Regis Resources Limited (RRL) Earnings Call Transcript & Summary

So having moved now through all the resolutions, we'll call for -- are there any final questions on any of the resolutions? Okay. Please ensure you've cast your vote on all resolutions. And I'll now allow time for these votes to be finalized. Rod Somes from Computershare will walk around the room, collect the green voting cards. And if you acquire any assistance, please raise your hand. [Voting]

Any more green voting cards? Okay. So I confirm they've all been collected and now formally declare the poll closed. Once counted and reviewed, the results of the poll we announced on the ASX later today. This concludes the formal proceedings of today's AGM. I'd now like to invite Jim to present on our operational and financial performance. And Jim or others will be happy to take other questions.

All right. Thank you, James, for that and also some good news on the Cricket score by the sounds of it. All right. Well, look, I'll run through the presentation actually when you look at it, is not really terribly different from ones that we've done in the past, certainly over the last year or so. I guess one of the reasons that I bring that up is I'd just like to point out that actually we're a business that just is now doing what we said we were going to do. We've been consistently delivering. And it's great to be able, as James mentioned in his speech, that the fact that we're in such a strong position has not happened by chance. There's been an enormous amount of -- what do I say? Anyway, so look -- you'll have a look and see, of course, for those that are following online, I'll try and remember to say which page we're on, but we're on the cautionary statements for now, and there's a couple of pages of those because we have forward-looking statements and also an exploration target. So just briefly stopping on the first page here, the corporate snapshot. I think it's worth just having a look at this. First up, James introduced Anthony and Michael, Anthony, our CFO; and Michael Holmes, our COO, but I also want to introduce [ a couple ] Elena. But I want to introduce a couple of the other members of the executive team and I think all can do is actually introduce 1 because the others aren't here. But over here on my left is Jeff Sansom. Jeff is our Head of Investor Relations. Absent today is Wade Evans, who's our Executive General Manager in charge of Growth. Growth is looking after exploration and business development. Unfortunately, he couldn't be with us because he had a funeral of a close family member that he had to attend in Sydney. And also missing is Yvette Gledhill-Powell, who is our EGM of people or People and Culture. Yvette this week was over at McPhillamys and in the true spirit of East-West flights, the flight was delayed and she hasn't been able to get here in time. So that's -- they are the teams and there's a couple of other people to mention as we go through here, but please at the end of this, feel free to wander up and have a chat with them and ask them any questions. All right. So what did we deliver in 2025? In FY '25 was a strong year all around. From a safety point of view, we kept our lost time injury frequency rate at 0.4, which was well below the industry average of 2.2 a great outcome. Of course, we always want 0. That is the objective. We're never happy if anybody gets injured as we go about our business. But still, to see the trend and to also know that we're below the industry average is certainly encouraging and telling us that we're on the right track. But as I say, you can have a rest on your laurels. We have to keep pushing there. From other aspects of ESG performance, you can see our female representation across our business is 23%, which is around about middle of the pack for the industry. And of course, our Board is 33%, as you would have seen from the maths sitting up front. Rehabilitation. We did just over 200 hectares, which was slightly above our target. And it's great to see that the business is starting to catch back up with some of the rehab work that we needed to do over the last few years. Our Scope 1 and 2 emissions were down as well year-on-year due in no small part to the installation of our solar farm, which does two things. It saves us money on diesel, but at the same time, it's also reducing our greenhouse gas emissions, which is certainly one of the favorable and ideal situations you can get with the implementation of renewable energy. And as I mentioned in there on the side, Duketon now, we have 9 megs of installed capacity and a huge 61 megawatts of Tropicana. Now the other part of our performance, which was record was all around the financial performance. Record revenue, record cash and bullion at the end of the year, record operating cash flow, record EBITDA record net profit after tax. And it's great to see that we're back into a position where even after we paid off our $300 million in debt, at the beginning of this calendar year, we were in a position where we could restart dividend payments, a key element of why business exists. And as James said, we're looking at that, and we'll be pulling together a more structured formal approach to that and be talking to the market and shareholders about that in the new year. All right. Well, the next slide is the one that when I'm out talking to our shareholders and our fund managers. This is the slide that I used to say, and this is what we have delivered. This is a great reflection of how the business has been able to turn all the physical performance improvements into financial benefits. Back in December '20, which was what now nearly 2 years ago, we were in a deficit of $145 million. So our net cash and bullion we were negative $145 million, and we just got rid of the hedge book. And as you roll forward over the next year and 3 quarters because the number there is the end of September, you can see we've added $820 million to our business. [indiscernible] that $300 million because we paid down the debt, of course, and we ended up at $675 million. And I can tell you that in the current price environment, I think in the last -- in the September quarter, the average price that we receive for gold was about $5,400 an ounce thereabouts. And it's very pleasing to see gold sitting at $6,300 an