Regis Resources Limited (RRL) Earnings Call Transcript & Summary

Thanks, Darcy. Good morning, everyone. And thank you all for joining us on this call to cover both the guidance update we released and the quarterly report we released earlier today. It's certainly been tough few days for the company. Now just on the guidance update, what's the context? The Rosemont Main Pit is approaching its final stages and was planned for completion before the end of January this year -- sorry, the end of -- it was due to complete by the end of the June quarter. For this reason, the bottom of the pit is narrow, with elevated geotech hazards requiring additional risk management. And I think we've mentioned that in the past on calls. And we have those protocols in place to manage those hazards. Last weekend on Sunday, there was some heavy rain around. And in accordance with the protocols, pit was evacuated and radar monitoring continued. On Monday morning, a rockslide event, approximately 800 tonnes, so not particularly huge, but a slip occurred. And that fell through a number of the debentures and some geotechnical fences we had in place, with some material hitting the pit floor, keeping in mind the pit floor is actually quite narrow because of the pits near its bottom. Now while certainly disappointing and disappointed with the commercial impact of the slip, we are pleased to see that our geotech monitoring and safety protocols ensured no personnel were in the pit at the time of the incident and the incident occurred without risk of injury. This sort of thing is not uncommon. And for anyone that knows, it's involved with the industry. And as usual, there's a process followed to address the need for appropriate consideration of the hazards and the risks. So when the slip occurred, the company's principal geotech engineer attended the site as quickly as possible, which was late on Monday, and along with on-site personnel, undertook an assessment of the geotech and safety hazards and potential risks and options of continuing to mine. With the very tight nature of the base of the pit as it approaches the final floor, this was a real focus on assessing the ongoing risk involved with returning personnel to the floor so as to allow ongoing operations. While the options were developed to reenter with careful risk assessment, it became clearer that continuing was considered to have an unacceptable risk level. So the decision was made to permanently stop activity in the Rosemont Main Pit. Now our work has been underway to assess operational response options. At that point, the full impact on production was unclear so we made the decision to request a halt to allow time to further assess the options and the impacts. As we discussed the impacts, I'd like to point out that this event and its impacts are confined to the Rosemont Main Pit and will have no adverse impact on ongoing operation of the Rosemont Underground or the Rosemont North Pit. In relation to the impacts on operations, the pit was expected to deliver approximately 18,500 ounces of high grade in the -- of the vicinity of 2.6 grams a tonne into this financial year. After which, as I mentioned before, the pit would have then been completed. Our flexibility to respond with options was pretty limited, was very limited and assessment has concluded that for the remainder of FY '22, this high-grade ore that was scheduled to be immediately fed into the mill could only practically and confidently be replaced by low-grade stockpiles, which would be only fractionally offset the lost ounces in production. We have on a number of occasions previously noted that we expect the guidance to fall at the bottom end of the range. And upon careful assessment of this latest development and primarily as a result of the rockfall in Main Pit, we've restated our guidance. At Duketon, we guide now is expected to produce between 300,000 and 340,000 ounces. Previously, it was 340,000 to 380,000. Tropicana remains unchanged. So as a consequence, the new company guidance range is 420,000 to 475,000 ounces. As a consequence of this lower production and other impacts, the all-in sustaining cost range for Duketon is now 15 -- $1,540 to $1,610 an ounce. Previously, it was $1,340 to $1,410. And the company range is now $1,425 to $1,500 per ounce. The guidance -- the all-in sustaining guidance for Tropicana is unchanged in relation to the costs. The increase is primarily because of the lower production of FY '22, but I'd also note increases in prices for some consumables and labor, in particular, around our mill maintenance have also contributed, but not to the extent of the lower production. I'd like to note to you that the company does not consider that this increase in AISC is a permanent reset of its cost base as production is expected to again lift at Duketon next year. So this summarizes the events of the Rosemont Main Pit and the associated consequential impacts on our guidance. We'll open for questions at the end, but I'll just move on to talk about the quarterly now. On COVID, to date, there have been no confirmed cases of COVID in our business. The management of COVID-related risk continues with the response plan for our operations constantly being assessed and modified for what is a changing landscape of rules and conditions with the very fluid nature of the situation here in Western Australia, it's proving to be a challenge at the moment. What we are seeing is the ongoing significant travel restrictions and general COVID impacts that we're experiencing and now expect to experience still for some time is resulting in the same pressures on commodity -- input commodities and labor costs as -- we're seeing the same increases as our peers are in the rest of Western Australia. And look, I think labor availability is