Earnings call: Regis Resources reports robust quarter and growth plans

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Earnings call: Regis Resources reports robust quarter and growth plans
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Regis (NASDAQ: RGS ) Resource Limited (ASX: RRL) has reported a strong performance in its quarterly update for December 2023, with significant gold production and positive operational cash flow. The company's strategic closure of its hedge book has enhanced its cash flow generation and exposure to the gold price. Regis Resources (OTC: RGRNF ) emphasized its commitment to growth, both through its ongoing exploration activities and the operational readiness of its projects. The company's environmental initiatives have also contributed to cost savings and a reduction in carbon emissions.

Key Takeaways

  • Gold production exceeded 109,000 ounces at an all-in sustaining cost of AUD 2,133 per ounce.
  • Closure of the hedge book in December has improved cash flow and exposure to gold prices.
  • Operational cash flow generated was AUD 97 million, with AUD 155 million in cash and bullion by quarter's end.
  • Solar and wind solar battery facilities are operational, aiding in cost reduction and lowering carbon emissions.
  • The company is making progress in its exploration activities and operational projects, with updates expected in the June quarter.
  • The maturity of a AUD 300 million loan facility has been extended.
  • CEO Jim Beyer provided insights into the company's strategies for Duketon South and the McPhillamys project.

Company Outlook

  • Guidance for FY25 will be provided later in the year, with current focus on optimizing operations.
  • Updates on resource and reserve estimates are anticipated in the June quarter.
  • The company is not solely dependent on one project and has multiple assets to ensure growth.

Bearish Highlights

  • At Duketon North, production is expected to soften due to more low-grade material being processed.
  • The site will enter care and maintenance post-FY24, with limited production expected in the first quarter of FY25.

Bullish Highlights

  • Strong operational performance and safety records were maintained throughout the quarter.
  • The company's environmental initiatives are contributing to operational efficiency and sustainability.
  • Unhedged position allows full benefit from the current gold price.

Misses

  • No specific misses were reported from the earnings call.

Q&A Highlights

  • The company is considering using its stronger cash flow for investing in new mines or better grades.
  • Decisions on capital allocation will be clarified in the upcoming half-year accounts.
  • The potential for reserve growth across their assets remains a focus area.

Regis Resources Limited, with its diversified asset portfolio, has shown resilience and a forward-looking approach to its operations and growth strategies. The company's financial health, underscored by its strong cash and bullion position, appears to be a key enabler for its future development plans. As the gold industry responds to market conditions, Regis Resources' strategic decisions and exploration successes may position it well to capitalize on opportunities. Investors and stakeholders are likely to await the forthcoming updates with interest, particularly the resource and reserve estimates due in the next quarter.

InvestingPro Insights

Regis Resources Limited (ASX: RRL), known for its robust gold production and strategic operational moves, has caught the attention of investors with its recent quarterly performance. To provide a deeper understanding of the company's financial health and market position, here are some insights based on real-time data from InvestingPro and select InvestingPro Tips.

InvestingPro Data indicates a market capitalization of 1080M USD, highlighting the company's substantial size in the gold mining sector. Despite not having turned a profit over the last twelve months, analysts following Regis Resources suggest that net income is expected to grow this year. This aligns with the company's positive operational cash flow and hints at potential future profitability.

The company's P/E Ratio stands at -67.66, reflecting market expectations of future earnings growth, especially considering the adjusted P/E Ratio for the last twelve months as of Q4 2023 is slightly better at -65.34. This data point may be of particular interest to value investors looking for turnaround opportunities.

A notable InvestingPro Tip is that Regis Resources has been trading at a high EBIT valuation multiple, which investors may want to consider in the context of the company's growth prospects and industry benchmarks. Additionally, the company has demonstrated a strong return over the last three months, with a 25.45% price total return, which could signal positive investor sentiment.

