Regis Resources (OTC:RGRNF) Limited (RRL) has provided a positive quarterly update, emphasizing its strong cash generating capacity and record cash flow, despite facing operational challenges due to weather and labor availability.
The company's production and costs remained within the full-year guidance, and significant progress has been made on their organic growth strategy, including the commencement of underground developments and the release of a definitive feasibility study (DFS) confirming the viability of the McPhillamys project.
Key Takeaways
- Regis (NASDAQ:RGS) Resources reported a zero lost-time injury rate for the past year.
- The company highlighted its strong cash generation and record cash flow and bullion build.
- Mixed operational recovery was noted, with Duketon performing well and Tropicana facing weather and labor challenges.
- All-in sustaining costs and growth capital stayed within the full-year guidance.
- Development of Garden Well Main underground extensions has begun.
- The McPhillamys DFS was released, confirming the project's viability.
- Regis Resources has a plan to establish four or five underground mines at Duketon, aiming for an annual production target of 200,000 to 250,000 ounces.
- The company provided production guidance for FY 2025, with expectations of 220,000 to 240,000 ounces at Duketon and 130,000 to 140,000 ounces at Tropicana.
- Non-cash inventory adjustments are expected to continue as stockpiles are utilized.
Company Outlook
- Regis Resources expects to exceed open pit depletion with underground reserves.
- A production target of 200,000 to 250,000 ounces per annum is set for Duketon.
- The company anticipates stronger performance in the first half of the following year with normalized costs.
Bearish Highlights
- Tropicana faced challenges due to rain events and labor availability.
- Increased costs were incurred due to wet weather and waste movement from the Havana cutback.
- The company is still years away from realizing gains from greenfields exploration targets like Merlin.
Bullish Highlights
- Production levels at Tropicana are expected to improve as the Havana cutback concludes.
- The company's three-year alliance with Barminco has been effective in advancing underground mining operations.
- The release of the McPhillamys DFS confirms a strong value accretive growth option.
Misses
- The company acknowledged supply disruptions and reduced equipment availability at Tropicana.
- There has been an underperformance in mining due to weather impacts.
Q&A Highlights
- CEO Jim Beyer discussed the efficiency of the alliance with Barminco and the integration of teams.
- Beyer emphasized the need for continued exploration despite not finding significant new deposits.
- The proportion of underground mining is expected to increase over time, with no significant changes in costs.
In conclusion, Regis Resources Limited maintains a confident stance on their growth and operational strategies despite some setbacks. The company is poised to enhance its underground mining capabilities and is committed to sustaining production within its projected guidance. With the ongoing developments and strategic partnerships, Regis Resources aims to strengthen its position in the mining industry.
InvestingPro Insights
Regis Resources Limited (RGRNF) has shown resilience in its quarterly update, underlined by its strong cash flow and strategic advances. InvestingPro data complements this narrative, revealing a company that, while facing challenges, is navigating its financial landscape with certain advantages.
InvestingPro Tips suggest that despite a recent decline in stock price, with a -11.14% one-week total return, analysts are optimistic about the company's potential to become profitable this year. This aligns with Regis Resources' positive outlook on their growth strategy and operational capabilities. Moreover, the company's liquid assets are reported to be sufficient to cover short-term obligations, indicating a level of financial stability.
The real-time metrics further paint a picture of Regis Resources' financial status. With a market capitalization of approximately $825.74 million and an adjusted P/E ratio over the last twelve months as of Q2 2024 standing at -13.69, the company reflects a challenging earnings landscape. However, the revenue has grown by 7.96% over the last twelve months as of Q2 2024, suggesting progress in financial performance.
Investors considering Regis Resources Limited should note the company's gross profit margin of 3.84% over the last twelve months as of Q2 2024, which indicates a potential area for improvement. Additionally, the company does not pay a dividend, which might be a factor for those seeking regular income from their investments.
For those looking for a deeper analysis and additional insights, there are 7 more InvestingPro Tips available for Regis Resources Limited at https://www.investing.com/pro/RGRNF. These tips could provide valuable information for making informed investment decisions. Remember, you can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, helping you stay ahead with comprehensive financial analytics.
Full transcript - Regis Resources (RGRNF) Q4 2024:
Operator: Thank you for standing by. And welcome to the Regis Resources 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 Jim Beyer, Managing Director and CEO. Please go ahead.