the most significant risk overall, and as such, is probably an ongoing risk to delivery of the medium-term plans. As such, we recognize this. And we're working quite closely with our contractors and suppliers to develop an action and execute these mitigating action plans. Operationally, Duketon saw a slight improvement, but clearly some heavy lifting in the second half. Key points around Moolart, it underperformed, certainly in the early stages there, with some ongoing weak reconciliations of 3 new deposits that we've brought in. They're actually not new in so far as they've been in our reserves for quite some time, but we're finding that some of the historic modeling is underperforming. And as a consequence, now we're going back revisiting, rebuilding those models and testing with some additional grade control as well. So we have a -- we feel we have -- we're getting a better handle on that. We also see that as we move into the second half, the ore sourcing is shifting. So we are anticipating a step in performance from the step -- an improvement in performance from Moolart in the second half. Rosemont is clearly impacted by the Main Pit unlike -- not in the prior quarter. It was pleasing to see some of that high-grade material coming through from the Main Pit. The North Pit is progressing okay. We're not seeing anything particularly concerning there. And we are looking forward moving back into the high-grade mining cycle at Rosemont Main Zone Underground where we expect to see higher grades coming through this half. Garden Well is still a work in progress. We've completed the extra oxygen capacity installation in the December quarter, and we have seen some benefits there, to the extent where it's -- we are adding more infrastructure, if you like, into the process plant to improve the efficient oxygen distribution to help us with our metallurgical efficiencies. We'll see things like SLAM jets and secure reactors being added in to improve that the oxygen distribution in the tanks and to improve the dynamics -- reaction dynamics and recoveries. And this, in turn, allows us to increase the feed of the higher grade Tooheys Well material that we've been stockpiling. Completion of these -- look, the completion of these, we'll see us being able to increase that proportion of that Tooheys Well feed. We're also doing some work on process plant reliability and integrity. The plant is old. We have got -- we are changing. The feed is increasing the amount of fresh feed. And we've got a plan underway there to improve the reliability and also helping to deal with the increase in the proportion of fresh rock feed. At Tropicana, we saw higher production for the quarter with improved ounce production from Boston Shaker Underground, which is pleasing. It's in a high-grade cycle there with large stopes, very efficient or much more productive. It's pleasing to see that the underground is really starting to hit its rhythm. The team up there is doing a good job of ramping up production. We see Boston Shaker Pit in the final phases, which should be finished around about the end of this financial year. Progress at the Havana cut back continues. And the plan is expected to see a consistent access to high-grade material later on this calendar year. And this, of course, allows the low-grade feed currently going into the mill to -- some of it to be replaced with the high-grade Havana stock feed. Like elsewhere, outside, there is exposed with labor availability. I note that the Anglo team managing at Tropicana is doing a good job of working closely with its mining contractors as well. We have mitigation plans, and we certainly have seen some improvement in that performance of material movement and personnel availability in the last few months. It is certainly satisfying to see the significant contribution that Tropicana is making to our company and to see the future of Tropicana to continue to unfold as we anticipated. Production rates are expected -- ounce production rates are expected to lift later this calendar year, on the path to return it to this 450,000, plus 500,000 range. In other growth areas in our business, Garden Well South Main development continued. We are anticipating first stoping to commence late in June, in the June quarter. And we see the new potential area underneath Garden Well Main Pit is shaping up, and we expect the study to finalize that later this quarter or late this quarter. Looking at McPhillamys, look, it's nothing material to add there. The permitting is progressing. It is frustratingly slow. And there have been some ministerial changes there and leadership changes, but we are seeing encouraging support from that. So as we come out of the Christmas break, work there is back progressing again, which is pleasing to see on that permitting front. Look, I'd also like to say there's some excellent and exciting exploration results detailed. We don't detail it in the quarterly, but if we did in the biannual exploration update, just some highlights there -- to -- worth drawing your attention to the Ben Hur extension of work, some very interesting fresh rock intercepts underneath Moolart Well beneath the oxide. That's particularly interesting. And also, pleasing to see works confirming the potential for extension of Rosemont Underground. And there is other very interesting information as well on the Tropicana Underground extensions at Boston Shaker, Tropicana itself, the underground, and Havana. But I won't drill on that too much. I'd just encourage people, if they haven't, to take note of that exploration situation. All right. Well, look, I will pull it up there and kept that fairly brief, and I'll open it up for questions. So I hand it back to you, Darcy. Any questions that anybody has to ask us, we're more than happy to answer.

