Regis Resources Limited (RRL) Earnings Call Transcript & Summary

Ladies and gentlemen, my name is James Mactier. I'm nonexecutive Chairman of Regis Resources Limited, and I welcome you all to our 2021 Annual General Meeting. This is the first time in which we've had -- shareholders have had the choice of joining the AGM, either in person or virtually, and I'm glad this has enabled so many more shareholders to join us. The agenda today will commence with a welcome in Chairman's address. We'll then move to the formal part of the meeting with some meeting administration and resolutions. Shareholders will have the opportunity to ask questions about the resolutions. And after the questions, final votes will be cast by way of a poll, and the formal meeting will close. After the close of the formal meeting, our Managing Director and CEO, Mr. Jim Beyer, will provide a presentation covering our operational and financial performance and outlook. Questions related to Jim's presentation may be submitted at any time online, and he will answer them along with any questions from here in the room at the end of his presentation. Both Jim's presentation and my address have been lodged with the ASX this morning. I'd like to acknowledge the traditional custodians of the land on which we are holding this meeting, the Whadjuk people of the Noongar nation, and also I acknowledge the traditional custodians of the various lands in which we operate and wherever our online meeting participants are based, we pay our respects to elders, past, present and emerging. I'd like to introduce my fellow Directors: Managing Director and CEO, Mr. Jim Beyer; nonexecutive Directors, Mr. Steve Scudamore; Ms. Fiona Morgan; and Mrs. Lynda Burnett; and we have Mr. Russell Barwick on -- joining us by audio from Queensland; we also have our Chief Financial Officer, Mr. Jon Latto; and our Company Secretary, Ms. Elena Macrides. Many of you will have heard by now a very sad news that our friend and colleague, Jens Balkau, passed away 2 weeks ago after a very long illness. Jens was one of the first and longer-serving employees of Regis. He joined in January 2006 as the General Manager of Exploration, and remained in that role until February 2016 when he retired from full-time work, but continued as a Consultant to the company. Jens led the exploration team with great enthusiasm. He was passionate about geology, exploration, discovery and developing young geologists' talents. He loved spending time in the field with his team and his team benefited greatly from the knowledge he was always more than willing to share with them. Jens was much more than an excellent technical geologist. He was a true gentleman, a great mentor and an inspiring leader. He was responsible for driving our exploration resource definition effort for 10 years, including the discovery of our flagship projects, Moolart Well and Garden Well. Our deepest sympathies with Jens' family and his many friends and colleagues. I'll now take a few moments to provide an overview of the past 12 months and comment on the outlook. Jim will provide more detail in his presentation. The 2021 financial year for Regis was both pleasing and disappointing. It was pleasing in that there were many achievements and improvements to our business. Most notably, we significantly improved our safety performance. We continued our long track record of reliable production and strong financial performance. We acquired a 30% interest in the Tropicana gold mine. We increased our Duketon reserves, resources and mine life. We acquired 100% of the Ben Hur deposit. We commenced development of our second underground mine at Duketon. We continued our significant investment in exploration, which generated exciting results. We continued to improve our sustainability reporting. And we paid $61 million in fully franked dividends. It was disappointing in that despite making considerable progress, we've not yet obtained regulatory approval for the development of McPhillamys. And of course, our share price declined very significantly. Clearly, the general decline in investment sentiment across the gold sector had a significant impact on our share price. However, we also recognize Regis-specific factors exacerbated this decline, including the McPhillamys delays and our acquisition of Tropicana. In relation to McPhillamys, we continue to engage with the relevant authorities. And although we still expect that the requisite approvals will be forthcoming, progress remains frustratingly so -- frustratingly slow and timing is uncertain. As for Tropicana, we believe we paid a fair price for an exceptional asset, the accretive value of which to Regis shareholders will become increasingly evident. Tropicana is a large-scale, long-life, low-cost, well-managed, cash flow-positive mine. It's without significant legacy, execution, community or permitting risks, and is located in arguably the world's premier mining jurisdiction. Gold mines such as Tropicana are few and far between and very hard to find, and they're rarely for sale. In addition to its stand-alone value, Tropicana adds diversification, mine life and scale to our existing portfolio of assets, which together provide investors with lower risk exposure to the gold price, which I know has gone up by approximately $300 an ounce since we bought it. Most importantly, we believe Tropicana offers considerable upside through resource conversion and exploration potential, which was highlighted in our exploration update we provided to the ASX on Monday. We also continue to aggressively explore our substantial tenure in the Duketon Greenstone Belt, where our 3 operating mills, which have produced over 3 million ounces thus far give us a very wide area of influence and operational flexibility. Again, the continued prospectivity of the Duketon belt was highlighted in our update this week. Although the Tropicana acquisition was partly funded with debt, our balance sheet is robust and conservatively geared. We continue to deliver into our hedge book, which now represents approximately 7 months of annualized production. Combined with a supportive macroeconomic backdrop for gold of unprecedented and rising global debt and money supply, alarming levels of inflation, negative real interest rates and rising geopolitical tension, we believe the outlook for Regis is very positive. On behalf of the Board, I would like to thank our management team, led by Managing Director, Jim Beyer, and all our employees and contractors, our joint venture partner, AngloGold Ashanti and the communities in which we operate. It's been an extremely busy and productive year, made more challenging by the ongoing COVID pandemic, and the associated exceptionally tight labor market. Unfortunately, these industry challenges remain. Despite a challenging start to the current financial year, we look forward to another productive and profitable year ahead, mining safely and responsibly. Thank you. We now come to the formal business of the meeting. I advise that the meeting has been properly constituted with a quorum of shareholders present, and I declare the meeting open. The Notice of Meeting dated 25th of October 2021 has been provided to all Regis shareholders in accordance with COVID-19 guidelines on the company's website, and I therefore take the notice as read. At this meeting, as this meeting is being held in-person and online via the Lumi platform, there's some housekeeping that I'll run through. All attendees can watch a live webcast of the meeting. In addition, shareholders and proxyholders have the ability to ask questions and submit votes. For this meeting, we will table each resolution and then answer any shareholder questions after each resolution is read to the meeting. We acknowledge that there's a short time delay between our meeting here in the room and listening online, so we'll allow extra time at the end for anyone who would like to ask a question online who did not get the opportunity to join the questions during the resolutions before we finalize the voting. There is an online meeting guide link in the Notice of Meeting and there's also a help line that you can call. Online attendees can submit a text question at any time. [Operator Instructions] Please note that while you can now submit text questions, they will not be addressed until a relevant time in the meeting. Please also note that your questions may be moderated. For those shareholders online who wish to ask a verbal question, an audio questions facility is available during the meeting. [Operator Instructions] If you're in the room today, there will be an invitation at relevant times during the meeting to come forward to the microphone to ask a question. Well, you may not get the microphone. We now move on to voting. The voting today will be conducted by a poll on all items of business. Mr. Rod Somes from Computershare Investor Services is present and will act as a returning officer for the poll. The voting online will shortly open for all resolutions. At that time, if you're eligible to vote at this meeting, a new voting tab will appear. Selecting this tab will bring up a list of resolutions and present you with voting options. To cast your vote, simply select one of the options. There is no need to hit a Submit or Enter button as the vote is automatically recorded. You can have the ability to change your vote up until the time I declare the voting closed. If you're attending the room today, you can vote using the green voting cards provided to you at registration. Voting on all resolutions is now open, and will remain open until questions relating to the resolutions have been answered. The online voting tab will soon appear. Please submit your votes at any time. I'll give you a warning before I move to close the meeting. Proxy votes are being received. The total number of valid proxy votes and the manner in which the proxies are to vote will be displayed before each resolution is considered and voted upon. Where a proxy vote has been given to the Chairman without voting instructions, in all cases, the Chairman intends to vote in favor of the resolution. Item 1, financial statements and reports. First item of business of the meeting, which is to receive and consider the financial report, the Director's Report and the Auditor's Report for the year ended 30 June 2021. These reports are all included in the company's annual report and are also available on the company's website. Derek Meates and Michael Bohn from the company's auditors, KPMG, are here today and are able to answer any questions on the audit if needed. Are there any questions on this item? Anything online? Yes, Bob, Australian Shareholders' Association.