Jim Beyer: Thanks, Travis, and good morning, everyone. And thank you for joining us on the Regis June 2024 quarterly update. Today I’m joined by our COO, Michael Holmes; our CFO, Anthony Rechichi; and our Head of Investor Relations, Jeff Sansom. So looking into the results, firstly on safety we had a very pleasing outcome in our safety performance. Specifically, our 12-month moving average lost time injury frequency rate was zero. It means we had a full year clear of any lost time injury. This is an out -- this outcome is certainly in line, it’s an impressive outcome and it’s certainly in line with our purpose of creating value safely and responsibly. Although I would note that while it’s a great outcome and well done by the team, this is a journey with no end and we will keep working hard to maintain this performance. Talking about our purpose of creating value, now let’s talk cash. I want to start off by pointing out to the cash generating capacity of our business. Since December 2023 our gold production has been fully leveraged to the gold price and we’ve delivered record cash flow and record build of cash and bullion. Given that these results were pre-released it shouldn’t be a surprise, but I wanted to iterate that the business is in a great position and we’re working to continue to deliver ongoing cash build now that we’re free of the shackles of our previously longstanding legacy hedge book. Onto our operations and high level financial metrics across the business. Our operations continued their recovery from the weather impacts of the prior quarter, albeit and not with full recovery and Michael talks some more on that in a moment. As we expected the quarter delivered much stronger production at 106,700 ounces of gold at an all-in sustaining cost of $2,247 an ounce. At Duketon assets recovered very well following the weather impacts and delivered $76,000 at an all-in sustaining of $2,249 an ounce. While Trop has been slower to recover and ongoing challenges related to additional rain events, poor labor availability and unplanned equipment downtime has meant that Tropicana delivered only 30,800 ounces at an all-in sustaining at $2,145 an ounce. For the full financial year despite the impacts related to the weather we’re pleased that at a group level our production, our AISC and our growth capital all fell within the guidance ranges that we declared at the beginning of the year and our expenditure on exploration and McPhillamys were slightly below. At a more granular level Duketon delivered production and AISC within guidance, and Tropicana production was slightly below its guided range but within the guidance range on unit costs, all-in sustaining costs. I’ll note that for June quarter we saw some non-cash inventory adjustment costs as we drew on our stockpiles albeit at lower volumes to the prior quarter and something that will continue into this year. Michael will provide more insight into the operational drivers and Anthony will provide more detail on all-in sustaining cost drivers shortly. From a growth perspective, I’ll talk to this a bit more in detail towards the end, but we made significant progress on our organic growth. Commencing the development of the Garden Well Main underground extensions of Rosemont called Stage 3 and earlier this week we released the McPhillamys DFS, which confirmed McPhillamys as a long line low operating cost open pit mine that delivers robust financial metrics and significant leverage to the gold price. So for now that’s it from me and I’ll hand over to Michael, our Chief Operating Officer to discuss operational performances. Over to you Michael.
Michael Holmes: Thanks, Jim, and good morning, everyone. Within our operations we had a mixed recovery from the severe weather events in March that continued to impact the final quarter of FY 2024. At Duketon the recovery from the weather impacts was relatively rapid and both Duketon North and South delivered ounces in line with expectations. During the quarter, Duketon South produced 66,000 ounces at an all-in sustaining cost of $2,094 per ounce. With open pit mining producing just over 55% of gold from our Garden Well, Ben Hur, Tooheys Well and Russell’s Find open pits. During the period we did have some small rain events which delayed activities in certain areas but nothing material. The Garden Well South and Rosemont Undergrounds performed well and delivered 29.6,000 ounces. We commenced the development of the Garden Well Main mining area, as well as the extension of Rosemont South called Rosemont Stage 3. We expect to commence first stoping of ore from Garden Well Main and Rosemont Stage 3 in quarter one FY 2026. So that’s in about a year’s time. At Duketon North we produced 9.5,000 ounces at an all-in sustaining cost of $3,328 an ounce with ore mined from Eindhoven, Gloster and Buckingham open pits. Production was up and costs were down compared to the last quarter as we drew less from our low-grade stockpiles and ran our mines and run the mines and the mill towards care and maintenance. As of now, ore process -- the process plant and ore mining activities have ceased and