It's important to note that Regis Resources does not pay a dividend to shareholders, a fact that might be more relevant for income-focused investors. However, the company's strategic focus on growth and exploration could be an attractive point for those looking at capital gains.

Investors interested in a comprehensive analysis will find additional InvestingPro Tips on https://www.investing.com/pro/RGRNF. With the current New Year sale, a subscription to InvestingPro is now available with a discount of up to 50%. Plus, use coupon code "SFY24" to get an additional 10% off a 2-year InvestingPro+ subscription, or "SFY241" to get an additional 10% off a 1-year InvestingPro+ subscription.

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Full transcript - Regis Resources (RGRNF) Q2 2024:

Operator: Thank you for standing by and welcome to the Regis Resource Limited quarterly briefing. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions]. I would now like to hand the conference over to Mr Jim Beyer, Managing Director and CEO. Please go ahead.

Jim Beyer: Thanks, Lexi. Good morning, everybody, and welcome to the December quarter, December 2023 quarterly update. I'm joined this morning by our CFO, joined this morning with our CFO, Anthony Rechichi, and also with our new Chief Operating Officer, Michael Holmes, who I'm very pleased to say has joined our team. Welcome, Michael. It's been a very satisfying quarter across a number of areas in our business. First up, on key safety, frequency rate remains well below the industry average as reported by the MERS and WA, with an LTIFR, lost time injury frequency rate of 0.66. And we've continued on with consistent operating performance. Gold production and oil and sustaining costs are right on guidance. For the December quarter overall, we hit plan and produced just over 109,000 ounces of gold at an oil and sustaining cost of AUD 2,133 per ounce. In fact, all dollars that we talk about today will be Australian dollars. It was another quarter that clearly demonstrates the cash generating capacity of our operating assets as they continue to transition to a cash harvest phase. This, combined with a very significant step of closing out our hedge book in December, means Regis has now very clearly moved into a much stronger state of cash flow generating at current gold price levels and is also fully exposed to the upside potential that exists for the price of gold. With this major change to our revenue, we're expecting a strong cash build for the remainder of FY24. Progress on our growth plans continued and last month we released our biannual exploration report, which does a fine job illustrating the substantial potential for resources and ultimately reserves growth. On the ESG front, we saw more than just safety. The 9 megawatt solar farm at Duketon South, which is now delivering direct reduction in our power costs and carbon emissions for the quarter, is online. We saved about AUD 900,000 in fuel and also about 2,500 tonnes of carbon emissions for the quarter. So all up over the year we expect 10,000 tonnes at least there, all of which are important fuel savings, but also keeping us below our safeguard mechanism threshold, which is another key cost saver. At Tropicana, work on site is well underway with the 62 megawatt wind solar battery facility that's being installed there. And based on progress, we're expecting that to be completed early in the 2025 year. I'd like to now hand over to Michael Holmes, COO, who's joined our team at the beginning of November. Michael will go through our operational performance in a little bit more detail. Over to you, Michael.