Yes. Thank you, Mr. Chairman. I'm representing 78 shareholders with almost 1 million shares. We're dealing with the financial reports, yes?

Yes.

And I've just got one question. You funded Tropicana with the Bank of America funding. And the terms of that funding was listed in the annual report. But subsequently, you've changed that to Australian banks?

Yes.

So were the terms -- why did it change? And are the terms materially better or the same?

Same terms and conditions. It was always intended for Bank of America to syndicate that facility. And they expressed upfront that they would prefer to syndicate 100% of the facility, and that's what we did, and that's on the same terms and conditions. Any other questions?

Nothing online.

Okay. We'll move to Item 2, which is the ordinary resolutions. And we now progress to put each of these resolutions before shareholders. Resolution 1 is adoption of the remuneration report. We now move to consider the first resolution for today, which is the adoption of the company's remuneration report. The Corporations Act requires that at the Annual General Meeting, a resolution that the remuneration report is adopted, be put to a vote of shareholders. The remuneration report details the company's policy on the remuneration of directors and senior executives. This vote is advisory-only and does not bind the company or directors. For the purposes of today's Annual General Meeting, may I ask the shareholders to consider and, if thought fit, to pass the following resolution as an ordinary resolution, that for the purpose of Section 250R(2) of the Corporations Act and for all other purposes, approval is given by the shareholders for the adoption of the remuneration report as contained in the annual report. I note the proxy votes that have been received are now shown on the slide. I now move the adoption of the company's remuneration report. Are there any questions?

There's no question, but we have one comment from the Max Louie.

So yes, we have a comment, not really a question. So given the poor current share price of Regis Resources, I urge the Board to exercise restraint on issuing further share options to employees and executives other than to mining -- key mining operations staff, if necessary, to attract or retain personnel. Not really a question.

It's not a question.

Okay. No, that is a fair comment, we will take that on board. The Board considers a whole range of things when it's remunerating its senior executives and staff below those levels, and of course, performance -- company performance is one of those things. The market dynamics are certainly another factor involved in that. So thank you for the comment. Any other questions? Bob?

Mr. Chairman, yes, I've just got one question. Thank you for addressing our questions earlier, but can you just explain why the safety KPI has changed from lost time injury frequency rate to all injury frequency rate?

Yes, that was a decision by the Board. That was not for me. Last year, it was the relative component of the short-term incentive package, which related to safety, was an improvement. I don't have the exact wording, but essentially improvement on the lost time injury frequency rate and the total reportable industry -- injury frequency rate, and we had very dramatic improvements in both those statistics. For the year going forward, the Board considered appropriate. And with feedback from the executives on how we can continue this exceptional improvement on performance. And of course, it's always something we're going to try to improve on. The all-in frequency rate for those of you not familiar includes anything that happens on site where someone has to get medical attention or gets a Band-Aid, gets an aspirin or whatever. So whereas the other components are more severe injuries in nature. And so we believe that captures -- if we can reduce the overall rate of everyone, all those incidents. well then that will continue to flow into the others. And we think that's a very good cultural thing to be continuing with. So that's why we've included the all-in frequency rate as a measure in our remuneration going forward. Thanks, Bob. Are there any other questions, Elena?

No.

If you'd like to vote on this item now, please select the voting icon and cast your vote. Resolution 2, election of Steve Scudamore. Mr. Scudamore is due to retire from office, and being eligible, presents himself for reelection. The Board, in the absence of Mr. Scudamore, unanimously supports his reelection. For those of you not aware, Steve is -- Steve also is Chair of our Audit Committee. He's also Chair of our Remuneration, Nomination and Diversity Committee. And Steve is a very hard-working and very experienced, detail-focused, very inquisitive and respectful Board member. And these are characteristics we very much desire on the Regis Board. So we're very supportive of Steve's reelection. I now ask the shareholders to consider and, if thought fit, to pass the following resolution as an ordinary resolution, that, for the purpose of Article 16.4 of the constitution and for all other purposes, Steve Scudamore, a Director who retires by rotation, and being eligible, is reelected as a Director. The proxies that have been received and are shown on the slide. I move the reelection of Mr. Scudamore as a Director of the company. Now I call for any questions on this item to make your way to the microphone. For those online, submit. No questions currently?

No.

Okay. if you'd like to vote on this item now, please select the voting icon and cast your vote. Resolution 3 is the grant of long-term incentive performance rights to Jim Beyer. We'll now move to consider Resolution 3, which relates to the approval of 450,563 long-term performance rights to Jim Beyer, as detailed in the Notice of Meeting. The performance rights proposed to be issued to Mr. Beyer represent the long-term incentive component of Mr. Beyer's remuneration package, and the performance rights will only vest if he achieves his respective threshold and target levels of performance during the performance period. The Board, in the absence of Mr. Beyer, unanimously supports the award of the long-term performance rights. Please note there is a voting exclusion on this resolution, as detailed in the Notice of Meeting. I ask the shareholders to consider and, if thought fit, to pass the following resolution as an ordinary resolution, that, for the purposes of Listing Rule 10.14, sections 200B and 200E of the Corporations Act and for all other purposes, shareholders approve the grant of 450,563 performance rights, the number of which are capable of converting to shares will be determined at a predetermined vesting date and subject to the level of satisfaction of performance conditions and Board discretion to Jim Beyer, Managing Director of the company, or his nominee, under the Executive Incentive Plan on the terms and conditions set out in the explanatory statement. I note the proxy votes that have been received and are shown on the slide. I move the award of the long-term performance rights to Mr. Beyer in accordance with the resolution detailed in the Notice of Meeting, and I pause for questions on this item. Are there any questions in the room? Are there any questions online?

There's a comment. There can be -- this is from Meerkat Nominees, there can be no justification to provide Mr. Beyer with short and long-term incentives in the face of the company's performance.

Okay. So that's a comment. Look, I appreciate that. I understand the frustration. There's no -- it's not lost to us in terms of where the share price is, and I said that's been obviously the big disappointment of the past financial year. That said, I don't think it's appropriate that we don't incentivize Jim and his other team members to continue to pursue shorter and longer-term growth initiatives and improvements in the business. And once again, it's also a very active market for people with the skills of Jim and his team and the market has exceptionally tight labor market. And I think that all needs to be taken into account as well. We're certainly not -- there's no lie just in terms of the Board's throwing around these rights and things, it's very carefully considered, and we think an appropriate level has been obtained. But thank you for the comment.

We don't have any more questions.