[Operator Instructions] Your first question comes from Andrew Bowler from Macquarie.

Yes. Jim, you noted that you've been slowly increasing some of that feed into Moolart Wells given those -- that oxygen plant upgrade -- I am sorry, the oxygen capacity upgrade previously. And then also talking about further increasing that with those minor upgrades into the -- oxygen injection into the tank. So can you talk about what proportion you feeds during the quarter? And what it might improve to beyond the next round of minor upgrades, please?

Yes. And Andrew, that was at Garden Well. Yes. I think the proportion of feed that was going in from Tooheys Well during that December quarter was probably 10% to 15% of that order. What we are anticipating is that once we get the -- all of the equipment installed, we'd really like to be able to push that up to 30% of the feed. Without the oxygen, that becomes -- without this well-distributed oxygen, that becomes a little bit problematic, but we know that oxygen allows to be able to handle some of that increased feeds. So that's where we're heading. We'd really like to get it up to 40%. But long term, we're looking at the order of 30%.

No worries. And also just on the pit slip. You're talking about getting some of those ounces potentially from underground. Is that likely to see all of those ounces recovered? Or is it just sort of a certain area in the bottom of that pit now?

Yes. Look, that -- it's still pretty early days. The interesting thing with those ounces is that probably, I think it was about 90%, just a little bit over 90% of them were high grade. There was a little bit of high wall around it. But most of it was high grade, which means, in an underground sense, we might be able to recover a reasonable chunk of that. But it's too early to say whether it's -- we can get half of or 1/3 or 75%. It's just a little bit too early. We do know that it's -- I think there was about another 20 or 30 meters of floor to go down in the pit. And then we go -- there was a crown pillar left before the underground workings started. You always leave a crown pillar in place for safety because we don't want it to break through in the -- early in its life. We're able to lift up, put another line of stopes underground. How much of -- that's what we know. We're confident that we can do that. Exactly how many ounces we'll get out of that at this stage is unclear.

Your next question comes from Patrick Collier from Credit Suisse.

Jim, just wondering about the Rosemont North Pit and just when that was due to complete?

Later on this calendar year. It will be [ finished ] by FY '23.

Okay. And then just on the split of Open Pit contribution at Rosemont between the North Pit and the Main Pit.

I'd just have to take that one on note. I don't have that off the top of my head what the contribution is. You're talking now or -- I mean...

Yes, just what the run rate was, I guess, in the December quarter.

I'm not sure. Do you have a feel for that off the top of your head? Yes. Look, we'd have to take that one on notice, Patrick. I mean, we were expecting -- no, I'm sorry. Just haven't got that off the top [indiscernible] notice.

Yes. Not a problem, if you can do that. And then maybe just given what's happened with the Main Pit, is there any technical learnings that you'll take on board at the North Pit? Like I think previously, you've mentioned that there were precautions taken at both pits, so if something similar happen at those of North.

Yes. I think what we're seeing at the North pit is that it's not as the -- it's not as high -- a high grade pushes pits deeper. Logically, you can afford to go deeper and down into the fresh rock. We're just not seeing the North pit being the same. It had -- yes, it was more in oxides and had risks that had to be managed like all pits do, but we're not getting itself into the same circumstances as the Rosemont Pit, the Rosemont Main Pit was.

[Operator Instructions] Your next question comes from Matthew Frydman from Goldman Sachs.

Sure. Jim and team. Just firstly, I wanted to, I guess, just unpack the guidance revision a little bit further. You've cited there that you expect that you lost around 18,500 ounces from the Rosemont Main Pit. But the guidance downgrade versus your prior guidance at least is 40,000 ounces or maybe it's closer to 30,000 if we account for the fact that you previously indicated you'd been in the lower half of that range. So just wondering if there's any particular areas where you can cite where the rest of that difference has come from or it's just generally across the Duketon operations, some of the challenges you've had over the first half.

Yes. Look, historically, we've said we were going to come in at the bottom end. So we already had seen some of these impacts and communicating them. But yes, look, the -- certainly, the largest impact was the Rosemont slip impacts. And we felt that in the grand scheme of where we were, that was the material element that caused us to move. Yes, there have been -- I guess we would have -- the slower rates of feed Tooheys Well and needing to get that oxygen in has probably held us back and we're not sure we won't be able to make up those ounces, which is part of what was pushing that guidance down in the bottom end already. And I think the impacts of that reconciliation that I mentioned at Moolart Well, although we do think that there's potential to recover that, but that's also had an impact. But certainly, the largest single impact has been the one -- the material one that has been the loss of all of the ounces out of the Rosemont Pit.

Yes. Got it. Just on that Moolart Well, I guess, reconciliation variances, I guess, fairly typical when you're, I guess, mining in the upper part of new sequences or developing new pits. Is there anything in there where you felt like maybe could have done some more grade control drilling ahead of time to, I guess, tighten up your expectations around what you get out of those areas? Or that, that was just part of the course in developing new pits?