Michael Holmes: Thanks, Jim. Good morning, everybody. It's great to be on the call today, and I'm really excited to join the Regis team. Looking more closely at the operational performance through the quarter, Duketon Gold production was at 70,413 ounces at an all-in sustaining cost of AUD 2,276 per ounce. And our share of the Tropicana Gold production was AUD 38,794 at an all-in sustaining cost of AUD 1,795. It is important to keep in mind that the Duketon all-in sustaining cost includes AUD 140 per ounce of non-cash inventory adjustments. In more detail, for the Duketon site, Duketon North's Gold production was at 9,651 ounces at an all-in sustaining cost of AUD 2,441 an ounce. The open-pit mining at Duketon North continued in the Moolart and Gloster pits for the quarter, and we will see mining continue in these areas in the second half of FY24. All open-pit mining at Duketon North will cease at the end of FY24, and as the mill feed from the open pits reduces, the low-grade stockpiles at Moolart will be used to supplement the tonnage to maintain the throughput rates. Down south, at Duketon South, Gold production was at 60,763 ounces at a AUD 2,250 per ounce all-in sustaining cost. Underground mining development and production stoping from both underground mines performed well, with development rates lower than last quarter's performance, impacted by equipment availability and some water management issues. An action plan was implemented to resolve these issues, and performance will increase over the coming months. Open-pit mining continued at Garden Well, Russell's Find and Ben Hur for the quarter. Garden Well Stage 6 pit destacking was completed during the quarter, opening up the main ore zone. For Ben Hur and Russell’s Find, the main ore zones were also accessed following a period of development. The mining of these pits will continue for the remainder of FY24. Growth capital spend is ahead of plan due to advancing the mining schedules in the underground and open pits, along with some one-off unplanned drilling blasting and costs at Ben Hur and Russell’s Find open pits. Growth capital spend rates and mining development performance are currently under review, as the company assesses the options of continuing the improved mining schedules versus conserving cash to come in on the original plan. Tropicana delivered an improved quarter at 38,794 ounces, and an all-in sustaining cost of AUD 1,795 per ounce. The open pits delivered more ounces than the previous quarter, as per plan, and the underground mines were slightly up on tonnes and grade quarter-on-quarter. Underground development did realise some issues with grade control interactions and ventilation restrictions, with limited face availability and development meterage performance. Work is underway to address these issues. Mill throughput was consistent quarter-on-quarter, and grade and recovery was improved due to the mill feed grades improving. Forecasted production remains on track, with guidance noting a lower March quarter and a stronger June quarter. I'll now hand over to Anthony for the financials.

Anthony Rechichi: Thank you, Michael. On to the financials for the quarter, which are quite consistent with the prior quarter, except for the hedge book, which I'll come to a bit later on. On revenue, we sold just over 104,000 ounces of gold at an average price of AUD 2,671 an ounce, which includes the effect of the hedges. This delivered AUD 279 million of sales revenue. Operating cash flows have been very strong again. Overall, we generated AUD 97 million in operating cash flows, which includes the delivery of 27,000 ounces of gold into the hedge program. Approximately AUD 47 million of the operating cash flows came from Duketon, with Tropicana tipping in a solid quarter with AUD 50 million. I'll now point you to figure three of our release, which outlines the quarter's cash flows. Cash and bullion closed at AUD 155 million at 31 December. You can see that operating cash flow before any hedging was actually AUD 136 million. Partly offsetting this, we spent AUD 60 million on CapEx, AUD 15 million on expiration, AUD 6 million on McPhillamys, and corporate and finance costs were AUD 13 million. This time, those corporate and finance costs had some once annual and one-off type costs included in them. Now, the hedge book impacts for the quarter, and might I say, I look forward to not talking about this in the next quarterly report. You can see the hedge book impacts over to the right of that waterfall chart that I was just talking about, figure three. Firstly, there were AUD 40 million in hedge losses owing to the delivery of the 27,000 ounces that were delivered into during the quarter. And secondly, the big one-off was the buyout of the remaining 63,000 ounces in December at a cost of AUD 98 million. Regarding our debt, as announced earlier in the quarter, we extended the maturity date of the existing AUD 300 million loan facility from 31 May 24 to 30 June 2025. The extension forms part of a broader funding strategy for the company's McPhillamys Gold project, which we spoke about in the September quarterly report call. Now that's all from me, and thanks. Over to you, Jim.