Okay. If you'd like to vote on this item, please now select the voting icon and cast your vote. Resolution 4, the grant of short-term incentive performance rights to Jim Beyer. We now move to consider resolution 4, relates to the approval of 89,917 short-term performance rights to Jim Beyer as detailed in the Notice of Meeting. The performance rights proposed to be issued to Mr. Beyer represent 50% of the short-term incentive component of Mr. Beyer's remuneration package. The other 50% is paid in cash. These short-term incentive rights will vest on the 1st of July 2021, if Mr. -- 2022, if Mr. Beyer is still an employee of the company at the time. The Board, in the absence of Mr. Beyer unanimously supports the award of the short-term incentive performance rights. Please note there is a voting exclusion on this resolution as detailed in the Notice of Meeting. I ask the shareholders to consider and, if thought fit, to pass the following resolution as an ordinary resolution. That, for the purposes of Listing Rule 10.14, Sections 200B and 200E of the Corporations Act and for all other purposes, shareholders approve the grant of 89,917 short-term incentive performance rights to Jim Beyer, Managing Director of the company or his nominee under the executive incentive plan on the terms and conditions set out in the explanatory statement. I note the proxy votes that have been received and are shown on the slide. I move the award of the short-term performance rights to Mr. Beyer in accordance with the resolution detailed in this Notice of Meeting. I'll now call for questions. Are there any questions in the room or online? Any comments? Okay. If you'd like to vote on this item now, please select the voting icon and cast your vote. Having now moved each of the resolutions, we will call for final questions on any of those resolutions. I know there is a delay online, so we'll just give them a little moment.

There's nothing registered.

Nothing registered?

Yes.

As there are no further questions on the financial accounts or other resolutions, I will now ask everyone to complete their poll voting, as previously explained. I'll shortly close the online voting system. Please ensure you have cast your vote on all resolutions. I'll now give time to finalize those votes. Rod Somes is collecting the green voting cards here in the room. If you need assistance, please raise your hand. [Voting]

So as these votes are being counted. There will be -- the results of the poll will be announced on the ASX announcement later today. Really good, Rod? Thank you. I can confirm all voting cards have been collected, and the poll has been finalized. Ladies and gentlemen, voting is now closed. I now formally declare the poll closed with the results being published later today on the ASX. This concludes the formal proceedings of today's Annual General Meeting. I'd now like to invite Jim Beyer to present to you on the operational and financial performance and outlook. Jim will be pleased to answer any questions following his presentation.

