Regis Resources Limited ($RRL)

Thank you for standing by, and welcome to the Regis Resources quarterly briefing. [Operator Instructions] I would now like to hand the conference over to Mr. Jim Beyer, Managing Director and Chief Executive Officer. Please go ahead.

Thanks, Darcy. Good morning, everyone, and thanks for joining us for the Regis Resources March FY '26 quarter results. Joining me on the call today is our CFO, Anthony Rechichi; our COO, Michael Holmes; and our Head of Investor Relations, Matt Collings. At times, we'll refer to figures and tables in both the quarterly report, which came out this morning, and also the resource and reserves report, which was released yesterday morning. So you may find it useful to have those documents at hand. Okay. I'll start with safety. During the December quarter, our operations continued to perform strongly from a safety perspective. The 12-month moving average lost time injury frequency rate finished the quarter a little bit further down at 0.32, which continues to be well below the Western Australian gold industry average. Our objectives remain unchanged to provide a workplace free from serious injury. We continue to focus on leadership, discipline and continuous improvement to support safe and reliable operations across our business. Turning now to our enviable production performance. The team has consistently delivered to plan during FY '26 and the March quarter was no exception. Operationally, the group production for the period was 90,600 ounces at an all-in sustaining cost of $2,807 an ounce with minimum noncash charges. The consistent delivery of both production and costs across both Duketon and Tropicana has translated directly into strong financial outcomes and has seen us achieve a major balance sheet milestone. During the quarter, Regis increased its cash in bullion by $198 million, and that was after the tax payment of $92 million for the FY '25 year. And Anthony will talk some more on this shortly. Now this near $200 million build has resulted in Regis' cash and bullion balance moving above the $1 billion mark with $1.13 billion on the balance sheet at the end of March. We also released our new capital management policy and announced a fully franked interim dividend of $0.15 per share. That was paid on 8 April, returning $114 million to shareholders and taking our total distribution to shareholders to nearly $700 million. This return to being dividend payers reflects our understanding that value growth and returns to our shareholders are the fundamental objectives to our business. To continue with this performance, Regis remains unhedged, continues to invest in growth and exploration, and thanks to a strong operational performance, has the capacity to balance disciplined reinvestment along with returns to shareholders. In fact, our message to the market hasn't changed on this front. We operate quality assets with strong leverage to the gold price. When combined with the continued rolling life extensions of our underground mines, as clearly demonstrated in yesterday's R&R update, we're extremely well positioned to consistently deliver ounces and cash flow well into future years. And with that, I'll hand over to Michael and then to Anthony, who will provide more details on operations and financial performance, respectively.

Thanks, Jim, and good morning, everyone. Operationally, the March quarter was in line with expectations across both Duketon and Tropicana. Our teams continue to deliver to plan and the consistency of execution across the business remains a key strength for Regis. At Duketon, open pit and underground operations produced 57,500 ounces. Open pit ore mining continued at King of Creation, Moolart Well Laterites and Ben Hur delivering 14,800 ounces at an average grade of 0.8 grams per tonne, and the performance was in line with plan. Our underground operations at Garden Well and Rosemont continue to perform reliably producing 35,300 ounces at 2.07 grams per tonne. Development rates across both undergrounds were pleasing and supported steady ore delivery through the quarter. Total underground development at Duketon was 3,666 meters with approximately 56% classified as capital development, reflecting investment in Garden Well Main and Rosemont Stage 3. Rosemont's Stage 3 development continues and progressing as planned to commercial production. During the March quarter, Garden Well Main underground and the Kintyre open pit both moved into commercial production, signifying the end of the growth capital period for those projects. The Duketon mills performed to expectations with open pit and underground ore feeds supported by planned stockpile feed. During the quarter, we also progressed activities associated with the Buckwell open pit at Duketon North. At Buckwell, pre-stripping rates have exceeded expectations with the recent addition of a large 3,600 tonne digger to the open pit fleet proving its worth. This strong performance has given us the option to either slow the mining rate or to continue and bring forward material previously planned for FY '27. We have made the sensible decision to continue mining at these elevated rates and derisk FY '27 production from Buckwell. This has timing impacts on our forecast capital spend, which Anthony will touch on later in the call. Turning now to Tropicana. At Trop, Regis' attributable production for the quarter was 33,100 ounces, representing another solid quarter of delivery. Open pit operations delivered 22,300 ounces at an average grade of 2.07 grams per tonne, with performance in line with expectations. Underground operations delivered 13,300 ounces at 2.95 grams per tonne, again consistent with plan. Tropicana Mill feed was a combination of open pit underground and supplemented stockpile feeds. Overall, both Duketon and Tropicana continued to perform reliably during the quarter, delivering consistent production while progressing key underground and near-term growth projects. With that, I'll now hand over to Anthony to take you through the financials.

