think is worthwhile, because ultimately, once we're down into the higher grade material, that will supply decent grade baseload feed to the mill for the long term. In terms of Edna May, we're still considering our options there. There's obviously a lot of value on the table at Edna May. At the moment, the nice thing is we don't need any ounces to deliver on our 5-year plan, but we're still considering what we do with in Edna May.

[Operator Instructions] Your next question comes from Ben Wood with UBS.

My question is just on some of the CapEx that we'll see go from FY '26 to FY '27 relating to the FEED project and potentially Rebecca-Roe early works. How much do we sort of expect of that $100 million, say, do we expect to be carried forward? Is it the full amount? Or is it potentially a bit less than that?

Yes. On the Mt Magnet plant expansion, probably thinking somewhere between $50 million to $75 million of the FY '26 number. So a lot of that given our new strategy that Mark just spoke to. And Rebecca-Roe, we just really wanted to double down on Mt Magnet. So probably about 75% of those costs will move into FY '27 or so.

Hopefully, we answered your question there, Ben.

Yes.

[Operator Instructions] As there are no further questions, that does conclude our conference for today. Thank you for participating. You may now disconnect.