Okay. Thanks, James. Welcome, everybody. First thing I'd like to do is just introduce some of the other members of the executive team. You met -- James introduced Elena and Jon Latto earlier. Sitting at the back or standing at the back is Stuart Guler. Stuart is our Chief Operating Officer. The guy that just came through the door is Tim Converse, our General Manager of HR. Wade Evans, stick your hand up. So I mean the reason I'm pointing these people out is so that if you -- when we wrap this up, if you want to have a chat with anybody, I'm sure they'll be more than happy to help you out if you've got any questions. And finally, Ben Goldbloom, who's just sitting over on the right. Ben is our Head of Investor Relations and actually just started with us on Monday. Okay. So I will first draw your attention to the cautionary statement as we are making some forward-looking statements. And I just wanted to make sure I did pick up everybody. Okay. All right. Look, I will -- I'm going to touch on a subject that James also touched on, and that's Jens Balkau. You might pick up from the fact that there's two of us that are talking about Jens is a reflection of just how significant and important he was to -- not as -- not just as a person who was a very good geologist and a good mentor to a lot of people. But was also somebody who actually generated through his leadership, an enormous amount of value. He was a true gentleman, he was a passionate geologist and much has already been said. But what I would have to say is that if you don't discover gold, you don't have a gold mine. And that's what Jens did. He was a key element of the discovery of orebodies that are the core of our company's value at Duketon today. And that's really a bit of a reason why we're talking about Jens who's passed away. Jens was responsible for driving the exploration and resource definition effort for 10 years and instrumental in the discovery of the flagship deposits, Moolart Well and Garden Well, over 5 million ounces of resource base. Now to honor his contribution to the company, we're naming the access decline to the Garden Well Underground after Jens. It will be called the Jens Balkau Portal, rather fit in considering that he was instrumental in the discovery of that orebody, Vale Jens. All right. So just covering off, first of all, on Regis at the high level. Look, we are a business now that has 3 key areas of focus: Duketon and our space on the Duketon Greenstone Belt; Tropicana, the recent acquisition; and McPhillamys over in New South Wales. We are a business that has a strong financial platform to build and for future growth. We're elevating our sustainability priorities. We are a low-cost producer. We have a history of that, and we will get back towards that. We are on a growth journey. We have paid out over $0.5 billion in fully franked dividends since 2013. And we have a strong value growth profile, which is, in the first instance, reflected by the step up that you can see in the production that we're targeting -- we're guiding for this year. Touching, first, as we move forward through the business is on safety. From being a pretty average performer, we are now at the leading edge of safety. Our lost time injury frequency rate is 30% below the WA gold mining industry. Our total recordable injury frequency rate has dropped quite significantly, as you can see from this. And as a follow-up to the question, we're now broadening how we measure ourselves, and it's against the all injury frequency rate, which means it doesn't matter how bad or how minor an injury is, we will count it as part of the statistics that we are trying to drive and reduce the number of times we hurt people. And that has taken a lot of effort. And I would thank and congratulate the teams on our operating site who have been able to deliver that. FY '21, it delivered growth across our business. We acquired 30% interest in the Tropicana gold project. We commenced development of the new Garden Well underground mine. We increased our resources and our reserves by approximately 1/3, and we acquired the Ben Hur gold deposit, 10.3 million tonnes of resource, 1.2 grams a tonne, 390,000 ounces. And we did a lot in the last 12 months that has increased the long-term value of this company. In the 12 months, we had a strong financial performance. Our NPAT, net profit after tax, was $146 million. Our EBITDA margins were nearly 50%. Our cash flows from operations were very solid at $276 million. We paid a dividend, as I mentioned. So our year was a strong one. But the conversation and the discussion that I want to go through now rather than looking on the backwards is looking at the future and the elements of our company that we're pulling together that really should illustrate the exciting future that our company has. On the first element, ESG. It's certainly something that's risen in prominence over the last year or two, but it's not something that we've just decided to get involved with. It is something that's been sitting in the background and being worked on by our business. We just haven't been making a huge song and dance about it, but we recognize that we actually need to start talking and celebrating some of the things that we've been doing and also set ourselves some goals to further improve. Just quickly on some of the things that the -- our company, where we're sitting. Diversity in a male/female, a pretty hot topic at various times. We sit across our business at 23%. Industry average is 18%. So we are sitting above industry average. Some other elements of what we've done, we've paid nearly $100 million in taxes, federal taxes and royalties in the operation of our business, making a reasonably significant contribution to the state and to the federal society. Now what we're looking at going forward, certainly, over the next year, we want to increase the rate of land rehabilitation. Mining does create a disturbance in the land and part of our responsibilities and obligations, both moral and legal, are to rehabilitate the ground that we disturbed, and we intend to lift the rate of that so that we are at least keeping the ground or targeting the ground that we disturbed as a proportion, we at least rehabilitate at that amount, which means we have to increase it from the rates that we've been doing over the recent years. We want to increase our community investment, improve our safety, as I said, increase our water use efficiency, we'll set an action and mission targets. We haven't yet, and the reason that we haven't done that is we are less reluctant to set goals without a clear pathway to get there, and that's what we intend to work on over the next 12 months so that we are clear on how we're going to achieve the objectives that we set. And we plan to implement more formal heritage training across our business. So the business is traveling at the moment. As we all know, the first quarter was a challenging one for us. And the second quarter continues to prove challenging as well. However, we are holding our guidance range, albeit that our production guidance is likely to sit certainly sitting in the lower half of our guidance range. Now the key risks that we've been managing and continue to work on managing, the skill -- these are the skilled labor availability within the state. I think you would all be very clear that there is a boom going on in Western Australia, partly driven by growth in the resources industry, partly driven by the restriction on labor availability due to COVID travel restrictions. And this is having an impact on the industry and our business. The time to fill roles is taking longer. There are opportunities that we need to -- that people are taking, and we can understand why they would take that. So that's proving to be a challenge for us at all levels of the business. Our contractor is, about 3 weeks ago, I think the number was around about 27 or 30, if not more, completely unskilled truck drivers injuring their organization, I think they had 7 across their whole organization, having a significant impact on the productivity while people get up to speed. An example of one of the challenges. We're also working on the metallurgically complex ores that are coming out of Tooheys Well and we need to introduce some more elements to the process plant there to ensure that the recoveries are where they need to be. And that's a key element because the Tooheys Well is one of the high-grade areas that we had planned to be producing and processing. And we, at the moment, are putting that to the side while we get the extra process plant infrastructure in so that we can process that material and not lose any metal. Of course, one of the unknowns that's sitting out there at the moment as well is the impacts of ongoing COVID restrictions. Come the 1st of December, and everybody who's on a mine site must be -- have at least one vaccination shot. Come the 1st of January, they must have two. And we know that, that is causing some potential issues with people who are just not comfortable with that situation. Now there's a huge amount of work being done in our business and a lot of -- across a lot of other businesses. But the final impact on that, and ultimately, when the borders do come down and what happens with COVID transmission that is inevitably likely to happen when that occurs, is something that we are looking to manage very carefully. But it's very difficult for us to quantify and understand what that might actually look like. So looking a little bit further afield on growth. And where is Regis going and what is it doing not just in the next 3 months, 6 months or 9 or 12 months, but what's its future. We have at the core of our assets now, Tropicana, Moolart Well, Garden Well and Rosemont. And we see there's a number of areas and activities that we're undertaking that will add value to our business. New mines and open -- new open pits and new underground. We have McPhillamys. And finally, we have the long-term benefits from exploration. Duketon, 3 mills in its operating center. There is a solid resource and reserve base, 6 to 7 years of mine life still there. And our history of reserve replacement, albeit a little bit patchy over the last couple of years as we -- as our -- as we work to catch up on our exploration to keep feeding that pipeline. So we know what's there. What can we do and what are we doing at Duketon in particular, to add value? The first thing that we can see that's going to happen is we've got great potential to add to our existing production levels by increasing underground. We have a mine at Rosemont Underground. We are -- later on this year, we will start material production from the Garden Well South mine. But what we've already identified sitting up here on the slide, you can see for those that are Slide 13, on the slide on the right -- on the diagram on the left-hand side of the slide, this is area here circled in a gold ring that is sitting underneath the Garden Well main pit. We've been drilling that, and that's proving to be a particularly interesting and exciting area. Now we're still evaluating it, but the way that we're starting to look at that and to shape that up, that's got the potential to be a new production zone for us that can add some extra life and extra production. Our plan there is to, if we can, is to verify that there's enough ounces to warrant financially the development of a decline across from the existing development sitting over on the left-hand side here, that is the Garden Well South area, which we're just getting into and developing now, stick a decline across and get out there and start production and add more life because both Garden Well South and Garden Well Main are open at depth. This is the classic Australian open pit mine that has got orebody extensions that continue on the ground. And this one certainly sits into that category. And as an added bonus, there's a whole area sitting between these 2 production zones where we have very little information. Not because there's no gold there, but because we haven't drilled it. So we see potential there. We're sitting over, underneath the -- just south of the existing development of Rosemont, we've got another area that's proving some pretty spectacular intercepts that we are currently drilling to prove that up as well. So alone we have from those areas, 2 more potential additional underground mine production areas that we are chasing and chasing very hard to see that we can bring them into, get -- confirm that they're there, undertake the technical work, satisfy ourselves that the risks are manageable and put it forward for approval. We have a similar story looking at the open pits. There's two here, and these are proving actually quite very interesting. The first one, looking at the Buckingham-Wellington, which is a part of the Moolart Well area, we've actually put the first reasonable diamond drill hole into fresh rock underneath that area. It really -- not much has been done historically. And we've hit an intercept and it's circled there, 19 meters at 5.7 -- 19 meters at 5.7 grams per tonne. Now that is a pretty interesting intercept. And what we think we might be starting to see, and for those that were on the call earlier this week when Wade was talking, all of that gold that we've mined on the surface in the oxide must have come from somewhere. And this is a strong indicator that there's some very interesting potential here for that. We start -- maybe we're starting to understand where it is. If you want to get a little bit more of an understanding of how exciting it is at the end of this meeting, chat with Wade or chat with Lynda up the end. These two geos recognize these needs. What we've also seen, though, is the drilling that we've done, we've got the potential to extend that pit. That's the yellow dotted line. So it looks like we -- that's shaping up as being potential to expand. On the bottom here, we've got Ben Hur, the deposit that we bought in the last 12 months. We've been drilling around that and under it, and we're already seeing that it's got potential to be a bigger pit than we've already allocated to it. And so we're doing the work to confirm all of that, but we -- it's another area -- an example of an area where we're particularly excited that can have some near-term benefits as Ben Hur comes into production. And an added interesting is 18 meters at 5.2 grams a tonne sitting here underneath the southern end, the larger pit. That's got great potential to be in underground. That's the real sniff that tells us we've got potential there for underground opportunity. If I look next at Tropicana, our new asset, 30% with AngloGold Ashanti, low cost, high margin. It's certainly in a pathway at the moment of recapitalizing. There's a major cutback being undertaken at the moment at Havana. And as a result, the production levels are in a dip where they were relative to history. But within the year, within the year, that pre-strip will be -- will have delivered what it's intended to, which is access to high-grade ore, and we will see the Tropicana operation lift back up to its historic levels of between 450,000 and 500,000 ounces per annum. And we will get our 30% share of that. Now that's the immediate benefits that we see from Tropicana. But the reason we were so excited and the reason that we are very pleased to have that asset in our portfolio is not just about what it does in the next 12 months or so, it's what it's really showing it's got huge long-term potential. The reserves that are sitting there are roughly 5 or 6 years, but both of the owners of this asset see that it's got a life beyond 10 years. And the reasons for that are all over the place. So at the moment, we produce from the Boston Shaker open pit and that will be finished within the next 6 months or so. Boston Shaker underground is the big production source from underground, being down there and been producing for a while and feeding that into the mill. You can see here the Havana pit that sits just to the south of the old Tropicana pit. That's where the new production area will come from towards the back end of next year, which will be what lifts the production levels. But where the really interesting area and where the future growth that we saw that was the reason why we were so attracted to it is everything is open down plunge. Boston Shaker, where the existing mine area is, is open down plunge. And we're putting the holes that are going in there that are supporting that. So we think there's more to come out of that, more life. Tropicana, parts of it are very lightly drilled, is very similar to Garden Well. Enough drilling and enough confirmation has been down there to satisfy ourselves that a decline can be put out. which has been put in. We're starting -- getting ready to start production from that area. But importantly, we're drilling that out now and seen that this is going to be a much larger area than was previously considered and open at depth. Havana is looking exactly the same. In fact, there's going to be a PFS study down on Havana next year. It's obvious, it's not something that would immediately come in because there's a lot of work happening immediately above it as we start production out of the pit, but does it clearly another potential production area sitting under Havana. And in fact, there's also drilling and more indications as it sits underneath Havana South. It's clear to us that what we're starting to see already out of the exploration results from Tropicana are backing up the reasons that drove us to think that there was that value worth pursuing. McPhillamys. As James mentioned, McPhillamys would have to be described as a frustratingly challenging process. We do step-forward, but there is a -- there are some clearly some things that we need to get finalized. And unfortunately to a large degree, they are outside our control, although we are working very closely with Department of Planning in New South Wales to drive these requirements to closure. And really the outstanding item required to get the DPIE recommendation to go to the Independent Planning Commission is to resolve the question of the surface water licenses, which is we're working on at the moment. Other items that we're working on with McPhillamys is DFS. Now we can't finalize the DFS until the whole approvals places is complete because that will come with a whole series of obligations, and we need to make sure those obligations are taken into account in our final project. We're working through a Section 10 application under the Aboriginal Torres Strait Island Heritage Protection section in the Federal Act. That has a reporter or an assessor that's underway. We have provided extensive heritage reviews that demonstrate that, that area is clearly very limited in the unique nature of any heritage there relative to the other 3,000 square kilometers of that area. That's just a process that we have to work through and we should be in a position to close that out in the March quarter next year. Another item that we've got to work on is we found, as a result of changes in legislation back in 1918 and 1911, I think it was, there is a -- out of the thousands of -- tens of thousands of square meters of our project, there's a small sliver of 74 square meters of ground sitting between a road and a creek that doesn't have a classification, which means that there's potential for a native title, and that will be -- we'll work our way through that process. If there is anything, there is a process in New South Wales called the Right to Negotiate, which will allow us to work our way through that process and resolve it. It's just something that will take a little bit of time. It is not something that will hold up the approvals process. All in all, we think that McPhillamys still continues to be a great project, 2 million ounces in reserves, a 10-year mine life. And the exciting part is, there is plenty of opportunity in that part of the world and the ground that we hold, which we don't talk a lot about because our focus in that part of the world is getting the project approved. But we have Discovery Ridge about 15 or 20 ks down the road, which would be a good feeder for it. And we also hold extensive ground around where our plant will be located. So we think that has got the potential to be another long value, long-term production region for the business. The final area is looking at exploration, and we have two highly prospective Greenstone Belts. We are the major ground holder at the Duketon -- in the Duketon Greenstone Belt and same in the Urbani Fraser Greenstone Belt, which is where Tropicana is. It's a favorable mining jurisdiction in WA. I can tell you based on other experiences, this is the place to be to find and also to get approval in a timely manner. We have -- and frankly, the Greenstone Belts we hold are underexplored relative to its peers. We see our 3 mills, long-term optionality at Duketon. It's a great base to have and to build our business off. And our exploration strategy is to look for the multi-million ounce deposits and find a new discoveries of 1 million-ounce or more. And just as a -- as we bring this to a close, just to give you a reasoning of why we think this is a little bit more than just wishful thinking. This is an analysis, a very reasonably simple one. But what it does is it shows some of the key Greenstone Belts and gold-producing belts within the WA region. And it shows how many ounces they have produced or have in their mineral inventory and how long they've been known about and how long they've been explored. And if there's one thing that stands out from this information is the key is -- the longer you have the ground and the longer you've been exploring it, the more likely and the more success has been had. Now things like Murchison, the Laverton Belt, they have been explored in detail hard for 50 years plus. We sit down the left-hand side here, both the Albany Fraser Belt, the one that's associated with Tropicana, and the Duketon Belt, we've barely been scratching that for the last 10 years or so. And the ground that we've picked up has really had very limited amount of exploration done in the last 15 years or so. Now it's not an absolute Y+Mx2 formula, but you can clearly see from that this Greenstone Belt is underexplored, it's as attractive as the belts that have already, I guess, being explored and turned over and worked very hard, much more than the activity that we've seen where we are. And we think -- that's why we think that this Duketon area and the Tropicana area both -- their lives of belly just started. We've got an enormous amount of potential to really grow this, not just year-on-year, but out 10-plus years. We've got the time to do that. We've got 6 years plus of reserves within our existing business. And we've got the ground to be able to do it. And we've got -- we're amassing the skills and the capability to be able to do it. This is our existing pipeline of potential projects. The further it is over on the left-hand side of those, looking at the screen, on the right-hand side, you can see the sites that are in operation. And then the projects that were being considered. And as you can see, I mean, the one takeaway from this is there's a lot of them. We've got a lot of opportunity. In fact, the trick for us is making sure that we're prioritizing that and focusing on where we think we can get the best bang for our buck. So that -- what I've tried to do in a fairly short period of time is to paint the picture of not just of where Regis is at the moment or what it did last year and where it's at, at the moment. But why -- where we see the value both at Duketon and at Tropicana. And as I said here, we see our first step that we are well and truly on our way to is 0.5 million ounce a year production level. We have 5 million ounces of reserves or approximately 5 million ounces. We have 10 million ounces plus of resources and our operating costs, all-in sustaining costs are sitting at less or just on about USD 1,000 an ounce. And that's the business that we want to continue to build on. Okay. Thank you. I'll leave it there and open it for questions.