Yes. Look, I mean, as you say, when you're mining through those new -- these new areas, you do get that high variability in the early stages. And that was part of what we were just -- you can have wild swings in reconciliation as you work your way through. And that was a little bit a part, I guess, of what we were attributing the variation too. But then we started to see a pattern, and it was clear -- we were getting the grade, we just weren't getting the tonnes. So we've gone back to the model and looked at the wireframes that are used there and whether they're appropriate. And so there's a fundamental review of that. And we are doing more grade control drilling. So hindsight being a useful tool. If you -- it's always useful to say it would have been helpful to do more grade control drilling to start with. But historically, when we've been through this phase and some of the other deposits, we had seen that reconciliation variation, but it tended to sort of balance itself out where it just doesn't seem to have done it here. So we do think there's a little bit more involved in modeling that we have to review rather than just relying on that variation as you go down in depth. So the short answer would be, if we look back and consider what might have helped us mitigate, it would certainly be a bit more grade control drilling. But on the basis of what we've seen historically elsewhere, it wasn't something that we normally did. But it's certainly front of our mind of things to think about managing risk in some of the others now as well.

Yes. Got it. And then just finally, on the Rosemont Main, you talked a little bit about the potential underground opportunity there and accessing -- or leaving a smaller crown pillar or accessing some of those reserves that have been left behind. I think you mentioned there's a study due later this quarter. Just wondering if you've got any sort of indicative timing around when the underground might reach that area or that part of the pit.

Yes, yes. A couple of things there. The extension study work that I mentioned was actually related to underneath Garden Well Main. That's a whole new potential mining area that we've been drilling out. And actually, if you have a look at the release, there's a little bit of detail on that on Page 8, but that's a separate area, and that's a separate study area. No, no. That's okay. It's just going to be an opportunity to talk about it. The -- underneath the Rosemont area, one thing that you did say was we'd be looking at making the crown pillar smaller. That's not what we would be doing. What -- we still want to maintain the right safety factor on the crown pillar. But because the Rosemont Main Pit has now pulled up at an RL that's higher, we have a bit more material to move, work with. So we'll still leave the crown pillar at the same factor of safety, thickness that we can go up a little bit up. We can -- in an RL sense from the underground, we can mine a little bit higher. When do we have access to it? Well, actually, we've already mined. That's where we started mining, at what we saw as being below the limit of the crown pillar under the old pit design. So we're actually there. We can't go in and start mining it straight away because there are stopes that we need to fill. And we need to make sure that we've got the grade control drilling sorted out. But I don't think we could get in there and mine. We certainly can't get in there and mine next week. I think it's highly unlikely we'll be able to get in there and mine before the end of the financial year. After that, it's probably fair going. But certainly, thinking whether we could pick up any more of that this year was something that we contemplated, but we just didn't see the timing working out, so we had to exclude it from our recovery options.

Got it. And then just finally, I guess a bit of a broader question on your exploration results in this release and then also your update late last year. Clearly, the investment in exploration there yielding some good results. Just wondering how you think about what kind of economic returns you need to justify in order to start bringing some of these areas into reserves. Or I guess, maybe to put it in the context of current gold prices, fairly healthy at [indiscernible] an ounce or even north of there. Is there the option that you lock in some hedging to underpin development of some of these areas, whether it's an additional cut back or a satellite pit that has cropped up of interest from these exploration results in order to maximize what you can feed into the Duketon infrastructure over time? And maybe just accept that, obviously, Tropicana's lower cost, it's going to provide the leverage to gold prices? Or I guess is the economic hurdle still developing some of these areas in Duketon, some of these new reserve areas, is it higher than that, and then really, they need to stand alone from an economic returns perspective?

Yes. Look, we actually had a look at that a year or so ago with the Duketon North. We had some lower grade, higher costs. We have been looking at this idea of, can we identify a high-cost material that we could actually lock in by the hedging? And when you start to risk analyze it, it's stuff -- you'd have to commit to it now. It doesn't really generate -- you got to put it at the back end of your mine life. You really have to start committing to it because some of it's quite expensive. The reason it's expensive it's because it's got high strip ratio. It's a real trade-off of -- you've got to be confident you're going to return them as well. So we actually couldn't get it to work adequately when we did look at it in some of the existing resources that we've got. In terms of looking at for exploration, it's way too early. We are seeing intercepts and early-stage exploration results that are telling us that we've got the potential to find good quality, large-scale deposits that don't need hedging to make them viable. And that's what we're after. So it really it's too early for us to, in effect, I guess, you'd say, maybe throwing the [ towel ] of finding the quality that we're after. We just believe that the area is still under-explored, that whole Duketon Belt, that there is way more opportunity there to find another Garden Well or another Moolart or another Rosemont. So that's what we're pursuing at the moment. So it's way too early for us to sort of be looking at -- we think at the -- looking at those options with hedging. I mean it's part of the equation, but certainly not front of mind at the moment.

Yes. Got it. So when we're looking at these exploration updates, we're really looking at the target being something that's at least equal to or potentially better quality than your existing business in order to develop that pipeline and justify more exploration spend.