ounce or $6,330 this morning when I had a look. This is a strong business, and it's performing well. And the reason it's performing well is because the gold price is up but also because the team has done an excellent job in positioning us where we are today. Okay. So looking a little bit more forward, what's our strategy and what's our plan to deliver more value beyond this year? Well, this is a reasonably simple slide, but it provides quite a bit of information on how we're thinking about the business. And clearly, from an operating point of view, we're split into 2 parts. There is Tropicana, and there is Duketon. And we see certainly out over the next 3 or 4 years, the Tropicana will be generating for us is around about 125,000 to 145,000 ounces per annum. And that comes from a combination of the open pits and the undergrounds. Once you get out beyond that, at the moment, it starts to drop down and just be a pure underground operation. I expect the underground will probably be producing more than it is today as we up to that. But you can see in the near term, in the next 3 or 4 years, this is still a very solid producer for us, excellent cash flow generation. And I think if you look at Tropicana and think about we paid circa $900 million for it, to date, pretax, it's earned something of the order of $630 million in cash back. So considering how much life is left in the old thing. It's not a bad investment, and it's got pretty quite a few years left to run for us yet. In terms of Duketon, we see Duketon producing in this range of 200,000 to 250,000 ounces per annum. And that's -- for the next few years, that's off the balance of some open pits and also our undergrounds. Critically, what we're looking at with our underground is for long-term longevity of Duketon into next century, in the next decade is to really get ourselves established to have 4 underground mines, and that's a core part of our strategy at Duketon. Now we will chase other opportunities, and I'll talk about that a little bit later on, but that's really what our team there is driving to do to give it a sense of longevity in life. And how is that turning out? Well, at Duketon, it's a pretty good story. We started with our underground. We declared a maiden reserve of 123,000 ounces back in 2019 or probably 2018, actually. And that represented probably about 2 years of mine life. And you jump forward 6 years, 5 or 6 years, and our underground reserves are now sitting at 441,000 ounces. And during that time, we have produced nearly 360,000 ounces. So when we went underground with this small little idea of something that could produce maybe 120,000 ounces, we've continued to grow it. Now not all of those reserves, of course, are sitting at Rosemont. They're shared across 3 of our underground mines, one of them yet to come into production. But the point is that we started off with 2 years of life. And 5 or 6 years ago, we've still got 2 or 3 years of life. And we've produced 360,000 ounces of gold. That's a great outcome. Now the slides on the overheads that you're looking at, this is on Page 33, I just remembered to people that are online. You can see Rosemont on the top and Garden well and there's 2 areas of Garden Well. Garden well South, which is the yellow box to the left of the dashed box. that's the mine that we've been operating from now for 3 years or so. And then the area in the yellow, that square box, is Garden Well Main. And that's the new mine that we've been developing for the last well, we kicked that off back in May last year. Now both Rosemont, the big extension at Rosemont in Stage 3 and Garden Well Main both. We've actually started production well, we fired our first stopes there. So we've kicked that off, but we won't be in commercial production there until later next year, both of which are running essentially on track. So we've got these 3 mines to running, 1 about to be commissioned or care into commercial production next year. We really want the fourth one. We think that with 4 mines, we can consistently produce 200,000 to 250,000 ounces a year consistently, well out into next decade. Off the basis of this, we mine it, we find it, we replace it. So the question is, where do we get our fourth mine from. And we've got plenty of opportunities. We look at underneath every old open pit basically where the ore body keeps on going down, that's got potential for a new underground mine. Now what's the what could be the fourth one be? Well, we think Ben Hur might be shaping up for that. We're not fully across the line with it. It's still got a bit of work to do. But you can see the scale that we're chasing there, another 300,000 to 550,000 ounces of potential exploration target in it. So there's a possible fourth mine. I've got a slide here. The next one, I'll just touch on this. This is a pretty interesting one because this one we show why we're so confident that when we go underground that life continues on beyond what we first thought. And I won't go through them all, but I'll just look at the top slide, on the left. That purple area that you can see, and I use the point here. So we're on Slide 34, Page 34. the 2 purple areas. When we first went underground, that's where we thought we were going to be producing from underground. That was it. And if you have a look at the slide on the right, with a few more holes drilled in it, the red dots but also, you can see not only did we mine out the areas that we thought we were going to mine, but we found new areas in between, it kept on going down, and it's actually plunging down to the south. And as time goes by and we learn more and more about the geology, the team is getting more and more of an understanding of where to look and how to chase it. It's a really good story, a really good story of how you start with an idea, you get in and after a few years, you build up the experience and knowledge and you start to realize and see and understand and you can chase the ore, which is what we're doing. We're seeing nothing to suggest that this will stop. At a broader level, we also are looking at exploration across the Duketon region. The Duketon Greenstone Belt is about 3,000 square kilometers. We hold about 90% of it thereabouts. And the team has really over [indiscernible] since we got acquired the 2,000 square kilometers now