If there's any questions for Jim -- you might want to stay there. Any questions for Jim, please come to the microphone. We do have a few online but...

We have questions. Do you want to come up?

Gentlemen, have you got a question? Would you like to ask a question? Are there any other questions in the room? Yes?

Just wondering what the time line is from approval from McPhillamys and producing?

Yes, good question. So if, let's say, for example, we got approval today from the IPC, then the time line that it would end -- and we're expecting that to be sometime next year, so not today, but on the basis of it, it occurs, and we've finalized the DFS, for example, and it's still work in progress. But once we get approval from the IPC, there's around about a 3-month period required to get normal permits. They're not special approvals. They're more like you've got to get a permit to increase the size of the road and knockdown fences and knockdown buildings and things. That takes about 3 months. The McPhillamys mine site, as it currently stands, is quite a complicated one because of the requirement to put in a 0 discharge site. So we have to do a lot of work before serious construction starts, building water catchment and containment dams and facilities. And so what that means is that the time for construction commencing through to first gold bar would probably be somewhere in the order of 22 to 24 months. So it's quite long, it's quite a bit longer than one might normally think because we actually can't start any construction proper until we've got the dams to make sure that we capture any runoff. Now we're looking -- it's one of the things that we're looking to do and make sure that we can look for every opportunity to optimize that. But it's still a work in progress. So I mean, effectively, it's 2 to 2.5 years after approval before first gold.

Jim, I've got another question from Mr. Alexander Thomas about McPhillamys. So I'll ask that now. Has our water supply plan from McPhillamys has been established yet? And also, is there any management plans if McPhillamys can't proceed due to approval decline?

Okay. So I'll answer. The first question is, have we -- what was the question?

What is the water supply plan?

Yes, there is a water supply plan. At the moment, there is a couple of underground coal mines that are located over [indiscernible] owned by Centennial Australia -- Centennial Coal, and a power plant that's there owned by Energy Australia. The coal mine has a significant excess of water that they are looking to provide to us. And we are finalizing the last elements of that agreement at the moment. And that mine would provide us with all of that at that mine. And we would also take some of the water that's come -- the used water that comes from the power plant. And that would come down a pipeline that's around about 90-odd kilometers, which we would have to build for the project and that's where we will source our water. So our water will be independent of any local or regional water that's used for farming or other forms of irrigation. The second question -- the second part of that was?

What happens if we don't get approval?

Look, I think our plan and our intention is to work as hard as we can to make sure that we do get approval. There is certainly nothing at this point in time that we are seeing that says that we've hit a brick wall. The frustrating part is that it's just taking longer than we expect. So we think that the risk around McPhillamys is more around driving hard and try to get it approved as quickly as possible rather than it not getting approved at all. Now having said that, in the event that it wouldn't be, then we would basically reset and look at our project and understand which elements of it was really causing the problem and look to see whether we would change the design to accommodate what were seen as being the fatal flaw that caused that refusal. But we're not seeing any element of that at the moment.