Thanks, Michael. As Jim outlined earlier, the March quarter again demonstrated the strength of Regis financial performance with consistent operational delivery translating directly into strong margins and cash generation. Gold sales for the quarter were just shy of 90,000 ounces for an average realized price of AUD 6,977 an ounce, generating $622 million in revenue. Operating cash flow for the quarter was $422 million, with $263 million generated at Duketon and $159 million coming from Tropicana. Also in cash and bullion, and referring to Figure 2 in the ASX release, the money bags again increased by $198 million during the quarter, taking the total balance to $1.13 billion as at the 31st of March. Importantly, this increase was achieved after the payment of a $92 million tax bill for the year ended June 30, 2025, while continuing to invest across the operations and at McPhillamys. For growth and sustaining capital, we spent $106 million in the quarter. At Duketon, this included underground development preproduction mining activities and waste removal as well as investment in plant and equipment. A significant portion of this spend related to the development of Garden Well Main, Rosemont Stage 3 and the Buckwell open pit. At Tropicana, expenditure related to underground development at Boston Shaker and the Tropicana underground, preproduction costs at the Havana underground and sustaining capital across the operations. Exploration expenditure during the quarter was $17 million, reflecting the high levels of activity across both Duketon and Tropicana, the former of which has underpinned yesterday's reported lift in both reserves and resources at Duketon. And $7 million spent during the quarter at McPhillamys, remembering McPhillamys' costs are expensed through the profit and loss account. A reminder to everyone that our strong cash generation comes after the payment of an accumulated $92 million bill from the ATO, which we've been flagging for some time now. Regis is now making monthly corporate tax installment payments, which approximates about 30% of our pretax profits. On the subject of growth capital, as Michael mentioned, pressure at Buckwell is being accelerated. This is a timing issue, bringing material movements from FY '27 back into FY '26, along with their associated costs and that's the largest single increase to the growth capital. Other areas that have impacted the growth capital guidance since Buckwell was announced. Firstly, the small delay in moving Garden Well Main and Kintyre into commercial production status. Secondly, the impact of diesel pricing on our forecast for Q4 of FY '26. And finally, a number of relatively minor increases across the broader suite of capital projects Regis is undertaking. As a result, we've lifted our growth capital guidance range by $20 million for FY '26 to now be in the range of $240 million to $255 million for the year. Overall, we are continuing to build an enviable balance sheet position, highlighting the incredible cash-generating capacity of the business in the current environment. With strong operating margins, disciplined capital allocation and consistent operational performance, I look forward to providing you with our Q4 results in due course. And with that, I'll hand it back to you, Jim.