about 5 years ago, 5 or 6 years ago. The team has really gone back to grassroots exploration, and there's some fantastic targets. We're now getting to a point where we kind of know where to go and we're putting holes down and pleasingly, the team is actually finding color or gold off the back of their research and their work, which is really pleasing. Lot more pleasing than spending 4 or 5 years looking and putting hole down, not fighting anything. So the team is doing really well. And we will find something there. We just have to be persistent. We're looking for open pits. primarily, but we'd also like happy to take some more underground beyond the four that we're chasing. And the man that's leading that is sitting at the back here, Rowan Hein is we'll get him to put his hand up. If you want to have a chat with Rowan later on afterwards. He and the team are doing a great job. All right, Tropicana. It's almost like press rewind, press play because it's a very similar story, certainly from an underground perspective as we see at Duketon. Tropicana went underground with a maiden reserve of about 317,000 ounces. And here we are 6 or 7 years later, the underground reserves there now are 640,000 ounces. So basically doubled the underground reserves waiting to be mined. And during that time, we mined nearly 650,000 ounces. So what started life is something that was 320,000 is now nearly 1.3 million between what we've mined and what we've still got to take. It's a great story. And it's a consistent one with world-class underground gold mines that we see across WA. Yes, they have 2 or 3 years of mine life and 20 years life still got it. You can rattle them off. And Tropicana is following the same trend. There too, exploration is active and certainly some opportunities where we can find some looking for satellite open pits that we could use because, as I said, in about 3 or 4 years' time, the open pits will run down. We'd love to be able to find something else we can add into what will by then be an underutilized mill. We've got the time. We're putting in the effort. Sometimes we just have to have the luck. But good geologists make their own luck. Okay. The other asset, which James also talked about still makes me shake in the middle of the night for all the wrong reasons is McPhillamys. So McPhillamys is and every now -- and again, I'd like to go through it because I sit down with some of the investors and the investment community and they say, what are you pushing this for? You might as well give up move on and find something else. Absolutely not. This thing is it's a 2.3 million ounce resource, used to be or 2.7 million ounce resources in the area. It used to have a reserve, but we took the reserve away when the Minister made her declaration of the Section 10. But the scope of this thing is 7 million tonnes per annum. Sitting within it is a 10-year mine life, an average of 187,000 ounces per annum, and it peaks towards the back end, the grades get better at the bottom. The initial CapEx is, call it, $1 billion. Now these are numbers from early last year, so you can put a bit of inflation on it, still pretty good. And an average all-in sustaining cost across its life of roughly $1,600 an ounce. That $1,600 million includes the capital that's required once it's built and operating. Now if you want to know why we think this is worth pursuing, and we'll chase whatever we can to make sure that it happens. If you sit down and do the math and say in an average year, if today was an average year at the gold price today, this mine will be producing more than $2 million pretax a day. That's a significant operation. And I firmly believe that the business needs to continue to drive this because this will be a cornerstone of our production next decade. It may well take us that long to get it there, but we will pursue the 2 options that we've got to make sure that this project is fulfilled. The first is the legal challenge, the judicial review, which James mentioned. How long that takes? I'm not sure. We're in the courts in December. How long it takes to get a decision and whether it's successful or not, but we will continue to pursue that. We cannot afford to leave that life for a number of reasons, not the least of which are the financial ones. But also, what we have to do is, I guess, take a view, as you do with these things is hope for the best, which is that the legal process works out and justice prevails, but plan for the worst, and that is we look for alternative ways to be able to develop and get this project going. And we're doing that at the moment as well. We're looking for different ways to be able to dispose of the tailings. And in the first instance, we see that as being a method that we call an integrated waste landform, and basically, it involves drawing out the tailings in big presses and co-mingling or comixing the tails in the waste rock dump. We think it's got great potential. We think it vital way. It's going to take us a while to do it. We have to do the test work, we have to do the estimations. We have to make sure that it's right. But either way, this could easily take us out to at least another 2 years or so before we've got something realistic there. So if we run those time frames, the legal process is very difficult to be able to put a time on it, but there's several years before we're in a position or at least a couple of years before we're in a position to make what's called FID, final investment decision. At which point in time, then we'll make the call and we'll move on whether we've been successful with the judicial review and the reconsideration or if we've been able to develop a new an alternative technology to use for tailings disposal. So we're working on both of those. And the good thing about McPhillamys is it's not -- the opportunity there is not just about McPhillamys. Down the road, we've got Discovery Ridge, which is another 400,000 ounces of resource, and we've got some extremely attractive high potential exploration targets in the immediate vicinity, some within a kilometer or so of the existing pit. This is a great region for us, and it's certainly, as I said, it's got the potential to be a cornerstone for our business out in the next decade. All right. I wanted to just touch on -- I talked about how our plan is to