DNO is transitioning to care and maintenance. We will continue however to explore with the exploration activities in the DNO region as we look for ounces that could support a restart in the future. We did continue to draw on stockpiles and the all-in sustaining cost of $3,328 per ounce includes a non-cash cost component of $438 per ounce. Looking to FY 2025 and with DNO transitioning to care and maintenance all gold production will be centered around our Duketon South operations. We expect that Duketon South will continue to produce ore from the undergrounds and the open pits of Garden Well, Ben Hur, Russell’s Find -- and Russell’s Find, Tooheys Well and with Russell’s Find finishing up towards the end of FY 2025. As for Tropicana, their recovery from the weather impacts has been slower than expected but several other issues have also impacted its performance, primarily the open pit performance this quarter. Overall, Tropicana produced 30.8,000 ounces at an all-in sustaining cost of $2,145 per ounce. Operations within the open pits continued to be challenged in the June quarter. Firstly, dewatering of one of the Havana open pit stages continued into late April reducing access to that ore. Ongoing rain events have continued to saturate the access roads impacting road quality and disrupting supply routes delaying the supplies of mining equipment parts and consumables. Poor labor availability also caused by seasonal illnesses and worker absenteeism combined with unplanned equipment downtime also reduced open pit mining volumes. The sum of these impacts was that the Tropicana open pits delivered only 12.1,000 ounces for the quarter. This underperformance of the Tropicana open pits was a primary driver for Tropicana being below the FY 2024 guidance range. As for the underground, operations delivered 13.4,000 ounces. At the end of the quarter Tropicana was still not performing to expectations, however is forecast to progressively improve in the coming quarter. And looking towards FY 2025, mining will continue in the Havana open pits, the Boston Shaker undergrounds. An assessment of the potential Havana underground project is continuing and is progressing to Board approval. Across all our mills for the June quarter, Duketon performed to expectations with no unplanned downtime, however throughput at Tropicana was lower than planned due to reduced availability. Across all the processing plants, low grade stockpile material supplemented mill throughput which will continue into FY 2025. I will now hand over to Anthony to discuss -- who will discuss the quarterly financials.
Anthony Rechichi: Thanks, Michael. First off, to close off on what Michael mentioned, in this quarter with an improving production profile and less reliance on stockpiles, we saw our all-in sustaining costs improve across the Board compared to the March quarter. In the June quarter, group all-in sustaining costs per ounce were $2,247 an ounce and for the year our all-in sustaining costs at the group and site levels were within guidance ranges. Moving on to our financial performance, Regis has had another great quarter and delivered a few financial records. We sold just under 115,000 ounces of gold at a record average price of $3,528 an ounce, receiving a record $404 million of gold sales revenue. With the high prevailing spot gold prices and sales revenue, in turn we delivered record operating cash flows of $166 million with $106 million from Duketon and $60 million coming from Tropicana. Now if I just point you towards figure two in the announcement and the changes in cash and bullion for the period. As we’ve noticed unencumbered with the hedge book, we’ve delivered a record cash and bullion balance growth of $109 million for the quarter ending with again a record cash and bullion balance of $295 million at 30 June. Looking back on the hedge book buyout in December, it did in fact turn out to be a beneficial outcome as we’d expected, taking into account the difference between the average buyout price of those 63,000 ounces we closed out and the average spot gold price we got for selling them into the spot market, we’re about $48 million better off for having closed out the hedge book when we did. Capital expenditure was $50 million for the quarter, which included $34 million of underground development and waste stripping costs at both Duketon and Tropicana, and $6 million of growth capital primarily related to Duketon underground development works, including initial works on Garden Well Main and the extension of Rosemont Stage 3. Exploration and McPhillamys expenditure was $16 million. Now on to tax, included in the June quarter was $20 million of proceeds from a tax refund which was mentioned in the previous quarterly conference call. This tax refund was made available for the last time for Regis through the ATO’s lost carryback tax offset provisions which allowed the company to effectively recognize carry forward tax losses immediately and in turn we received a cash refund. We don’t expect any further tax refunds of that kind. So they are the main messages on the financials and now back to you Jim.