Jim Beyer: Thanks, Anthony. And good to see that you didn't get stuck in the lift for this quarterly report. On the growth front, returning back to the growth section, our work on the future plans, and I just want to talk through the work across all our assets. The Garden Well exploration decline is now finished, and we're feverishly drilling away. If you look at figure five in the release, I'll refer to that in a couple of the points. In fact, if you have the quarterly release handy, I'll refer to a couple more figures in that a little bit later on. The drill results are confirming this is at Garden Well. The drill results are confirming our belief that a continuous mineralisation system does extend from the existing Garden Well south mine for at least a kilometre to the north underneath the existing Garden Well open pit. This work and the results that we're doing continues to reinforce our exploration target in the area, which is 800,000 to 1.3 million ounces in potential. The initial drilling program has already delivered some early success immediately to the north of the current reserve, so immediately to the north of the Garden Well south area. We're drilling off the decline, and if you can zoom in, you'll see there's a DP1, which is a drilling point one on the figure. We did some drilling from there, and we've been able to add some stopes already into the mine plan for Garden Well South, so getting some returns there already. Just covering off on some of the two or three of the highlight drilling intercepts to point out in that drawing, we've got intercepts of 36 metres at 5 grams, 10 metres at 3.7, 24 metres at 3.7. Now, these are all good intercepts that put us in good standing for that area, both immediately to the north of the south area -- a bit confusing there -- but also over right up in the main area, which was our primary target. Moving on to Rosemont, in figure 6, this illustrates some of the recent high-grade drill hole intercepts from significant grade and gold grades that we've been achieving, drilling up to 700 metres below the southernmost currently planned underground area. The drilling continues to infill and extend the high-grade load that we've been -- or loads that we've been pursuing. Examples of intercepts -- 7.4 metres at 6.7, 3.4 metres at 45, 1.3 metres at 30, 1.4 metres at 40 -- some pretty impressive intercepts that we've been hitting there. And while we're still waiting on all of the results, all the holes that we've put into this target area are of intersected mineralised quartz-dolerite with fine-disseminated sulphides, quartz veining and quartz-albite-sericite alteration. It's occurring in multiple metre-scale zones, a common feature of the Rosemont gold-bearing geology. Now, for the non-geodes that are on the core, all of that's technical highly technical speak but what, from my perspective, is this is the really juicy stuff. So I'm very excited about some of the results and the drilling that we're getting in this area as well. Resource modelling and economic evaluation of both the Garden Well and the Rosemont undergrounds is underway with this new information that we're getting and still coming in, with an update expected to be provided at the FY24 June quarter resource and reserve statement. At Tropicana work continues at the Havana underground project with more drilling and, as can be seen in figure 6, some good supportive intercepts were had as we moved to increase the confidence category there. A feasibility study focusing on operational readiness and detailed designs is now underway. The Havana underground has the potential to add a new production zone for seven years on top of the existing plans. We're very excited about the progress of this project. I'd add here that the Havana deposit is following the same maturity curve as its predecessors at Boston Shaker and Tropicana in the undergrounds and really reinforces why the entire asset is one of the few genuine Tier 1 assets going around. The value of the underground continues to grow well beyond the reserves as they were or the reserves as they were two and a half years ago when we bought the thing. Can I draw your attention now to Figures 7 and 8 and how exciting are these pictures? Figure 7 is a long section that shows all of the mineralisation across the Tropicana site in grey. The joint venture is, we have a view that significant potential exists for confirming extensions to mineralisation down plunge of the existing resource areas. To test this potential, drilling has begun consisting of a series of deep diamond drill holes as marked in Figure 7. Testing of these deep holes is looking at high-grade plunge extensions at Boston Shaker, fold offset locations for Havana underground and repeats of the Havana underground beneath a fault called the Swizzler fault. Our first results, and these are the first results in that are down plunge at Boston Shaker and they're pretty exciting because it shows or indicates that mineralisation extends another 650 metres down plunge from the existing mineral resource. So further infill drilling has high potential down that plunge to add significant resource. Now I think you can see that, it's illustrated in what I think is Figure 8 in that diagram, just how much further down plunge those intercepts are hitting. Blind Freddy can see the potential that exists here for a long underground life. How can you not be pleased that we acquired this asset? At McPhillamys, we await a response on the Federal Section 10 application. We remain confident this will be cleared but are just growing increasingly frustrated with the process. In addition, we're working on completion of the DFS, which we expect to be done by the end of the March quarter. Things are pretty busy on that front and it is tight for timing. We should be there as long as there's no delays in some of the external information we're chasing. Now a decision on the timing for FID will be in the following quarter, which will of course follow the release of the DFS. Pardon me. So in summary, the December quarter for Regis has been quite a significant one for the company. Another quarter of safe, consistent production, production that was on cost, a cash flow that is now free of the hedging shackles. I can actually hold a glass of water and talk about hedging without shaking. And we've been free of the hedging now, which we've had for nearly, we've been dealing with for now for nearly four years. This will clearly drive a strengthening of our balance sheet from here. So Regis is a producer of well over 400,000 ounces of gold a year, a great outlook, fully unhedged, all in a global economic environment that just continues to point to a higher gold price scenario. Along with that, plenty of future reserve growth potential exists across all our assets. What a great foundation for the future. And the team here is really looking forward to doing more of the same. So with that, I'll hand it back to you, Lexi, and we're happy to take any questions that may come.