get to the 4 undergrounds. And really, that's the core of our business that we're driving to for the end of the decade. The other thing that we've mentioned on a number of calls, and James talked about it as well, is in this high price environment, we need to make sure that we're looking for enhanced opportunities for value creation. It's particularly attractive to us at the moment because we have a mill that's under well unutilized. We will have a mill that's underutilized in a few months' time. And the team has done some work, both the site team and our tech services group here, have done some fantastic work and identified an opportunity that we released last week, which we colloquially -- in the office, we call it Buck well, but it's a combination of the Buckingham and Wellington pit. What it's done is it's given us a potential -- well, it's given us a reserve of 250,000 ounces. It's going to run for nearly 6 years or 5.7 years of production. Out of that 250 million in reserves, I think, we'll cover about 223,000. So that's over those 5.5 years, you say. And we have used -- in the calculations you can see on the screen, which is also the ones we used in the release last week, we looked at the economic benefits of it, using what's called consensus pricing. It's where you get all of the price outlooks from the various brokers and [indiscernible]. You look and use an average and you apply that. And the average for the next -- over the next 5 years is about $5,387. And if we use those numbers -- so we thought pretty good ones to run with, the value is in NPV pretax is $268 million. Internal rate of return of 127%. That's not bad. It's a pretty good return. Why is it so high? Well, all the plant, all the infrastructure is all there. All we have to do is pre-strip and get into it. And the beauty of this is it's only a handful of months before we're actually starting to get good production out of the pits. And I did some quick calc this morning, which is always dangerous, but at the spot price today, which is another $940 an ounce above the number that we use there, that would add another $210 million to the pretax cash flow, undiscounted. So this is a good -- a really good project that the -- or addition to our existing production that the team has been able to identify and add on top. It is -- actually, some of it was already in our plans. It was actually right at the back end of our mine life. And we saw an opportunity and we brought and added a few more ounces to offer a little bit more geological interpretation. The picture on the slide shows you where it is. It's those little colored swimming pool looking things. It's in 3 stages. So you can turn them on and off if the gold price doesn't do what we'd like it to do. It's not like we've made a major commitment. It's not huge, but it's pretty good and it's quite impactful. You can see on average -- it helps each year. And this is the sort of thing that we really while we're out looking for the next big Wale of a deposit, be it 0.5 million or 1 million ounce, these sorts of things really do add incremental value. We want to keep looking for more. It gets a little bit more challenging now, of course, because we've got all our mills are full. So whatever we do find and decide to do, we'll have to make sure that it's more economically valuable than continuing to follow the current plan. But that's a pretty good position to be in. We're using everything to its max. Okay. So I'll wrap it up. Our outlook like in FY '25, you can see -- well, this is our outlook for FY '26. How does it compare with '25? Pretty much the same. Production last year was 373,000 ounces, and our all-in sustaining cost was 21. Now the midpoint here is a little higher than that. You got to remember, this got $170/ounces of noncash costs sitting in the AISC. So it's quite similar. So with the gold price being where it is, it's more of the same plus. Our plans, as I said before, I won't go over this slide, but I hope -- I've sort of for those that haven't heard me give the story, I hope you understand that and put that into context a little bit more. To wrap up, if you're looking -- we look and we like to identify and explain to people why we think that Regis Resources is heading into a new era. It had a great start. It had a fantastic start. It had a period where we had to recapitalize. We dealt with hedge books. And during that time, we managed to do okay. I think the team did a great job in times when it was challenging. And now we've basically, we've got rid of the hedge book. We've brought it out. The operations team have done the job to be able to position us, and it's fantastic. The gold price is going off like a cracker, and we are positioned to absolutely ride that. So you can see the comments here. Regis at the end of September, $675 million in cash and bullion. I can tell you now that it's more than that pretty safely. We've got clear ongoing generating capacity. We'll continue to address our growth strategy. What we've been doing seems to be working. So we'll continue to work on that. We'll enhance our core production by continuing to look for these opportunities, as I just mentioned. We'll progress our underground growth. As I said, I think we're extremely well positioned for this. What we're really seeing is a generation or repositioning of the gold price. It's a great time to be in gold. And it's a great time to be working with the team at Regis. And I'd like to take the opportunity to thank everybody in the team who's contributed to this. As always, you can never -- this is a major team effort. The folks that are on site who we invited to listen to this, but I hope they're not. I hope they're making gold. They can listen to the recording later. And the team back in the office and for those that have managed to come along here, thanks very much. I think it's a job well done. And I'd also like to thank the Board for their support. These -- you have challenges, none of this like the duck on the water, it all looks pretty smooth, but there's always things going on underneath. And it's great to know that there's a Board that's here to back you up and support you. So thank you, James, and thanks to the rest of the Board. All right. With that, thank you very much for coming along. Do I throw it back for more questions?