Jim Beyer: Thanks, Anthony. As I mentioned up front we had a great financial quarter and aside from delivering significant financial performance across the Board, we also made significant progress on delivering into our growth strategy. So from an underground perspective, across Duketon and Tropicana, our underground reserves grew at a rate that outpaced depletion for the third consecutive year and in the release I just draw your attention to figures three and four. In fact, at Tropicana, not only did we exceed underground depletion we also exceeded open pit depletion in the underground reserves. This is a great outcome. Now given the style of mineralization we see at both of these assets, this is a trend we expect will continue into the future, which gives confidence in the sustainability of our undergrounds well beyond their existing reserves. Now just take a step back for a moment and understanding what our broader strategy is certainly at Duketon and we really as I think people have seen in our past presentations we show our target of at Duketon of 200,000 ounces per annum to 250,000 ounces per annum and we’re driving to establish that region as a production center that can sustain that out beyond 2028. And to do this we’re targeting to establish four or five underground mines and between these mines we target to hit and sustain production of that 200,000 to 250 000 between them. Of course, you know it goes without saying that if we find new pit reserves on the surface, not sure where you’d find pit reserves underground, but if we found pit reserves on the surface, this will add and top up the production by utilizing spare mill capacity. Delivering into this strategy we announced the approval and have commenced the development of Garden Well Main and the extension of Rosemont and that extension is called Stage 3 which Michael talked on before. Garden Well Main will add additional annual production ounces while Rosemont Stage 3 is more of a major extension to the life of Rosemont underground. Now while we’re -- there we’re currently drilling at Garden Well both South and Main, and Rosemont to convert inferred resources into indicated resources and thereby continuing the expansion of our mineral inventory down plunge of the existing mineralization and reserves. Based on our local geological knowledge and other exploration data today we’re confident on delivering further underground growth at the Garden Well South and Main and Rosemont. We also continue to drill across several prospective additional underground mine targets and have a good line of sight over our potential fourth and fifth underground area that I was -- underground mine area that I was talking about. And if you have a look in our release we highlight the opportunities these potentials at Ben Hur and Tooheys Well which are two, one Ben Hur is a pit in production at the moment, Tooheys Well is an old one that’s been done and then the other one that’s in our release is Merlin, which has both underground and open pit potential, a little bit earlier stage though than the other two. So moving on from Duketon we now our large growth, the final growth pillar and after the end of the quarter we completed and released the details on the McPhillamys DFS. Take you back on a little bit of a journey, McPhillamys was acquired by Regis back in 2012 and in 2017 we released the DFS in conjunction with the reserves, maiden reserves. Since then we’ve continued to progress the study works and very pleased to have reached this major milestone and derisk stage of the project. With the DFS that we released we updated the ore reserves to 56 million tonnes at 1.1 grams per tonne for a contained 1.89 million ounces. Now the project itself is a proposed plan with a capacity of up to 7 million tonnes per annum and that will recover 1.7 million ounces over just under nine and a half years of processing in the current plan. The average annual production rate will be about 187,000 ounces per annum and when at full production after ramp up and its maximum production which occurs at the back end when we’ve got the higher grades coming through is up to 235,000 ounces per annum. Now the average life of mine all-in sustaining cost is estimated to be just less than $1,600 per ounce, that’s Aussie. So with these impressive operating metrics and looking at a $3,500 gold price which is about $167 an ounce less than what it is at the moment, $150 an ounce less than spot, the project delivers a pre-tax NPV of $1.3 billion. It has an IRR just under 25% and a payback period of 3.5 years. Now on top of the current contained gold that we talked about in that 1.7 million ounces have recovered, there is exploration has intersected gold mineralization down plunge of the current design pit. Now this includes 3 meters at 8.4 grams per tonne. It also has 52 meters at 4.5 grams per tonne including within that 26 meters at 7.6 grams per tonne. It’s 26 meters at 7.6 grams per tonne. This indicates the exciting potential down plunge of current mineralization which we really have yet to fully explore. These are the first serious holes that have been put in this down plunge mineralization. It’s very exciting. We also have 400,000 ounces of resources down the road at Discovery (NASDAQ:WBD) Ridge, and of course, we’ve got the intercept across the road from McPhillamys at Kings Plains, that’s a property that we hold there, with one hole in it of 85 meters at 1.5 grams per tonne. We believe there is significant value embedded within McPhillamys and in the surrounding area and this can only enhance the scale and improve the current economics. As discussed before we continue to progress our application for a modification to our development consent and the Section 10 -- Federal Section 10 ATSHIP Act application is still being considered by the Commonwealth. On obtaining the approval of the mod and the satisfactory resolution of the Section 10 application the project will be ready for final investment decision which is expected to be in FY 2026. McPhillamys is one of the largest undeveloped open pit gold projects and a great investment option to have in our portfolio. Now onto our outlook and our FY 2025 guidance. At Duketon the production range reflects the reduction in ounces produced as DNO transitions into the previously well-flagged stage of care and maintenance. This leaves all Duketon production coming from Duketon South open pits and underground and well within the sustainable target range of 200,000 ounces per annum to 250,000 ounces per annum which we’ve been talking about. The guidance for this year is for Duketon is 220,000 ounces of gold to 240,000 ounces of gold at an all-in sustaining cost of $2,500 an ounce to $2,800 an ounce and growth capital $110 million to $120 million. Now I would point out that that all-in sustaining cost includes approximately $190 an ounce of a non-cash element that relates