Thanks, Anthony. I have mentioned it already, but I'll do it again, and that is to note that during the quarter we announced our dividend policy alongside our half year financials, and with that, a fully franked dividend of $0.15 per share. A full 3x previous half's dividend, returning $114 million to our shareholders this month. Our new policy makes clear our intention to be a reliable but responsible dividend payer. It provides a clear structure for returning capital to shareholders while also allocating capital to existing operations and maintaining a strong balance sheet and future -- and funding continued growth. Just to remind you, in essence, we expect the return semi-annual dividend payments to represent 25% to 50% of the group cash increase over the preceding half year, and that's after adding back any dividend payments. And as Anthony noted, with regular tax installments now a fact of life adjustment for tax renewals should become less material. Now our other major announcement in the last 24 hours is the annual update to our group R&R resources and reserves, and that was following on from the Tropicana's update release in February. After depletion, our group mineral resource grew by 10% year-on-year to now 8.3 million ounces. And if you see Figure 1 in the R&R release, you can see that buildup after depletion. Our ore reserves also increased by nearly 20% to just under 2 million ounces. And for that, the build there, you look at Figure 2 in our R&R release. At Duketon, our underground were the stars of the show in both categories, adding 600,000 ounces to resource and 390,000 ounces to the reserves. I think the underground sections we have included in the R&R release in Figures 5 to 10, clearly illustrate the growth in both volume and confidence at Garden Well and Rosemont. Now these updates are additional confirmation of what we've always believed about our underground operations and prospects at Duketon. It underscores the growth potential that exists and validates our prior decision to lift our exploration expenditure for FY '26 by $20 million in the December quarter. Despite the perception from some about our reserves and mine life, we keep adding life each year by adding more resources and efficiently converting those resources to reserves. This is doing exactly what we said we would do. And the great thing is we have more targets, and we intend to chase them. At Tropicana, the good news keeps coming as the operation consistently delivers extensions to known mineralization, building the underground pipeline and reinforcing the long-term value we still see at this asset. At McPhillamys, as previously flagged, the judicial review of the Section 10 was heard in the Federal Court back in December last year. The judge has reserved its decision and we await the outcome. In parallel, we continue to progress work on the alternative pathways to return McPhillamys to an approvable position, and that includes ongoing assessment of an Integrated Waste Landform solution. This work is progressing well and methodically and does involve a longer time frame. On guidance for the year, I think Anthony and Michael covered off the growth capital change quite well. Production, we're still very comfortable with how we're traveling there. And on all-in sustaining costs, we've seen 2 areas creating the upward pressure. The first is we're actually experiencing a higher assumed -- a higher gold price than what we assumed when we gave guidance. And this has lifted -- this has increased our royalty payments about $60 an ounce above what we had factored into our all-in sustaining. Quite frankly, that's not something I'm going to complain about or anybody should for that matter as it will take -- I'll take that higher margin any day. The second, of course, is the impact of the recent hike in fuel prices. There's no avoiding math. We have, in our assessment of guidance assumed both gold price and fuel price remains at its current level. Now despite these 2 elevated assumptions, we still expect at this point that our full year all-in sustaining costs to be within our guidance pre -- our guidance range, albeit towards the upper end of that range. And just to touch on the topic of fuel, for a guide on the company's exposure. And I would say that the team has been doing an enormous amount of work on site and our suppliers. We haven't seen any reductions in supply. We're quite comfortable with our stock levels. And we see our supply horizon is the same as what it currently normally is in any normal situation. So at this point in time, we are quite comfortable with the way that our suppliers are coming in. But what I can say in terms of -- so it's a question of supply on the question of cost and cost impact, that the diesel price for every $0.10 a liter movement in the diesel price, it will impact the all-in sustaining costs for our group by about $25 an ounce for the gold produced at that diesel price. I'm not talking about the average for the year because obviously, 3/4 of it is already gone. But at an instantaneous rate effectively, a $0.10 movement in the diesel price causes a $25 an ounce increase in the all-in sustaining cost of the gold. So in conclusion and summary, Regis has delivered another quarter of consistent production across our operations. We continue to deliver strong, reliable cash generation, which underpins our enviable strong balance sheet and our commitment to prudent capital returns to shareholders. We have decided to accelerate mining at Buckwell, bringing some growth capital forward and derisking FY '27. Our other key value points of production -- and our other key value points of production and all-in sustaining costs are both on track to be within guidance range, while the fuel and higher gold price means we're likely to see AISC at the upper end of that range. At McPhillamys, we continue to pursue all available pathways and options while awaiting the outcome of the Court process. And finally, our resource and reserves just continue to grow at both Duketon and Tropicana, providing an ongoing pathway to operating life extensions and value growth well into the future. Overall, the business remains well positioned to continue to deliver long-term value to its shareholders. And with that, thanks for your attention. I'll hand it back to Darcy and we'll now open it up for questions.

[Operator Instructions] Your first question comes from Levi Spry with UBS.

Maybe just 2 quick ones. So just picking up on the data sensitivity there. Thanks for giving that to us. So just if I do the numbers in my head, like are we talking about sort of $300 an ounce increase from the midpoint of last year's guidance if the price were to stay here? Is that another way to think about it?

Probably not that high for the group. We see what are we running at now. We're probably running about $2 a liter, so it's about $1 more than we assumed. And for the group, that's about $250 we announced...

[indiscernible]...