Operator:

Q - Alexander Papaioanou: Hi, Jim and team. For Duketon South Underground, can you remind me again, when do you expect to be at a run rate closer towards the 1.5 million tonnes per annum?

Jim Beyer: Across both the assets? We're probably sitting reasonably close to that now.

Alexander Papaioanou: Yes.

Jim Beyer: Yes, we're probably sitting reasonably close to that now. Maybe between 1.2 and 1.5. That's the range that we'll run in. Some quarters it will be strong, some quarters it will be weak, just because of the cyclical nature of the assets. This is why we'd like to get more production zones in, so we can be more consistent.

Alexander Papaioanou: Yes. Okay. And can you remind me again, is there a planned 1H FY24 tax refund?

Jim Beyer: Anthony?

Anthony Rechichi: Yes, we mentioned it once or twice, I think, Alex, and we mentioned it at the AGM as well. The expectation won't be as big as last year. Last year it was $67 million. We mentioned at the AGM that it could be up to around $20 million in cash this year.

Alexander Papaioanou: Okay, great. And just one final question. On Duketon North, the negative sustaining CapEx of 3.1, can you give a bit more colour on that?

Jim Beyer: What the negative sustaining CapEx did you say?

Alexander Papaioanou: Yes.

Anthony Rechichi: Yes, so just flicking to it now on the table, actually. I think that's stock movement.

Alexander Papaioanou: Yes, are you looking at - nearly AUD1 million.

Anthony Rechichi: We've just got a year-to-date adjustment coming through in this quarter, but we just did want to make a change to the corresponding quarter there, Alex.

Alexander Papaioanou: Okay, okay. Great, that's just me. I'll pass it on.

Anthony Rechichi: Yes, it's just a year-to-date adjustment.

Operator: Thank you. Your next question comes from Andrew Bowler from Macquarie. Please go ahead.

Andrew Bowler: Morning, all. Just continuing on with Duketon North, obviously due to close at the end of this financial year, is there anything more we should know about that in terms of environmental liability that you'll be undertaking sort of in the near term? And also, if you have any plans with that process plant, whether there's sort of any used parts, scrap value or something you can get from that plan, or are you happy to keep it as a bit of a spare's meal for now?

Jim Beyer: Yes, look, Andrew, it's a good question. I think, to be fair, you've probably taken it a little bit further than what we will. Our plan is not to close it. Our plan is to put it on care and maintenance. And because we're still, highly confident that we'll find more, our exploration will deliver some additional material in that space that we can process. So we have no plans of putting it into closure. We'll just put it on care and maintenance. Same with the camp. We don't plan to do anything with that. Obviously, we're looking for other opportunities as to what we might do with that more corporately, is there a deposit somewhere where we could move it? But I think right now, it'd want to be pretty, a very clear and good value opportunity for us to decide to decommission that and move it somewhere else, because we think that area has still got potential, significant exploration potential. It's just that the timing hasn't worked out for us with the cost of processing a lot of those low-grade stockpiles that we've had there for quite some time. But in current cost environments, it's just not worth it. So I hope that answers your question.