to stockpile drawdowns, reminding people that all-in sustaining cost is not necessarily cash costs of the period. The all-in sustaining guidance range reflects this overall reduction in production along with the increased proportion of underground ore being mined and increased mining depths within the open pits. The growth capital expenditure reflects the costs of the previously announced development of Garden Well Main and the extension of Rosemont at Stage 3, both of which are key projects of the Duketon underground strategy. Turning to Tropicana, since the severe weather events in March which Michael talked through before this year, recovery of the open pit mining activities has been constrained by the ongoing supply disruptions, poor labor availability and reduced equipment availability. This has led to a gold production guidance for this year of 130,000 ounces to 140,000 ounces at an all-in sustaining between $2,300 and $2,600, and growth -- minimal growth capital sub-$5 million. Mining activities at Tropicana are yet to normalize and the FY 2025 production guidance reflects the flow on impacts that the lower than expected or delivered mining rates have resulted in, for example, access to open pit ore production. So this drives the need and the availability -- reduced availability of ore coming out of the pits has driven the need to pull down on lower grade stockpiles to supplement mill feed. This also results in those all-in sustaining costs having a $90 an ounce non-cash element in the AISC. So what does that mean for the consolidated group? We’ve got 350,000 ounces to 380,000 ounces of production, 2,440 to 2,740 in all-in sustaining cost, of which about $150 of that is non-cash. We’ve got growth capital of $110 million to $125 million, most of it associated with the undergrounds at Duketon, Exploration $50 million to $60 million and McPhillamys fitting $15 million to $20 million. So to summarize the June quarter, we delivered another quarter of safe performance. Our mines delivered a solid operational outcomes underpinned by a record gold price. We achieved record free cash flow performance. We continue to deliver on our growth strategy by growing our underground reserves ahead of depletion for a third year in a row. We commenced the development of our third underground mining area at Garden Well Main and we also commenced the major extension of Rosemont via Stage 3. And we released the McPhillamys DFS, the culmination of 12 years of work that confirmed a strong value accretive growth option. I would say this DFS, as I mentioned, it’s a culmination of many years of work of people who are with the company and people who have also moved on from Regis and I just take the opportunity to thank all of the people that were involved over the many years to get the project to this state. And while I’m on it, I’d also like to make a comment on Duketon North as we progress that to care and maintenance. There would be hundreds if not thousands of people who over the years have contributed to the very successful status of the Duketon North operations. A site that is heading into care and maintenance but over the period since its production has produced over 1.2 million ounces of gold. So thanks to everybody that was involved in that over those many years. All right, well look, that’s sort of covered off the -- our message from the quarterly, so I’d like to hand back now to Travis and help out where we can with any questions from the listeners.
Operator: Thank you.
Jim Beyer: Travis?
Operator: Thanks. [Operator Instructions] The first question today comes from Alex Papaioanou from Citi. Please go ahead.
Jim Beyer: Hi, Alex.
Alex Papaioanou: Hi, Jim, and team. Just appreciating that your new Tropicana has some challenges. So I’m just trying to think how should we think about costs beyond FY 2025 when things normalize?
Jim Beyer: Well, look, we obviously we don’t give and haven’t given the guidance out beyond where we are, but I would certainly make a comment that this year is an unusual, well not an unusual year, but a less than normal year for us in the way that the costs are rolling out. Obviously, there’s a combination of the production levels are probably a little bit lower than we were initially anticipating and that’s part of the gold production levels a bit lower than anticipated and that’s resulted in obviously lower production, no kidding. But what’s also happened and we sort of talked through the reasons for that which we believe very firmly that the operation can work its way through. The other thing that’s impacting on the costs for this year is as a result of the underperformance of the mining during all of that wet weather period in areas not just the production of ore but in the movement of waste which is effectively the waste associated with the Havana cutback. That’s probably, we’ve had to, we see an increase in the TMMs for this year, this current year, to help sort of I suppose catch up if you like. So we certainly would like to believe that we will see production levels of Tropicana lift in the future years, and of course, as the cutback starts to wind down at Havana that the total material movement will wind down or the waste will wind down and that will take the pressure off that current all-in sustaining costs that obviously has a fair bit of pressure on it. So we don’t see this as being a permanent shift. This is just at the moment it’s a difficult year and obviously the team there are doing a lot of work to see what can be done to improve on this situation, but as it stands at the moment that’s what we decided to run with in terms of our outlook.
Alex Papaioanou: Yeah. And in terms of weighting of that recovery would it be fair to say that production would be more 2H weighted with those recoveries hopefully happening in 1H?
Jim Beyer: Actually it’s interesting when we look at our guidance we’re anticipating that H1 will be probably a little bit stronger than H2 across the Board. So it sort of -- it’s almost counterintuitive to think that the issues that have flowed in in the March and flowed through into the June quarter at Trop would sort of continue but in actual fact what we’re doing now is we’re -- in simple terms we’re getting to the ore to produce from that we actually should have got to back in June which is -- we didn’t get to that ore in June which is why we didn’t meet our guidance and we’re getting to that now and then it takes like it does in mining, it’s going to take maybe another six months or so and we start to -- we see a dip at Tropicana and that dip is because of the waste that we haven’t been able to move. It’s sort of it’s simple but it’s almost counterintuitive but we actually anticipating a slightly stronger first half of the business than we are a second half and then recovering at the back end of that second half in the next into the following year. Does that make sense?