Well, see we don't pay the road tax which is the appropriate -- my view, the appropriate term for the rebate. So our rates are a little less than that, but that's the going rate. So for the group, it's about $250 an ounce for Duketon because all the power and all our use is diesel. That's a little bit over $300 for Trop. It's their gas and diesel and they're probably more closer to the $100. So you do the maths and you can see it comes out of that $250.

Yes. Got it. And great news on the capital management policy. So just thinking about how that might be put into practice next year with a little bit more production coming on from Duketon North. Like have you flagged any more incremental capital that gets pushed into next year yet?

Look, we're still working on next year. I'm not sure I'm seeing anything at the moment that in the absence of approving any new mine, for example, a new underground or a new pit, there's nothing that's at the moment that's kind of way different to the current year, but we're still working on that. So -- but that's the way it's sort of looking at the moment.

Your next question comes from Daniel Morgan with Barrenjoey.

Just a little bit of a nuance to follow-up just on that diesel question again. So I would imagine that some -- you've been quite clear on what the impact is on ASC, but I imagine there's a diesel impact in the growth CapEx, i.e., material movements that then get capitalized. Is that maybe another way to think about it, which is like how many liters you use or something like that where we would have the total impact?

Yes. That's way too complicated. It's probably $4 million or $5 million impact on the growth capital. That's around about the -- that's 1 of the reasons -- 1 of the elements of the increase was just -- it became more expensive. So there you go.

Understand. That makes sense. And if I had -- just a follow-up on Levi's question on the business going forward. It sounds like the business is in reasonable stability on production, notwithstanding the diesel costs, which are outside your control that you expect to spend broadly the same CapEx for next year?

Look, we're still working on next -- on the detail of next year's plans. And obviously, once we've landed on that, we'll give the guidance. As I said, this -- if it was steady state, well, that's steady state. But as you guys all know, we're looking for new undergrounds. We're very excited about our exploration. But I think if you look at it pretty clearly, this -- our cash generating capability of the business at the moment, we're not expecting any major dips in the coming years. In fact, we've shored it up with the Buckwell project that Duketon North contributing, I think it's something like 35,000 to 45,000 ounces extra a year. I think we're pretty comfortable with the way that the outlook is going. But questions about large leaps of capital, that's something that we're still working on and is really as we sort of try to get to a landing on what may or may not be new mine projects in next year, still working on it. So I'm not in a position, not willing to give much more guidance than none.

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

Jim and team, congratulations on another very consistent quarterly, well done. And in the $1 billion mark, it must be a nice one to hit.

Pretty significant.

Yes. That's on the back of the [ cash ]. On the diesel, look, thanks for the sensitivity stuff that's really useful. Just wondering if you can give us a bit more detail on what levers you've got to pull in terms of contingency planning and supplies on site and stuff like that, if you're happy to go into any of that.

Look, it's probably -- there's so many different scenarios that we've looked at trying to work through. The key thing that we work through is which goal gives us the best return per liter of diesel and -- but then there's a whole series of complications that arise around that. We don't have huge stocks of diesel on site, probably got more than a week, but certainly less than not no more than 2. So we sort of operate in that range and always have. We've tried to sort of work to keep that as full as possible. So our options, we do have options. We could wind things back and run off stockpiles for example. But at the moment, our best scenario is to keep running. Our suppliers give us good intel on how we should be looking out into June. We've got long-term contracts with our supplier and we get good intel as to what ship they've sort of locked in for June. And once we know they've got to ship for June, that means we know we're comfortable for fuel in June, and they don't normally book things in too far out. So we're very comfortable on that front. Probably the -- probably 1 of the things that we're just keeping an eye on is the supply of that gas. There's no alarm bells going off, but occasionally a bit of noise pops up around the availability there for the fleet for airlines. And I mean, there are options there that we sort of adopted back in the day -- COVID days where we can -- but we look and we prepare, but we don't need to action any of them. I think everything is pretty comfortable -- it's alert and aware and concern but not actioning anything and -- so that's -- that's the best I can give you. We're quite comfortable the way that this thing looks out to the end of this financial year, notwithstanding something that regulators may decide that they want to enforce. But the message we're getting is that I think as in the COVID days, the state recognizes the importance of the resource industry.