That's right. That's right. And the makings are there, as we've said in the past, the -- this -- the Duketon Greenstone Belt is like -- but it's a bit like the Albany Fraser Belt. And when you compare it to some of the other more mature belts, the only reason the other ones have got many more ounces on it is because they've been explored for 40 years plus. And really, [indiscernible] had high-quality detailed exploration really for the last 10 or 15 years. And even some parts of the Duketon Belt that we now are holding has really not had quite -- I'd say quality. It's not the word. A focused, well-funded, both financially and intellectually exploration program. So we think that time is still on our side. We're only just getting started. So we think there's plenty of opportunity to find more deposits of the scale that have made Duketon the success that it is. We think -- we just think there's more there, and that's what we're looking for.

Your next question comes from David Coates from Bell Potter Securities.

Just a quick, sort of delve into that question from Matt a little bit further, just on the guidance. Are you looking -- does that sort of compensate a little bit more for the lower end of the range you were talking to before? And should we be sort of thinking about that as aiming for the middle of that downgraded range?

Dave, I mean, our approach on guidance range is, we give a range either side of where we think we're going to come in. So -- but the reason you give a range is because there are some factors that we think could improve that performance. And if a couple of things go against us, we -- not everything has to go right to come into the middle of that range. That's the way we've set our guidance here. We've looked at what our plans are. We've looked at what things that we need to go right to deliver that. And we -- it doesn't have all assumptions dialed in the red. So we think that range is quite a genuine range, but it is a range around the midpoint.

Okay. Cool. And just looking a bit more on the pit wall incident itself. It went down through a couple of levels and a couple of geotechnical fences you mentioned. What's -- is that leading to a review of some of the protections and stuff you have in place on other pits? What's the sentiment kind of trigger in terms of future prevention?

Yes. Look, that always happens, right? Every time you have some quarters, some geotechnical event, or frankly, any safety events, you'll always go and look at it and see if there are learning from this that we need to pick up. Rosemont Main Pit is a bit different to our other pits. It is fresh rock. It's deep, it's deep. And it's right down in the bottom. It's narrow. And it's high grade. If a pit is tending to be more middle of the range, you don't always get this sort of bringing -- going right down super deep. You just hit -- you hit a more of an economic limit that just doesn't make it worthwhile continuing on, whereas this was the beauty, and it was the beauty of Rosemont in its early days. It was just really good grade and something you could easily dip into to make up for other variations across the business. And we've tried to squeeze every last ounce out of it. And as you get down into the bottom, it had risks that we felt we were adequately managing. And as I said, it is a bit unique relative to all the other pits we're running. But it was despite the attractiveness of the ounces that were there to be got still, we just felt that when we balance the risk and the -- well, when we looked at the safety risk that was involved in continuing on, particularly in -- with the context of that slip that occurred, we just felt it wasn't appropriate to continue on. I don't think any amount of ounces would have convinced us to keep going on that front.

Fair enough. And in terms of -- and so in terms of other pits, if there's additional protections -- is there anything you'd be changing at your other operations as a result of it? Or it is because of that unique that it's not really applicable?

Yes. I'll just ask Stuart to put some color on that question.

Yes. Dave, there's an ultramafic unit in the wall in that pit that we've been basically having to deal with for the life of that pit. So over the last year, we've been watching, managing and correcting that as we get down to the bottom of the life of the pit. And it's what we -- and over the last 12 months, we've been increasing the geotechnical measures that we've had in place, specifically in Rosemont because it's specifically got this ultramafic unit. And it's just that we've noticed an increase. There has been an increase in activity over the last sort of 6 weeks or so. But with the event that happened on the weekend, that's what sort of got us thinking about whether in the long term, we can keep dealing with it or not, which is the reason why we got to where we got to.

So it's quite a -- it's a situation that in itself is unique to that pit. But we go, and we go back, and we have a look at what other protections we've got elsewhere. As you mentioned, there was Rosemont North, but we do see this one as being a little bit unique.

Your next question comes from Peter O'Connor from Shaw and Partners.

Jim, Jon and Stuart, I missed the first little part of the call, Jim, so apologies for doubling up. If the statutory obligations with a geotech issue of this nature? And if so, what directions, if any, did the mine department imposed upon you in terms of electrification, remediation or future requirements?

Look, I guess that's still -- the short answer is, as always, there's oversight. But as part of our own work and our own risk assessment, we've just decided that it's -- continuing on is not appropriate. So to a large extent, we didn't ask a question that they did answering.

Okay. So decisions at this stage have been wholly Regis Management Board to take the steps you've taken?

Right, right.

Okay. Just back to Stuart, on the uniqueness of the Rosemont Main Pit, and you mentioned the ultramafic unit. So the slip relates to structure or -- I just didn't quite understand your comment. If you could just describe to me the uniqueness of this pit so if I was trying to pitch to somebody, I can explain why it's unique to your other pits [indiscernible] less of a systemic risk.