Alex Papaioanou: Yeah. Yeah. It makes sense clearly. Thanks for the extra color. I’ll ask one more if I can. Do you expect some of those non-cash inventory adjustments at Tropicana specifically into FY 2026 as well or are they just to FY 2025 for now?
Jim Beyer: We expect as long as any of our operations are pulling material off stockpiles there will always be a component in the AISC that is non-cash and we certainly expect that to continue at Trop and at Duketon. It’s kind of interesting that, the way the AISC is calculated as much as it’s sort of thought of as being a the way that you should be calculating free cash flow. The irony is these stockpiles have been built up over the years and now we’re drawing down on them. They’re actually free issue only the cost of milling but in the AISC point you have to account for them as a cost even though it’s non-cash. And so the short answer to your question is, yes, we can we expect it to continue. To what extent and to what proportion of the all-in sustaining costs will just depend on what proportion of production comes from stockpiles.
Alex Papaioanou: Yeah, Understood. Thank you. That’s it for me I’ll pass it on.
Jim Beyer: Thanks, Alex.
Operator: Thank you. [Operator Instructions] The next question comes from Matthew Frydman from MST Financial. Please go ahead.
Matthew Frydman: Sure. Thanks. Good morning. Good morning, Jim, and team.
Jim Beyer: Good morning.
Matthew Frydman: Maybe just carrying on from some of those non-cash inventory questions. In FY 2024 you guided to an expected non-cash impact of $200 an ounce on your AISC. You actually ended up delivering, I guess, you can say only a $91 an ounce impact. Can you talk to maybe some of the drivers at the end of the day that that caused that difference? Is that a deferral of expected stockpile drawdowns into FY 2025 and then in FY 2025 you’re guiding to $150 an ounce. Can you talk around, I guess, your confidence around whether that’s the right number and also if I’m thinking back I’m guessing that those inventory impacts are because the stockpiles are carried at cost rather than at any sort of NRV value or is there any adjustment there that we need to think about the value of those stockpiles as you realize them in a higher gold price environment? Thanks.
Jim Beyer: Yeah. Look, I mean, the bottomline is that if you produce more ore from your pits and your underground you can feed into the mill and you’re not drawing as much off the stockpiles then your non-cash component will reduce, right? Is that a good thing or a bad thing? Well, usually what you produce from your pits and your undergrounds are a much better grade than your longstanding stockpiles, so overall it’s a better it’s a better thing and basically it was just driven by less stockpile use. So, and going forward, if I had -- what would -- we’ve made it we’ve made on our schedules what we think will be the balance between across -- in fact across both Duketon and Tropicana what’s considered to be the balance between underground production, open pit production and therefore what’s needed to be drawn off the stockpiles for to get to supplement to keep the mills full. If either one of your ore sources be it underground or open cut overperforms and delivers more then that’s less and as I said that’s usually pretty clearly on a basis of rather than putting in I don’t know 0.5-gram dirt or 0.6-gram dirt you’re putting in 1.3-gram dirt, so or 1-gram dirt or whatever the grade happens to be that you’re feeding in so it’s a better thing to do and that stockpile material is always there for the future it’s not like it evaporates or deteriorates. So we make an estimate based on what our schedules are saying and if our reconciliations go a little bit better and we we’re able to produce more ore from the same benches or we’re able to produce a bit faster than that has an impact on how much you draw on stockpiles which then has a subsequent impact on what your non-cash element is but it’s usually as a result of getting, pardon my grammar, but more better material.
Matthew Frydman: Yeah. Thanks, Jim. Yeah. I think that’s not strictly correct from a grammar perspective but I get what you’re saying.
Jim Beyer: You knew what I meant right?
Matthew Frydman: Yeah. I knew what you meant. Maybe can I ask quickly also on the Tropicana underground study you mentioned it in your opening remarks, but sorry just maybe just remind me around the context of that study. That’s around the Havana underground if I’m thinking correctly. Can you just sorry reiterate when you expect the outcomes of that study to be delivered and then any sort of further color on when development of that Havana underground might commence, and I guess, what your -- as sort of partner in that asset what your kind of hopeful outcomes for that study are in terms of maybe scale of that operation and potential CapEx, is there potential for a CapEx light development given the kind of existing underground infrastructure in place already in your view? Thanks.