Okay. Excellent. And just on the reserve and resource update yesterday, great update, well done again. You made the comment, Jim, efficient resource to reserve conversion. Can you just sort of delve into that a little bit? Is that sort of drilling from underground shorter holes? And should 1 we kind of be expecting to sort of see like a life-of-mine reserves being sustained. And also two, as the undergrounds get bigger, will that sort of efficient conversion expand, I guess?

Yes. Look, I guess the efficiency is when you -- we are getting better and more efficient at converting the reserves because as we now -- obviously, as you build in your head further -- further underground, you incorporate your drilling platforms and your drives that provide you good quality access at the right angles into footwall and hanging walls, whatever you need them to be. And that's proving to be a lot more efficient than drilling from the surface with a lack of control and obviously, it gets harder at depth. So -- and the team is doing a good job of being quite targeted. And also, I think the ResDev team are -- as every year goes by, every half year goes by, they get more and more improved in their understanding of the nature of the ore body. And it just becomes more efficient not just because of the capital that we're putting in, like more drives and more drilling. It becomes more efficient because the intellect is becoming far more knowledgeable and they know where to drill and they know where not to drill. And I think the team is doing a great job there.

Your next question comes from Adam Baker with Macquarie.

Just wondering if you've got any updates, I know you've given an update on McPhillamys' judicial review outcome, but maybe just an update on timing. I think the last indication was April, May. Are we still on track for that time frame?

Yes. I think when you say April, May, I think it's like April, may be the time that we hear about it. How's that for [ a pun ]. Look, the reality is with respect to the judicial system, there is no time frame here. Advice on timing is we shouldn't expect it to be any earlier than now, which means we could hear anytime from here forward. But we really don't know when that will be. I think we get an indication maybe a day or 2 beforehand that a decision may be forthcoming, and that's about the only warning we get. So -- as I've said, what we're doing is we're running 2 -- a very clear 2-prong approach here. We've got the work trying to overturn and get back to a sensible scenario around the Section 10 application. But in the -- what we view as unlikely event where we are unsuccessful, we -- effectively, we hope for the best and we plan for the worst. The best being that it's overturned, and we get back to what's reasonable. The worst is that it doesn't. We're working on that plan B, and that plan B is clearly using the approach called an Integrated Waste Landform where we squeeze the tails out, dry them into a sort of a damn cake and commingled the -- the old processed material, the old tailings in with the waste rock dump. And that's an option that's starting to shape up as being viable. It's just taking us a bit longer to do that. So our preference is the other way. But as we said at the time, we didn't have an alternative back when it was 2 years plus ago, when the minister made a decision, and we are working on the alternative. We're chasing the legal, and we're working on the alternative and the alternative is shaping up. It's just taking just a less desired route because of the time. But the answer to that question, not sure.

Yes. Understood. And just on Tropicana. Looks like a pretty decent result from a cost perspective, noting the positive ore inventory adjustments. Do you have any idea this is likely to persist over the short term?

I think -- I mean, that's an interesting one, right, because that's, as we all know, all-in sustaining costs even though it's -- as you said, it's a stockpile adjustment, the cash is still the same, regardless of whether it's going on or off. So it seems to be -- we wouldn't expect that to be something that continues into the future. It's more of a one-off. The irony in that is that when we do take the material off, our all-in sustaining costs will go up, but our cash costs will actually come down because we won't spend the money. It's that disconnect between all-in sustaining costs and cash flow calcs. But you guys will understand that, I know.

[Operator Instructions] Your next question comes from Levi Spry with UBS.

Let me sneak another 1 back in. Can you just -- and maybe I've missed this, but can you just kind of spell out the next steps at Buckwell, so first ore and sort of ramp up and just how we think about that?

We'll be getting into it next year. Next financial year it will be in production and contributing. We've just been doing the stripping. I think there's very small amounts coming out now. So not noticeable yet. But it will definitely be part of next year's production profile.

Yes. At full run rate from the start of the year.

When do you think it will be full run rate, Michael?

I think we've got a plan for quarter 2.

So probably you expect it by middle of the year, financial year.

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

Thanks, Darcy. Thanks, everybody, and we appreciate you joining the call and asking the questions. We recognize these are busy days for you folks. Anyway, if there's any follow-ups, as always, will give us -- get in touch with Matt, and we'll do our best to answer them. Thanks for your attention, and have a good day.

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.