One more slide.

Well, what if I do want questions. Okay. We're open for questions now. If anybody would like to step up to the microphone, happy to have a crack.

David Brook. Jim, about a few weeks ago, you've said -- okay. A few weeks ago, there was an announcement, which said that there were preliminary talks going on with Anglo Gold over the other 70% of Tropicana. Can you tell us anything more on that or not?

No, we didn't put out any announcement. That was actually media speculation and we don't -- the reality is we don't -- we're always looking at lots of opportunities, but we don't comment on media speculation.

Okay. So nothing here.

Yes, we didn't put out anything. Yes. I mean we love the Tropicana asset. We think it's a great asset.

Yes, it is. And clearly, we've got a fair amount of cash now and one wants to use it. And now you want to use it very sensibly, which I'm sure you'll do.

Yes. Yes. Good point, David. I think we do have a lot of cash, and I think we do appreciate the follow-up comment was we did it wisely. Yes, that's I think, just to follow that up and I didn't talk about it in here, but part of our I talk today about all our organic growth. So in other words, all our internal opportunities for Vale and of course, we continue to look for other opportunities outside.

[indiscernible], shareholder. I note the amount of renewable energy that's being generated now. I'm just wondering what that represents as a percentage of the usage. And what further investment is intended to be put into this area because ultimately, that transfers to the bottom line is straight profit?

Yes. It's a good question. I think the last time I did some calcs on it, the renewable energy was contributing something like 8%. It wasn't a huge amount, but it was significant enough to help reduce our overall power reduction. I think the challenge for renewables is the life cycle, the investment period that you have to put them in place for them to make sure that they pay back. So we have to look carefully -- we are looking at adding to that capacity. We're looking at putting potentially batteries, which makes them much more efficient, and it allows you to utilize the generating capacity more. But we haven't made any decision yet. Of course, it's the decision is by two things: one, the drive to reduce your overall emissions in line with the safeguard mechanism legislation, but also to offset the cost of diesel. But we have no decision yet. We are looking at alternatives, but we haven't made any decision to add more capacity to it yet. All right. It looks like we there's nothing on no other questions online or anything? No. Okay. All right. Well, look, thanks, everybody. I appreciate you coming along. We will be staying around for a while and happy to answer where we can, any questions that you might have. Thanks for coming. Thanks for the process, and thanks again to the Board, and thanks to the Regis team and our major contractors and suppliers to make the year successful and here's to another successful year for FY '26. Have a safe day. Thank you.