Jim Beyer: Yeah. So, Matt, the -- yeah the Havana underground is the ongoing extension of course of the Havana open pit. In fact, anyone that’s been around for a little while with our story they’ll know that the last cutback that we’ve -- with the cutback that we’re doing at the moment at Havana was actually a trade-off between going underground or doing another pit as the gold price rose it made more sense to do another cutback. So, yes, there’s an evaluation going on of opening up what would effectively be another a third underground area at Tropicana sitting underneath the Havana pit. The evaluation on that has been is currently underway. It is expected that that would be presented, that would be approved if you like later on this year exactly whether it’s late this year or early next year is still being finalized, but when I say this year, I mean, this calendar year, so later on this calendar year. As soon as once that’s done we will be able to inform the market of a number of things what it’s -- what ultimately what scale it’s deemed to be at. I mean it looks a little bit bigger than what we’re getting out of the Tropicana underground area but probably not quite as big as what we’re getting out of the Boston Shaker region area and that would work -- a little bit of access work and there’s already some development there was a link drive that we talked about last year has been pushing out to get drills closer to that area. So there’s a bit of work going on at the moment. It would entail or it does entail a new portal and some of that works very early works has already started not a major commitment of capital I would add, but once it’s been fully approved, it’s -- it’ll be its development will commence and I don’t think it’s unreasonable for us to think that that’s going to happen in this that approval. It’s reasonable to think that approval will happen in this financial year or that decision will be made in this financial year. Once it is we will then be able to inform the market more clearly on or clearly on cost and timing in scale.
Matthew Frydman: Got it. Thanks, Jim. That’s very clear. Maybe if I could just ask one other one. Your -- I guess it’s probably more relevant for your Duketon business but clearly you’re doing more in terms of underground activity -- underground mining activity and you’re hoping to do more over time. I mean that’s true at Tropicana as well, but obviously, you’re not the operator there. How does the business think about, I guess, internalizing some of that capability and some of that mining expertise and function? I know other gold mining businesses like to have operational control over their underground mining in particular because they can allow them to be more nimble and more flexible and more responsive to gold price and mine plan, et cetera. Is that something that you’ve given thought to and what would that look like in terms of buying Regis owned underground equipment and Regis shirted operators, et cetera?
Jim Beyer: Yeah. Look, I mean, at the end of the day the way that you operate and how effective you are whether you’re self-perform or whether you’ve got a contractor in place basically ends up being how good you are in your relationship with whoever’s doing the work. You could self-perform or you could own or operate or you could self-perform or you could use a contractor. We have Barminco on site. We have a three-year alliance running with those guys which is basically an approach that involves a much higher degree of integration of the way the teams work together and we’re quite pleased with the way that that’s we only basically signed up for that what Michael three months ago two months ago. Barminco had previously been in place before that but under a different arrangement and we’re quite pleased with the way that that’s unfolding at the moment. There’s always the discussion as to which is the way you prefer to go but right now we need to make sure that we’ve got the right skills in our organization from -- everywhere from basically Chief Operating Officer which we do have the right skills there all the way down to the site managers on site who are making sure that they’ve got the right sort of experience that’s required for an operation that’s clearly going to be stronger from an underground perspective and we think we’re building -- we’re certainly building that and we’ll continue to build that as we move to at least another one hopefully two more undergrounds. So right now we’re working with Barminco. It is effective we, I mean, having said that, you always want everybody to be more productive, but I think the main thing for us is everybody’s working very constructively together to the same outcome. So if you’ve got that running whether they’re working with a Regis logo on them or whether they’re working with a shirt that’s got a Regis and a Barminco logo on them because that’s what they’ve got. I think as long as you’re getting the improvement that you’re after then that’s really what you want to do. And of course, the big advantage of having the company the scale of Barminco is that there’s other expertise for us we can draw on there that we may not have internally. Barminco is a big global organization. So, we see at the moment, we’ve gone from being a straight up scheduler rates contractor to being more integrated and we like the way it’s unfolding at the moment.
Matthew Frydman: Got it. Thanks very much, Jim. That’s very helpful. Thanks.
Jim Beyer: No worries, Matt. Thanks for the question.
Operator: Thank you. The next question comes from David Coates from Bell Potter Securities. Please go ahead.
David Coates: Thank you. Good morning, Jim. Good morning, team.
Jim Beyer: Hi, David.