Andrew Bowler: Yes, thanks. And on those low-grade stockpiles, I mean, clearly quite sensitive to the cost environment also that the current gold price, what would the gold price have to be to keep that mill spinning and processing those stockpiles? Is that well above where we are now spot-wise?

Jim Beyer: Well above where we are now, yes. I mean, the grades are sitting 0.3-ish, something like that. So, it's not conducive.

Andrew Bowler: No worries. And last one for me, I have to ask you about McPhillamys. Can you just remind us again sort of when this Section 10 needs to come through to not impact your current timeline? Are you still thinking you can get things done to the old timeline or is it starting to push things down a little bit?

Jim Beyer: Look, we think that we can still meet the timeline. It might have a little bit of an impact on it. But we think that we can keep delivering into the -- completing the DFS by the end of March. What it may mean is that there's a couple of things in there that in terms of, cost estimate accuracy, it might have a little bit more of a wider confidence range on it. So we have to make a slightly higher provision because we haven't been able to do some extra geotech drilling that we wanted to do. But we've made a decision to keep moving with that and we just keep responding to the queries coming from the Feds and doing what we can now to try and get this to closure. So short answer to your question is no, I don't see anything immediate. It just has an impact on the confidence level on this and therefore maybe in some areas, not a lot, but in some areas we just need to make sure we take that into account when we make confidence predictions or contingency.

Andrew Bowler: No, all right. That's all from me. Thanks.

Jim Beyer: Thanks, Andrew.

Operator: Thank you. Your next question comes from Alex Barkley from RBC. Please go ahead.

Alex Barkley: Thanks. Good morning, everyone. Just a question on Duketon South those open pit. You've called out what you're expecting to be producing in the second half this year. Are those the same pits that will be running FY25 and sort of what's the production trajectory over that year? Thanks.

Jim Beyer: Yes, look, we'll give guidance on FY25 later on this year. At the moment, we're just working through the details to make sure that we don't over or under promise.

Alex Barkley: And maybe like, so what's the life of those three pits? Or is there kind of one next cab off the rank that might be replacing them? That's sort of my question.

Jim Beyer: Yes, look, we've got a multitude of options there. That's part of what we're working on now is which pits will we bring in. Ben Hur obviously continues running, Garden Well continues running. And we've got a few other options actually that we're chasing now, which with a little bit of --it's quite interesting, some alternative thinking in our approach around some of our past pits as well that we're having to look at. So the reason I'm being, evasive on it is for two reasons. One, we'll give guidance for next year in due course. But also, there's actually a few moving parts for us that we're looking to optimise at the moment. So we're just not in a position to say too much more than what we've really indicated in the past, that, what Duketon’s capable of providing in the near term over the next couple of years, three or four years.

Alex Barkley: Yes, sure. No problem. It's always good to have options. All right. Thanks. That's all from me, guys.

Jim Beyer: Yes, yes. It's great, actually. The guys are doing some good work there.

Operator: Thank you. Our next question comes from David Coates from Bell Potter Securities. Please go ahead.

David Coates: Morning, Jim, Anthony, and welcome, Michael. Couple of questions. You just --so at Duketon South, you flagged -- I think you said you'd finished, I think, stage 2 cutback and opened up some new zones. Are we going to see production a bit more weighted to the second half or increasing the second half as a result of the open pits at Duketon South?

Jim Beyer: No, we're maintaining our guidance where it is.

David Coates: Okay, cool. And…

JimBeyer: If you look at the first half, I think it's been about 221,000 ounces. They're about...

David Coates: Oh, yes, no, you're staying in the middle.

Jim Beyer: Yes.