Put another online question about the vaccination rate of employees currently.

Right. Well, I can't exactly quote the vaccination rates as they stand today. But what I can tell you is that anybody that goes to site in about 6 days time, there will be -- they have to be -- it is mandated by law that anybody that goes to a mine site in Western Australia must be vaccinated. So come at least with their first shot. And by the 1st of January, they must have had their second shot. So what that means is that in less than a week's time, I guess, I don't know how many days it is to the 1st, by that stage, 100% of the people on site will be vaccinated. At this point in time, in our office, we don't have a mandatory vaccination requirement. But we will -- we have a number of protocols for managing those that don't. But that's part of our safety and risk management plan. But I can't quote the exact numbers as to where they are. I mean, I saw them a week ago, but that's kind of irrelevant because everything is moving so quickly. The take-up of vaccinations and the information that we're getting is happening extremely rapidly because people realize, if they don't have their vax -- demonstrated their vaccination at least of their first -- by the 1st of December, they won't be on a site. And that's mandated by law. And there's very significant fines for anybody and any company that allows the situation to continue.

Another online question about McPhillamys from Matter Corporation. "Do we have an estimate as to when McPhillamys may resolve their outstanding requirements and receive the recommendation?"

Look, we've -- the -- no, we don't. What we do know is that there is a significant level of support at ministerial level for our project. We know that there is active discussions that are being undertaken between our personnel who are managing the approval -- the permitting process in New South Wales, engaging directly with the Department of Planning and also with the Department of Water. We know that we have good support from the -- solid support from local members and from the relevant ministers. What we don't have a feel for is whether that the resolution of this outstanding issue around surface water licenses can be resolved within the next month or whether it's going to take 3 or 4 months. It's quite frustrating for us. We can see the pathway, but it's just taking time and all of the work that needs to be done on that is basically outside our control.

So we have question from CJL and ST Holdings. "Today's presentation makes frequent mention of growth. Other than a reference to dividends or any paid however, there is nothing in there on capital management initiatives, generating returns for shareholders, maximizing shareholder value. Could the Board articulate its policy on capital management, dividends, buybacks, other initiatives, particularly in the context of McPhillamys going ahead versus not going ahead?"

Do you want me to?

Yes. So the capital management. So I think it's quite clear that the company and the Board's approach to capital management has been reflected in its behavior over the last number of years when we've been in a position to be generating significant amounts of cash and also, at the same time, be able to provide the capital that's required for ongoing investment because mining is a quite capital-intensive business. Then the balance between dividends and capital reinvestment has been made. The decision on how to balance that has been made and dividends are being paid. We are entering particularly with the approval of McPhillamys with the pending approval of McPhillamys. And the significant CapEx that we anticipate is likely to be required for that, that will require that conversation to be. And we have that quite regularly. And obviously, until we know exactly what we're looking at, that's all it is at the moment. But we look at the balance between retaining earnings to pay for the investment or leveraging the balance sheet some more. And really, without -- it's difficult and challenging to make a decision on that front until you know what the gold prices be -- been, how your revenue is generated. So we don't have a policy on that. There isn't anything specific. But there is a regular consideration of what's appropriate to do with the excess capital. James, is there anything more you'd like to add to that?

No, I think that sums it up. We've always said the dividend policy is one that we strike a balance between investment going forward, which includes exploration, our performance is going in terms of production, what the gold price is doing, and we make a decision at each time. We don't have a firm policy in terms of the payout ratio and those sorts of things, which can get companies into trouble. We see plenty of examples of that. So...

My question -- it is a question and a comment.

If you could just introduce yourself.

Sorry, my mistake. So my name is Peter Cunniper. And I'm here in the capacity of my father's shareholding, Joseph, who is 93, and he is a very, very happy man, okay? So the share price is tanked and his dividend has gone down. So every time I see him, which is fairly regularly, I'm asked about this. And of course, I am the individual that introduced him to Regis Resources. And at that time, I felt it was a very promising gold company. It was appropriately priced. And this -- the reason I'm standing up now is you've just had this question online with regard to capital management. But I would strongly argue that in fact, the Board has not taken this into account. The -- all the questions that have come about this morning have been about McPhillamys. And that, to me, is sounding more and more and more like a stranded asset. It's been in this position now for quite a while. And I would suspect it's the main reason why the share price has such a dismal performance. In addition to that, to make matters worse, and I hear everything about Tropicana. But the dilutive impact of a significant capital raising with that has just made that a lot worse. So in some senses, I think you've taken off a big bid chain, you pay top dollar for Tropicana and I hear everything, it's a great asset and all the rest of it. And yes, we're all were excited about that particular part of WA Greenbelt. But what I note from your exploration and your kind of project waterfall that you showed up right at the end of your presentation, is that the Duketon asset has multiple, multiple opportunities. And I think Ben Hur, the acquisition that you made recently is also very good. So my comment is really, I don't think the share price is going to improve much for these -- all the reasons I've just explained. So I feel that the Board is overextended. You've mentioned the fact that -- or the company has allowed the company to become overextended. So we've talked about skill shortages. Well, you've got all these projects, how are you going to manage them all? It's a huge strain on management. So this is now problematic. I think luckily for everybody else in the room, my father will not sell at a loss. But I can tell you, I am singularly unimpressed. So his big problem is you had the cash, you diluted the hell out of it, to be quite frank. And you should have really kept that $0.16. You had the money, you had the cash flow for it, and it was not carried. So it was not a question. It was more a commentary from a shareholder.

I also have a similar comment online from Meerkat Nominees.

Okay. Your comment is noted. I think there is -- I'm not really quite sure how to respond to a comment as to a question. But look, our view is we certainly agree that there is an element and I think James touched on it during his speech that there really is an element of the market struggling at the moment to see the value in McPhillamys. And quite frankly, we agree. But we've got two choices. We can either walk away and lose all of the value or just keep punching and that is our view. Our view is that it's such an attractive target and we are so close to being near the last hurdle of getting the recommendation made that we will keep pushing on. It's such a valuable project for us. I think, the question of Tropicana, as you said and as you acknowledged, it was -- and I think James said, we paid -- we recognize as an element that believes, and we saw we paid full value for it. What we saw and felt we saw -- we paid full value for what people saw, but we see much more. The value in Tropicana -- And it's -- this is the unfortunate part, is you can't see that Tropicana was not a turnaround job. It's not something that we picked up cheap and said, we'll fix it in 6 months and then it will be a ripper. Which, by the way, if you actually go back and have a look and see how many turnaround jobs are actually successful, they're rather limited, but people tend to forget that. The Tropicana project was a bolt-on, immediately producing a safe operation. And what we're already seeing is some of the benefits and the extension of the life and the better quality of the orebodies there beyond what we actually included in our valuation. Now that just comes with time. And part of our challenge for our business at the moment for the executive and for the Board is to just keep working on, getting the market to understand the value of the assets that we do have because they are very significant, and they have significant long-term benefits. But we have to work our way through that. I mean, it's also -- the macro environment of the gold price at the moment continues to drive us and all our peers. So we have a number of challenges that we recognize we need to work on. We need to continue to build our production levels at Duketon. We need to drive and fight hard to get the McPhillamys project approved, so that -- because when that occurs, the market will respond to that. And we just need to continue to work and get people to see and help them to understand the value that we see in Tropicana, both in the short and the long term.