But in the wall of this specific pit, we've got an exposure of a rock type, which is an ultramafic rock type. It's pretty common to Western Australia. And -- but yes, the nature of it has been is that can be challenging to manage, specifically when it's exposed for long periods of time. It's just -- it can be difficult for the geotech to get their heads around what's the best way to deal with it. And I mean -- and the guys have been continually looking at and assessing it. So we've had -- we've been deploying like we've got -- apart from rock [indiscernible] and all that sort of stuff, we deployed radars to some of our pits. And then with a radar specifically on this pit as we were working it. We also implemented some catch fences and mesh and all those sorts of things. And I think -- but the challenge is what you're trying to do -- what the geotech is trying to do is to make sure that operations and the operations personnel working around on the pit floor are safe, and they're doing what they can to make sure they're safe. But at this point in time, the guys are finding it more and more difficult to try and figure out how to manage that.

So just taking a step back from the detail, Peter. What we were saying before was Rosemont Main Pit was a little bit different to the other pits that we run. If there's a -- and the reason for that is, first off, it's high grade. So it tends to be -- it's deeper and it's steeper. It's an attractive target to go on after because high grades pay for the higher strip ratios and removal costs that are involved with going deeper. And this particular area was -- it's not -- this is not common across our other pits. They all tend to be lower grade, shallower. And the pit floor don't have the same risk profile as this particular pit [ field ]. As Stuart said, there's a rock sequence in there that we know is problematic. We're observing it and watching it and put in place mechanisms to manage it. And that's what we were doing. We did get movement. We responded to it, and everything that we put in place effectively work. But after that movement, we made a decision that the risks that we saw there going forward were now such that we were uncomfortable with them, and we decided to leave it.

So Jim, what would it be a correct statement to say one of the 2 things is that there are now ultramafic units in any of the other pits? Or there are in other pits, but they're just not as deep, and therefore, they don't present the same risk?

More the latter.

The latter, okay. Got it. One last thing...

Actually, I'd love to have the high grades that we got out of the Rosemont Main Pit all over the place, but we don't. It was a problem. It was a technical challenge that had to be managed or a technical hazard that had to be managed that was being driven by those grades that we got out of it.

Got it. Just if I may go back to the guidance, just for clarification to Matt's question. So you were serious at the September quarter to the lower end of the guidance range that you gave. And then the drop we've got now. So from the lower end of the range to the midpoint of the new range, as you just answered before, is the smaller proportion of a drop than the absolute mid to midpoint? Is that the way we should be thinking about it? Just to clarify your previous answer.

Sorry, Pete. Could you say that again, please?

In September quarter, you were guiding us to the lower end of the prior guidance range. So doing the way we do math, we look at, okay, that was a lower end. You've now set us a new midpoint. If you look at the math between the 2 and look at the percentage downgrade, is that simplistically the right way to look at it? It's not 8% downgrade from midpoint to midpoint, it's a lesser number than 8% because it's from the lower end to the new midpoint.

That's right. That's right. I mean that -- in effect, the bottom end of the old range is the top end of the new range. So there is a -- well, it's not an overlap, but there's a connection there between the 2. We just -- well, we knew that we've been discussing and communicating that bottom end outcome for production, but this was -- this slip was really -- it wasn't a straw, but it was a factor that just in said or we need to change our guidance.

And just can I ask a nerdy question? So you talked about the underground is near or already underneath the main pit where the slip occurred. What is the vertical difference between the 2? What would be the thickness of a typical crown pillar in that area? And can you get it with a similar stope, shape and sequence to what you're using now? Or do you have to go to something more elongated to play around?

You're right, Pete. That is a nerdy question. I'll get Stuart to answer that.

The previous crown pillar was meant to be about a 20-meter pillar that we would have taken out at the end of the life of the underground. It looks like with what's happened now, it's going to double in height. So it goes from 20 meters to 40 meters. And these are the steepest stuff that we need to work through now is, does that mean that we have an intermediate level that we could take out in the meantime? What's the timing for how we would take this crown pillar out? How we would do it. And the nature of what we might -- how we might mine those top now 2 levels rather than the 1-level.

So how far are you from the pit floor to the underground workings at this time? What vertical it's in?

In simple terms, the pillar was going to be -- between the original design bottom floor of Rosemont Main, there was going to be 20 meters between it and the top of the nearest stope from underground. Because the mine has now pulled up short and it's probably about another 20 meters above that, that means instead of being 20 meters between the bottom of the pit and the top of the stope, it's now 40. Now that's more than needs to be there. So we're looking to go back and place another 20 meters potentially. How much exactly, we're not sure. But that's -- in rough terms, that's what we look at. Does that make sense?