David Coates: Yes, which is great to see. Thank you. Congratulations on that, by the way. Have a steady quarter. Good to see.

Jim Beyer: Thanks, Dave.

David Coates: And kind of contrary to that, you mentioned, I may be giving the same answer to you, but you flagged slow development rates at Tropicana. We see the underground production there sort of potentially impacted and therefore it's got to sustain the same, presumably offset, by higher production from the Tropicana. Is it going to -- are those soil development rates going to impact production from the underground at Tropicana in the second half, do you think?

Jim Beyer: Yes, it's not a great phone connection there, Dave. I think we were you asking -- can you just ask that question again?

David Coates: Yes, sorry. I was just asking, you flagged the slow development rates at Tropicana. Are they going to impact production underground there in the second half of 2024?

Jim Beyer: No, we're not anticipating anything like that. I mean, the team there have worked out what they need to do to address it and have got on with it. So, not to -- no, short answer is no. Not at this point.

David Coates: Okay. And then the other thing you mentioned this time on McPhillamys, obviously, right under Section 10. You mentioned that once the DFS is finished, you will then announce the timing of the final investment decision. So, if you just perhaps give us a bit of insight into how you guys are thinking about pushing the button on McPhillamys, what factors are going to drive the timing of that, if you're able to?

Jim Beyer: Yes, it's a good question. I mean, I think one of the things that we recognise and I think a lot of people do, but I'll say it is that as a company, Regis is not a one project company. You know, McPhillamys is a very important part of our future, but we have other operating assets and other potentials. So, we really look at understanding how we can use the optionality and the timing of McPhillamys is something that we can dictate. If we were a one asset company and our meaning to be was all hanging off this one project, then, of course, you really don't have too much of a choice apart from just pushing on and developing the project. We, on the other hand, have got the opportunity and, in accordance with that, you've got to figure out how you're going to fund it based on the time that you're stuck with, if you like. We, on the other hand, have got a business that is now generating a significant amount of free cash flow. Now that we've removed the hedges, we'll see a balance sheet that continues to strengthen. When we look and find -- we're looking at McPhillamys as a project. Well, how what's the sensible timing for us to make a decision to build it? We might be in a position, for example, to make a final investment decision in the middle of this year. But is that the sensible thing to do in terms of being able to finance it? What happens -- pardon me. What happens if we push that timing back 6 or 12 months? Well, the project's still there. Our balance sheet gets stronger. It means that maybe we don't have to, things like we don't get forced to have to do an equity raising, which we definitely don't want to do for this, or prefer not to. Our preference is to look and have a strong balance sheet, fund it a little bit out of debt, and maybe a little bit out of our cash flows and our existing cash balances. So from that point of view, from a capital investment timing, we have the luxury, if you like, of being able to decide when's the appropriate time to develop it and not as soon as and that may not necessarily be as soon as we possibly can. It might make sense for us to delay that. It's important that people understand not to interpret that as, they're going cold on the project and trying to talk it down. Far from it. What we're trying to do is we're just trying to let people understand that if they're looking at how we -- how do you plan to fund it? We've got options and time isn't going to force our hand. We have time on -- we have a business that's very strong as it stands. So that's basically what I'm saying by, we'll make a decision on the timing as opposed to making the decision by June. If that explains the situation.

David Coates: No, no, that's no, that's very useful. Thanks very much, Jim. That's all from me.

Jim Beyer: Thanks, Dave.

Operator: Thank you. Your next question comes from Daniel Morgan from Barrenjoey. Please go ahead.

Daniel Morgan: Hi, Jim and Tim. On the call and in the release, you called out -- you were considering -- well, you talked about how development is ahead at Duketon South, Pitts and Underground and you were spending a bit more money as a result of that higher rate of progress. But you were looking at options to slow that down to perhaps preserve cash. Can I just understand that you're thinking here a bit better? I mean, usually if productivity is ahead, you probably want to take that win while you can and use the balance sheet to handle that because you end up getting there quicker. Why would you want to slow it? Thank you.