In terms of -- if I can just add, Jim, your comment about management, certainly, they're all busy and know about like the turnover, skills and management and personnel generally. The reality is that Tropicana takes rig of our management time. We participate in joint venture meetings, and we have a very good relationship with AngloGold Ashanti and they're very encouraging of our feedback and our ideas, and they like another set of eyes looking over the project. So we certainly have a lot of involvement. It does actually take a lot of management time and such. And it's with attractive dollar that it was bolt-on. In terms of value, if you have a look at sort of market comparables ASX listed, but anywhere really, if you look at gold companies that have a similar production profile, similar mine life, I know they're sort of on a reserves basis that sort of only look at our reserves, but clearly for an underground mine, we're very confident it's not just the reserves. And most people, quite frankly, are they know how the underground mines work. But if you look at any listed comparable, I can't see any that have a market cap or an enterprise value of less than $888 million that we paid for it. So I think that's pretty good -- it's a pretty good market indicator of what that's probably worth. And they say it's a lot more than $888 million. What you find intend, and it takes a while for these is whenever you do a big acquisition, it takes a while for the market to absorb it especially something like this, which is not just a turnaround story that you can talk about what's going to be, what's going to be, what's going to be and multiple cash. It's never that asset, okay? We've paid a fair price for an exceptional asset. And so that will come through in the fullness of time with our strong bullet. It gives us extra optionality in terms of mine life. We do have a preemptive right on the other 70% of it. We don't value that in terms of -- but it's clearly there. And that may well have some value at some point in time. But clearly, that's we -- that's not why we bought it as such. You'll notice AngloGold Ashanti didn't turn around, sell the other 70%. They know there's value there. So we think it's a tremendous acquisition in terms of market comparables. It looks cheap to me. Whenever you win a tender, you tend to be the highest bidder, not always, you tend to be the highest bidder. And the people, the underbidders, tend not to give you a standing of pause and say, well done, especially not their advisers. They go penniless. So sort of we've seen it time and time again over the years in the gold industry and other industries. So we believe in the fullest of time, the accretive value of that acquisition will bear fruit. So in the meantime, it gives us a bit of time. Obviously McPhillamys taken longer than we would have liked. So it helps on that front as well, keeps our production momentum going and the exploration story and all those other things. So yes, I understand your frustration. There's some other comments online with similar frustrations. You probably don't need to read out, because it's talked about gearing the balance sheet, reducing dividends, et cetera. The other thing with resource companies other than say maybe some of the big ones that have got 50-year mine lives in the iron ore space and things like, the dividend stream is harder to it's hard to continue year in, year out at the same rate or growing. Remember, BHP had a policy at one stage, I think BHP, don't quote me, but of increasing dividends. Like how is that going to happen in a commodity -- in the commodity space. So we're very conscious of that. We're very careful about that. The Board, our shareholders, not only are we losing -- we lost money ourselves in terms of current rebound. There's a bit of pride. And all these people around here and our senior executives are very proud people, very skilled people, very experienced people. And so they don't take it lightly. It's -- I certainly understand your sentiments. I said there's some others online saying similar things. So we are very frustrated about a bunch of things. We've got some shorter-term operational challenges that we're working through. And -- but on for a moment, I don't think we're not thinking about this 24/7 about how we're going to improve value for our shareholders, okay? It's one thing to say that the overall sector is down, and it is. But I certainly caveated that by saying that Regis has some specific issues that contributed to our underperformance. And we don't shy away from that. So we're very conscious of that. We're very conscious of dividends, returning value, however, return value through other capital management techniques exploration success, resource growth, production growth, all those things. So we spend a lot of time thinking about this, but we understand your sentiment. So we're not at all dismissive about doing this and we've underperformed.

Yes. There's no -- we -- yes -- your -- there was no...

At the same time, we're very excited. And so...

So look, I think -- I mean, just to wrap it up, this -- and I'm not at all -- James has expressed it. I would say, on my behalf and the management team, we're not happy at all either. And to be quite frank, an element of our frustration is our business. And that's -- I guess that's the point of trying to talk it through. Our business is a great business and it's got a great future. And we're just frustrated that for some perspective that are a little bit outside our understanding, that value is not being reflected. So we've got to take -- we are looking at it and trying to work out, all right, the part of a reflection of value is what you're doing and what you're delivering. The other part is do we need -- what do we need to do more to get people to understand how good the story is because it is -- you own shares or you and your father own shares and I own shares in what is a great company. We just have to work our way through and get people to recognize it. Because of course, we're in it, we see it. So we're working hard at it. And hopefully, we can have a better conversation on this in 12 months' time. Thanks for the comment.

Got some more. Yes. So before you ask the question, I just got the microphone, but we just got a question that's probably been answered. So I'd just say, in regard to Tropicana was an increase in gold price. So I can ask the question. Thank you. "In regard to Tropicana, it was an increase in the gold price following the acquisition, one of the assumptions made to justify the purchase." And then second question is, "As a junior partner in Tropicana, how exactly is Regis impacting its vision for the asset? Are you really being ahead?" And I think you've answered that, James.

Yes. I think, well, so the first part of the question is did we factor in increasing gold prices for the long term? No. The value that we see, we saw and we see in Tropicana is its life and the ability for it to extend its life beyond what -- if you look purely at the reserves, which at 30% is 800,000 ounces, which is only about 5 or 6 years, and it's what will be its production rate, we see its value well beyond that, well beyond that. And that's what we were -- what we were effectively setting up for the company was to looking -- we were looking several years out and saying we'll have Tropicana with a 10-year mine life plus. We'll have McPhillamys with a 10-year mine life plus operating. Put those 2 together, production levels at some -- if we can get Tropicana running -- sorry, McPhillamys running, you've got 300-plus ounces a year, and you put Duketon on top of it. you can -- that's the vision with which we're driving to is to have Tropicana, McPhillamys and Duketon sitting on top, whereas you got -- go back a couple of years, it was just Duketon and Duketon had a very relatively -- by now, back 2 or 3 years ago, the mine life that we had back then, we'd be 2 years away from closure. So we have done a lot to add to that. It's this -- as I said, it's part of the frustration, it's getting the picture clearer so people understand. We're all -- we are frustrated, and we're working hard at it.

Okay. Well, the frustration with the value of the company. I note that the average tenure of both the Board and the management team is about 2 years. That doesn't necessarily speak of a great amount of experience leading this company. And I have an example. I know that at least fairly recently, the Regis hedged the gold sales price. And then the gold price went up considerably. Now maybe that's bad luck or maybe it's a lack of acumen. Could you please explain?

I certainly can. I'm more than happy to explain. The hedging that we have put in place has actually been in place for about 10 years. It was put in place by -- well, it was something that was put in place as probably a risk management approach. What year were they taken out, Jon, that they started putting them in?

I think was first in around 2010.

Yes.

The last I think was done in 2018, I think there was some.

So what you're actually seeing at the moment is a management team that's dealing with the legacy issue. So we are working our way through what was a significant challenge to our business. It is what it is. It's -- I mean, the decisions that were made back in time were not -- hindsight is probably one of the most powerful tools on demand. But hedging is usually taken out as a risk management approach. But what had occurred was that the gold price continued to rise. Those hedges were still in place. And we had to start dealing with them. So they're not something new. It's a good question. They are not something new. But I would say where are we at now, Jon. We're probably -- we're less than half of what we were a couple of years ago.