I'm sorry. Yes. No. I get all of that. But what I was asking was you said you were basically underneath the open cut now. What is the vertical difference where you are mining today development wise or stoping versus the pit floor?

Well, because Rosemont Main, we have a top-down mining approach, so we actually took out some of -- the first stopes that we took out, in fact, they were the high-grade stopes that gave us the big kick of production at the end of the June quarter last year. Those were the stopes that were basically butting up against what was the designed crown pillar. So we -- from an underground sense, right? But because -- and we were -- we're just looking at it -- in fact, I think probably 2 weeks ago, we were looking at it and saying, all right, well, let's just make sure that crown pillar is still the right thickness and the decline that we want it to be. And now that the existing pillar there is twice as big as what we need it to be, so that means that we can take some of it away.

The next question comes from Matthew Frydman from Goldman Sachs.

Sorry to have a second bite of the cherry, Jim, but I just wanted a quick one. I guess just to put things in context, I mean, you cited that the rock slip was 800 tonnes. I mean that's probably only 4 or 5 truckloads at best. And I understand that at the moment, you've taken the decision to manage risk, to cease activities in the pit. But is there a potential that with appropriate controls and monitoring that you put in place, once you assess the options of accessing that material from underground versus maybe restarting operations in the main pit, is there a potential that it might actually be more attractive to go in and do whatever remediations required to access that last sort of couple of cuts in the main pit?

Yes. Matthew, look, you can never say never. However, one of the things that is a key factor, because normally what happens when you have a slip or a rockfall, that you -- the rock sort of rolls its way down. It gets caught on benches. That's why you have benches to capture rock so that they don't continue to roll all the way down. And then they hit the bottom. And then -- and if they hit the bottom of the floor. And the way that -- one of the way -- normally, a pit is very wide, and there's plenty of real estate for you to operate in. And you can have people 100 or 200 meters away on the other side of the pit doing work while you watch these small slips not put anybody at risk. We're not talking about hundreds of thousands of tonnes movement. However, a couple of things. As we've said, the bottom of the Rosemont Pit is -- we're right at the bottom. We've pushed this all the way down. If you go and stand there, it's not quite like this. But it's not too much longer, and you'll be able to touch [ both ] walls with your arms. And it's like -- when a rock hits the bottom, it actually rolls almost all the way across to the other side of the pit. It's -- it can do. And so it's very tight. And that's a -- so you want to make sure that you -- in that circumstance, you can understand you be -- you want to be pretty confident that you're going to be able to -- your people will be safe working in that pit under that type circumstances. And some of those benches that were designed to be -- to catch the rock have done exactly that. They have caught the rock. But as a consequence, now they're sort of full up. So the rock can't be caught. It will just run straight over the top of the other benches. So there -- that was a -- that's the immediacy of the issue. Can we figure out a way of going back in there? Yes, longer term, we probably can. I mean, ultimately, we'll profitably -- we may look at -- I don't know, what the options of -- is it safe to mesh that whole wall and go back in? But really, you're going to be countering that with the option of coming up from underground, which would be a lot more conventional in attacking those ounces, and I suspect that's probably more inclined to be the solution. And we might look at the alternatives, but I don't think there'll be -- to be frank, I'm not sure whether they'd be taken too seriously, certainly not at this point in time.

The next question comes from Alexander [indiscernible] from Citi.

Regarding McPhillamys, has there been any recent updates to the plan towards supply pipeline given the community contamination concerns?

No. No. The -- we're still finalizing the Water Offtake Agreement with the counterparties, the pipeline. I mean, I think some of the community concerns about the write-ups that have been -- some of the statements that have been made by some individuals are probably inaccurate at best. There's certainly not toxic material. In fact, the standard of that material that will be traveling down that pipeline will be feedstock quality. So we don't see any issues on that front. They're still working through the approvals, of course. But we don't see anything material on that front causing a problem.

Your next question comes from Alex Barkley from RBC.

I just had a question on why processing the low-grade stockpile at Rosemont mill rather than some other regional Open Pit ore. It does seem like you had that -- those other Open Pit options ready to be sent to the mill from FY '23 onward. So what pits are planned for FY '23 onwards? And is there any potential that could be brought ahead into this financial year?

If there was potential, we would have done it, the bottom line. We don't go and develop stopes -- a couple -- not stopes, sorry. We don't go and develop and ready pits for production a year ahead of when we need it. It's not a particularly sensible use of cash flow. So while we try to avoid just in time because sometimes, that can be just too late. But we don't have -- basically, we don't have pits lying around waiting for -- waiting to cover these sorts of events. Sometimes, you can speed the mining up in a particular pit and maybe make up for it. But obviously, that's all of what we went through. We've been pulling a lot of levers pretty hard this year, and our options were quite limited on that front. And as I think we've said that by the time we looked at it all, really the only practical option within the time frame was to just put through the low-grade feed to replace it in the mill. And while that recovers some of the ore, you might be putting in 0.5 grams per ton, that in no way matches 2.6, 2.7 material.