Jim Beyer: Yes, good question. I was hoping somebody would ask that. Keeping it at the highest level. I mean, basically, if you look at our progress on our growth capital numbers, I think our guidance was AUD 85 million to AUD 95 million. You look at how much we've spent to date, I think it's something like low 70s. So if we -- the point is that the messaging here is the reason that it looks like we're -- blowout's not the word I'd like to use, but the reason that it's looking like, we're going to be high there is not because we've lost control of the costs or anything like that, the unit costs. It's because we've actually had a good performance. Now, you're quite right. We could make a decision to keep running on. And obviously, if we do keep running on, then there'll be -- maybe not to exactly the same extent, but we might see that trend push us to change our guidance off the back of some good productivities and good performance. Or we might look at that and say, well, you if it makes sense to us, maybe we can throttle activity back. It's just an assessment that we've really seen and satisfied that we understand what's driving the improved performance. Now we've just got to assess, do we want to keep that going or do we want to utilise it and take advantage of it in a different way? And as you say, it obviously -- mining's an interesting game. Sometimes, when you've got the opportunity to get ahead, you do it. And particularly now, as we've got a stronger cash flow, it might make sense to do that. We just haven't made that decision yet. But, we're pushing on at the moment, but we'll probably be able to give a clearer picture on that. We've got the half-year accounts coming up in about three or four weeks' time, so I certainly expect we'll be clear there. But, we plan to do what's sensible.

Daniel Morgan: So conceptually, unpicking that a bit more, does that mean that because you're ahead, I mean, usually if you're ahead, you're getting into new mines or better grade earlier. Does that mean it's possible at the back end of this year, this FY24, you might have a bit better production than you might have thought? Or is FY25 better than maybe you would have planned if you continue your current course? What does that mean, the benefits of continuing to spend?

Jim Beyer: Yes, look, this is great capital. And usually the great capital is not for immediate production. It's for longer term. So what we're actually seeing here is we're pushing development out into areas where we hadn't originally planned because we see future growth potential. So will that deliver higher production this year? Probably unlikely. I mean, just by definition of the fact that it's great capital, if it was going to bring forward production this year, it'd be more like sustaining capital. So, being the difference between sustaining and growth, people always say that it's being try to understand how that's being allocated. In this particular case, great capital is where we're looking at development in areas, at least a couple of years out that aren't sitting in our plan. So it's more like future opportunity rather than this year, which is, again, part of the reason why we just need to make sure that if we're going to continue with this, we need to with the accelerated expenditure, because really we're bringing forward spend, then, it's the right thing to do this year.

Daniel Morgan: Thank you. And just last question. Duketon North, what does production look like through the balance of FY24? And do you still plan to be producing some gold in FY25? Thank you. Thank you.

Jim Beyer: Michael, you want to deal with that?

Michael Holmes: So the production is, as per the guidance, it's going to be, as I said, we're into the pits, but we're supplementing more low-grade material. So you'll see a softening of that production throughput. And then we're on care and maintenance after FY24. So there'll be no gold coming out of Duketon North. Or maybe, as we put it, care and maintenance will be cleaning up the plant and things like that. So there might be a little bit that will be producing -- well, will be presenting itself in the first quarter of FY25.

Daniel Morgan: Okay. Thanks very much.

Jim Beyer: Thanks, Daniel.

Operator: Thank you. [Operator Instructions] There are no further questions at this time. I'll now hand back to Mr Beyer for closing remarks.

Jim Beyer: Thanks, Lexi. Thanks, everybody, for joining us. And thanks, Anthony and Michael. And welcome, Michael. As I said before, it's great to have you on board. And if anybody's got any questions, please give us a call and we'll do our best to answer what we can. Alright? Thanks, everyone. Have a good day.

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

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