David Coates: Thanks for the presentation this morning. Just two questions on Duketon and I appreciate you haven’t provided guidance on this, they’re a little sort of forward looking. Part of the cost guidance for FIPs [ph] includes the non-cash stockpiles which we’ve been talking about. I’m just wondering as undergrounds become a more important part of the mill feed, is this where we should be, is it sort of broadly where we should be expecting costs to kind of settle or that sort of is the grade profile of the underground potentially expect to increase and help bring those costs down a bit together with maybe production and economies of scale increases as well.
Jim Beyer: Yeah. Yeah. Okay. Well, I think, while we continue to run for at least the next 18 months to I think what Michael was talking about that Garden Well Main might be coming into production was sort of at least at least another 18 months out I think from first doping. I mean I wouldn’t see too much of a change in the all-in sustaining costs coming up from the undergrounds, primarily underground cost per tonne. When we look at Rosemont, we’ve got narrow high grade mining which tends to be a little bit more expensive, but of course, it’s a higher grade and at Garden Well we’ve got a slightly lower grade arguably, but it’s a more, I wouldn’t call it, a bulk mining method, but it’s certainly more efficient than the narrow vein stuff. So, broadly they kind of tend to balance out and if the grades are expected to remain fairly similar which for the same ore bodies, we talk about sustainability and continuity that’s not unreasonable to expect. So, I’d be looking and thinking that in line with our expectation of progression of the sustainability of the ore bodies we’re probably not going to see too much of a change in grade unless we change the mining method which we don’t have any plans to do. The new deposits, I can’t say yet, because I don’t know which one and what grades we might be bringing them in and -- but our underground mining costs at the moment are probably reasonable to think that they’d be projecting, but we’ll have to see what the new ones as they come on and what we’re seeing. We’ve given some guidance on how we see that all-in sustaining costs. I think they were included in when we put out the info on Garden Well Main and also on Stage 3, we gave some indications in there as to what the all-in sustaining costs would be. Our views haven’t changed from that. More broadly I guess while we continue to mine open pits over the next few years while we run those reserves down, none of them are getting easier they do get a bit deeper and further to the hall, so I don’t see any improvement on the open pit side. So, yeah, obviously, over time the proportion from underground will lift. I do think there’s some -- I mean, I think there’s some, if I look at our costs at the moment, what there’s -- almost there’s nearly $200 in our all-in sustaining costs of non-cash costs and as we -- they’ll stay there -- that sort of cost will stay there for as long as we’re pulling down stockpiles to keep the mill full once we run out of stockpiles obviously that cost won’t be there, but it’s a non-cash cost, so it -- it’s -- it would sound like a beating drum to keep hammering that, but I think that’s really important that people consider that when they’re looking at our cash flow calcs, because it’s -- it actually works out to be something like for your $50 million that appears to be a cost but is actually non-cash for our business.
David Coates: I appreciate -- I really appreciate that attitude. And just -- and a little bit along the same kind of thing, exploration -- open pit exploration focus at Duketon top priority targets or most promising targets can you give us a quick 2 seconds, 2-minute view on that.
Jim Beyer: Yeah. Yeah. Yeah. Look, I mean, I guess, we’ve -- in the last couple of years we’ve gone and worked all the brownfields targets, I guess, for want of a better description for open pits. They -- we’ve found deposits, but they’re just too scratchy to become reserves. They’re too far away or they’re too much pre-strip, so we’ve parked them up. Our greenfields exploration has come up with, is identifying some really good targets and I think Merlin was actually something that popped out of that and but the rather much earlier stage exploration, but they’re at least a couple of years away. We’ll keep pushing on with those. I mean, if you stop looking, you stop finding, so you know we have to keep looking and undertaking our exploration across Duketon and people -- we’ve got people got to remember that that we’ve only really had two-thirds of our holdings on the Duketon belt, we’ve only really had for three years or four years, so it’s still relatively early days given the very limited exploration done there. But plenty of priority targets are now being identified or vectored into as the exploration geos like to say these days, but nothing we can hang our head on at the moment. But we’re well positioned, we’ve got great milling capacity there and plenty of experience operating on the Duketon belt. So, we just need to get our exploration geos to find stuff.
David Coates: Awesome. Thanks, Jim. Appreciate that as well.
Jim Beyer: Thanks, David.
Operator: Thank you. [Operator Instructions] At this time, we’re showing no further questions. I’ll hand the conference back to Jim for any closing remarks.
Jim Beyer: Well, thanks, Travis. All right. Thanks everybody for joining us. We do appreciate it and also recognize it’s a pretty busy morning across the front in this space. As always if you’ve got any follow-up questions or anything that you’d like to ask about on our release, please feel free to give us a call and we’ll do our best to answer them. Thanks very much for joining us and have a good day.
Operator: Thank you. That does conclude our conference. Thank you for participating. You may now disconnect.
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