Your next question comes from Peter O'Connor from Shaw and Partners.

You just answered my low-grade stock grades. But financials, impairment, is there anything likely Rosemont Main could catalyze stripping or anything of that nature? Or will there be no impairments on the back of this recent event?

Look, obviously, there's a couple of different elements of that, but we've had a look to see at a very high level, Peter, it's very [indiscernible]. But if we decide that we can't get to the material at all or we decided it's appropriate to impair, it's of the order of about $4 million or $5 million was the current estimate that we've got, that's not -- that's unaudited and all of that, that's -- we're looking through as we look at our options because that wasn't front of center, but we just wanted to get a bit of a feel for it. So I think Jon and I were discussing it, it's a number, but it's not material.

And that's really much just related to capitalized stripping of the Rosemont Main?

That's right, that's right. That's exactly right.

Can I wrap up with another geeky question? So ultramafic material is the best way to support that? Is it with geotech fencing or bolting? Or is it with rock creep? What's the best way to manage that in the future, or what lessons have you learned?

Yes. Look, it's a whole bunch of things. The lesson #1, in geotech, the most important thing, visibility this time. The longer your lever, the wall exposed, the more likely it is to start to crumble and move. As Stuart said, there's ultramafic unit that was in the wall at Rosemont. We were watching it. And we were trying to get out as quickly as we could. Because it's a long -- relatively long aged pit, that was -- that's being exposed for an extended period of time. What can you do about it? You can do -- yes, you could bolt it. You could do all of those things. But of course, we're talking about large expenses. We're not talking about localized requirements. So the other thing you can do is put in a shallower angle. But that's the challenge of geotech. You're always trying to work out how to manage the tension of risk and value and making sure that you don't let all of us running the way of managing risk. So there's different ways -- there's many different ways to manage unstable ground. But the key is -- it's something like the ultramafic, where this one filed, it looks lifetime was the -- time is probably the most significant element in why [indiscernible].

And Jim, with regards to this incident, and this is the general [ Duketon ] area, when do we next expect to hear an update? Will there just be an update with the financials at the half year or next quarterly? Or is there any milestones coming out of this where you'll be coming back to us just to report how you're going remediation or updates?

No. There's no plan on that. No plan to update on any physicals. As you say, the next schedule is, I think it's like -- where are we? February, late February when Jon and the team finalize the half year accounts, and we'll be coming out with that. And we'll look to see what other information we've got there, but we don't plan on providing any -- we have no need and no plans to give any further update on how operations are progressing at this stage, unless there's something -- unless, of course, we think it means that the guidances need changing.

So is there anything on McPhillamys we should be expecting? Any dates, time lines, triggers [indiscernible] anything that we need to be thinking about?

Look, I'd like to say that there is, but we are dealing with the government departments. Keep in mind that -- well, keep in mind, here in the West is somewhat isolated from Omicron [indiscernible] as well as anybody [indiscernible] -- it is causing...

It's coming to get you, Jim. It's coming to get ships.

Yes, we know that. There's been some -- as I said earlier, I think there's been some minister changes there, but we don't see that as being bad, apart from the fact that it's just a -- there's a department that comes back up the learning curve. But the department and the minister are well aware of the project. The Deputy Premier of New South Wales is a local member. We think the project is valuable. We know that there's good support for it. It's just taking time to get that last element of the water licensing result. With this progress being made, it's just taking time.

Is it to do with the absenteeism of people because of Omicron or is it other? Is it more of the changes in staff?

What's that? Sorry.

So is the delays or the time that you're taking is it more about that absenteeism?

That's -- they're just factors, right? It's just taking time. If Omicron wasn't there, I don't know. I can't -- I'm not sure whether it'd be happening any faster than it is. And naturally, when there's a change of ministers, there's a degree of people needing to get up to speed. But I think that's happening quite quickly from the message I'm getting from new -- from our New South Wales team. So I don't see that being too detrimental. I mean at the moment, it's -- the Department of Planning, [indiscernible] planning is in constant discussion with our team. And everybody is working to get this large element completed so that we can demonstrate there's a pathway forward. And as soon as that can happen, the better we'll be, but I just can't put a date on it. It's not in my control.

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

All right. Thanks very much, Darcy. Thanks, everyone, for joining as always. It's certainly been a difficult recent period for us, and we've got some challenges that we're working through. But we are certainly looking forward to delivering into our guidance for the rest of this year. If anybody has anything that they want to follow up, please give us a -- drop us a message and let us know, and we'll do our best to help answer your queries. Thank you for joining us.