So over the last 2 years, we've lowered the amount of hedge down to about from just over 400,000 ounces. At the end of the current quarter will be around 270,000 ounces. So we're significantly lower than the hedges that we have and therefore, increase our exposure to [indiscernible]

And that comes clearly at a cost because we have to sell that gold into the hedge price and not into the spot price, but we have to. That's what we have to do. We have to deal with them. So thank you for your question. I think the comment about the average tenure of 2 years with management and the experience is a little bit -- while we might have been within this company on average for that period of time, all of us have been in senior operating and corporate positions within the mining industry for many, many years. So I just -- and I'm happy to talk to you a little bit more about that afterwards. But I think that some -- Yes. So I think that was a comment which I made a comment on. And I've answered to your question as to why we took out the hedging. We didn't -- we're just dealing with it.

But it was taken out for risk management purposes at the time. It was a considered decision. Yes, in hindsight, should we have delivered into the sooner? Sure. We didn't. We took advantage of the high spot prices at the time. In hindsight, it wasn't the right thing to do. But we continue to on -- and this is right way, risk don't forget. The value of our existing production, reserves, resources goes up a lot more significantly than the other money hedge does. It impacts us in the financial year more dramatically. But look, it was taken out for the right decisions at the time. Could we manage it better post that? Absolutely. We're managing it now, and we're aware of it and it's come down to less and less level.

Yes. I mean, I think, I agree with James. I mean it's not -- it was done for the right reasons at the time. And now it's being dealt with for the right reasons. But they're disconnected. And if the gold price had have gone down significantly, it would have been an absolutely master strategy, but it didn't. So...

No one predicted COVID. And I guess, the gold price jumped very, very fast. There's always some predicting maybe COVID, but such a jump in the gold price, but we were doing it for risk management decisions in terms of finances. But certainly, COVID and the impact on the gold price was something none of us still coming. But it is right way risk. It was a relatively small percentage of our of our reserves. And the decision we made at the time, we're working through it. And we understand the frustration.

So I hope that answers your question.

Just another question about Tropicana. So in regard to the Tropicana capital raise, why did such a large proportion of shares need to be replaced with new shareholders in what at the time was a significant discount to the market price. And why was the entitlement offer non-renounceable?

Yes. Yes. I mean the discount wasn't a significant. It was a fairly modest discount. Why did we go out with the -- to other shareholders? We actually saw it as an opportunity to -- There was a large number of existing shareholders that participated and we had a lot of new shareholders who are very keen on participating as well. So we access both of those basically.

And with an underwritten rights issue and then we offered a share purchase plan for shareholders as well -- for smaller shareholders to be able to participate. That's something that has to be done quickly for obvious reasons.

Final question we've got online. I think you've probably answered it, but Mr. Bari, just from Wilson Wong. Regis share price is down from $5 to $1.93 as we speak, despite gold being $1,800 an ounce. I would like to hear your thoughts on what you think contributed to this, especially since your presentation seems to be very rosy. There seems to be a huge mismatch between what you see and investors see. How do you plan to turn things around? I think you've answered that.

Yes. Look, look, I think we've answered those questions. But just to reiterate that we think we see there's being a combination of a general movement in the gold sector despite the movement in the gold price. And you would see that the general index has moved down. But more specifically, for Regis, there's clearly some hesitancy and putting value in McPhillamys. And our task there is to get McPhillamys approved so people can realize that. And the other element is the perception of the value that we paid for Tropicana. And as we've gone through and tried to illustrate this morning, we believe that there is significant value that's going -- that in the near term and in the long term that will be delivered through Tropicana. We just have to keep working and explaining what that is so that people recognize it. So I think it's a combination of both the general movement. We can see a significant move across the group, but also recognizing quite specifically associated with McPhillamys and Tropicana. Although we feel, obviously, we do, certainly, we understand the frustrations with the timing of McPhillamys as do we. But we feel that the value perception of Tropicana is missing performed, and we aim to demonstrate that.

We've got a challenge to start the year to outline his presentation. So...

Yes.

My name is Richard Daventry, I'm a shareholder personally. There's been a lot of talk about dividends and share issues. If the company value, the way we all like to see it is accrued as we're being told, why doesn't the company take a stance of buying back some of the shareholding that's being undervalued, say, grossly at the moment, and show some leadership to the market that you believe in your company so much that you won't allow it to be sold so cheaply?

Yes. Look, buybacks, dividends, various capital management is a thing the Board discusses and we'll continue to discuss and look for opportunities. As I said earlier, in terms of whether we pay a dividend or buy shares back or invest further into the business in terms of the underground growth we're doing, exploration, et cetera, development of McPhillamys, when I hope to say, so there's a whole range of things that the Board considers and buybacks, yes, it's potentially one of those mechanisms to deliver value back to Regis shareholders.

We've got an audio question actually come in. So the audio question is from Marcus Rose.

Yes. Marcus Rose. I'm a former Director of Regis Resources and one of the initial founders of the company, and it was quite instrumental in building it into its current state. And I've been a long-term holder after retiring from the Board. And I've been extremely pleased with the way the company had been run up until very recently. I think the Board has made a series of blunders very recently, particularly in relation to the acquisition of the McPhillamys and also the other investment, Tropicana. And my fear is, and from what I'm hearing from the Board now is that you're going to exacerbate those mistakes. And particularly when it comes to McPhillamys, I agree with the -- given the position you're in that you desperately need to get to the point of approval. But I would then suggest that you might consider not proceeding with the project at that point because I'm hearing that it will require a very significant capital outlay. I hear that you're saying things along the lines that it's going to take 2 years or so for the water to be made available and to be had at the mine site, et cetera. And I'm presuming that's going to be a very, very substantial investment. And so my word of advice is to hold off on that for the moment, focus attention on all those projects at Duketon and so forth where you spoke earlier about the wonderful prospects and the growth opportunities that you've got there, and I believe in them. And I'm sure you'll make a giant success of that with Tropicana. You've made the investment. You've probably paid a $1 for something that's currently valued at about $0.60 at the present moment. But be that as it might, it will hopefully produce ongoing income that will enable you to pay dividends. So just to repeat, without laboring the point, I think it's terribly important that you don't exacerbate the problem, particularly at McPhillamys and that is getting into a long, costly exercise in developing it where there won't be a dollar return for quite some time into the future.

Thanks, Marcus. We appreciate your comments. I think is clearly isn't a question, so I'm not sure what to add to that apart from we obviously will -- we haven't pre-committed. The decision -- the final decision on McPhillamys is yet to be made. And when that time comes, I'm sure we'll be taking all of those factors into account that you've suggested. So -- and in relation to Tropicana, well, I think we've made a sufficient commentary on what we feel is -- we see in the detail that we used when we made the acquisition, and we continue to see more information coming out subsequent to that acquisition, that we think that, that was definitely the right investment for us to make, and it will prove to be valuable many, many years into the future, well beyond what people give it credit for. That's it.

There's no more questions.

Any other questions in the room. Any other questions online?

None online.

Okay. Well, thank you for all your -- no questions?

No question.

I thank you all for your attendance. As I'd just like to reiterate, we understand your frustrations. We're sharing that in terms of our own -- our own investments, and we share in terms of a bit of a dent in pride, I have to say. But we're here doing our best, making informed decisions. And in terms of about the allocation of capital, et cetera, within the company, we're excited about the exploration. There's nothing certain in exploration. Another reason why the Tropicana acquisition was made. Because as I said, the rarely assets of that quality rarely come up for sale. Exploration is a risky business. We will keep exploring. We're excited about what we're seeing. They don't have immediate results either. So we understand the frustration. We thank you for your attendance, both physically here and online. We're glad that we have the online virtual meeting available as well, so we could have more people with us. And your comments are noted. And hopefully, your questions have been answered. So thank you very much. Please stay for a cup of tea, if you like, and I look forward to meeting some of you.