I would now like to hand the conference over to Mr. Bryan Quinn, Managing Director and Chief Executive Officer. Please go ahead.
Thank you for calling in today for Aurelia Metals' third quarter results for financial year 2024. First today, my executive leadership team members, Martin Cummings and Andrew Graham, will provide some updates and then join me for Q&A. We will be using the presentation circulated today as a reference, if you would like to follow this presentation. Let me start by highlighting that our solid third quarter production performance has been underpinned by Peak North and South Mines delivery, 10% higher ore mining volumes and 13% higher processing volumes, and the Dargues Gold Mine delivering slightly above target for ore, around target for processing. All efforts towards, you know, delivering our FY 2024 budget and delivering quarter-on-quarter improvements that we've discussed in our previous quarterly presentations.
Our project and exploration teams are continuing to build our future pipeline for our growing base metals portfolio, with some exciting releases and milestones presented during this quarter also. Federation Project has delivered many achievements, and there are more planned over the next two quarters, including first ore in Q1 FY25, which I'll talk to later. Our focused efforts remain on disciplined capital management to keep our balance sheet robust, with the cash balance remaining steady since last quarter, reporting of AUD 106.9 million and AUD 144 million liquidity available. This is very important for Aurelia and a platform to build our credibility for our ongoing journey and commitment to sustainably grow our business in line with our vision, values, and, and strategies.
With a strong outlook in gold and base metals demand, with our-- and with our established infrastructure and resource base and our recently revised regional operating model being implemented in the quarter to achieve our goals, we remain committed to deliver the best performance possible in FY 2024, so we can continue on the journey to building our base metals business into FY 2025 and beyond to create shareholder value. To support this growth potential, we released some exciting drilling results at Federation this quarter and also at Nymagee to confirm the high-quality resource potential at both of these locations. They are significant results for Aurelia as we continue to review our work, to review and work on our portfolio and pipeline of opportunities beyond what we already have in our resource model of 26 million tonnes in the Cobar region.
The results also confirm our direction and transition to base metal business, which is a positive upside. And Andrew will talk to more of this in his section. I'll just move to slide four on the production and costs. In summary, during the third quarter, Aurelia produced 14,500 ounces of gold, 4,300 tonnes of zinc, 5,800 tonnes of lead, and 300 tonnes of copper. Notably, zinc and lead were up 37% and 46%, respectively this quarter, in line with our narrative in the December quarter report.
Our group production was rather largely impacted by Peak's processing plant's on-stream analyzer, which reduced our recovery of base metals and forced management to move to low-grade feed to prevent loss of high-grade base metals that we had planned in quarter three, and I'll discuss this in more detail. These results generated a positive group operating cash flow of AUD 4.2 million. This AUD 4.2 million does not include cash flow, which was impacted by timing of shipment sales from Peak, where we are sitting on with stocks on hand over AUD 14 million at the end of the quarter three, that will largely transfer into quarter four. We're anticipating a stronger quarter four cash flow based on production and sales in our plan. Martin will unpack some of these details in his section.
The impact of these operational issues impacted the inability to sell our products this quarter, which resulted in All-In Sustaining Costs per ounce being higher than planned, which is expected to reverse in the June quarter. We also had some higher costs from Peak, which I'll talk to in the Peak section. Overall, we're committed to deliver on the upside of gold guidance, remain on guidance for lead and copper, and have revised our zinc guidance down and our all-in sustaining costs upwards. Also, slightly reduced the growth capital guidance to combat some of the delays to non-critical path project work at Federation, in addition to our spending capital guidance, which we're partly managing through our capital management framework. I'll just move on to slide 5, safety and environment. We continue to put safety above all else and have some improvements this quarter.
However, our people are having incidents and injuries, and we cannot rest until all these people on site return home every shift, injury-free. We've continued a disciplined process of reviewing fatal risks and business material risks across the site and business every month, and we continue to have our leaders focus on safety interactions in the field to observe safety in action and risk control effectiveness that must be in place at all times to prevent fatalities. As indicated last quarter, our recorded injuries continue to be reported as mainly hand injuries, slips, and trips. Subsequently, we've introduced some expertise into our organization to assist, raise awareness on how to prevent these injuries and use our tools better. Let me shift to operational assets. Slide six on Peak, to start with.
At Peak, we continue to expect the base metals production and grade this year to be weighted to the last quarter, after some operational resequencing had to occur when the on-stream analyzer failed. The on-stream analyzer, which we call OSA, receives plant slurry samples from the different streams within the circuit and tells us how much lead and zinc is in the feed, concentrate and tailings streams that can manage the chemical and concentrate grades and recoveries. Premature failure, which was caused by essentially power and moisture issues from the regional supply and required the mine and processing plant to change gears and stop producing high-grade lead and zinc due to loss of recovery that was being caused with the out of action. Peak was down for nearly a month with this particular issue.
In the meantime, we ran low-grade lead and zinc, and then low-grade copper production to prevent losses in recoveries and grades. This was rectified in February, and production of high-grade base metals prioritized for March. Unfortunately, throughout the quarter, and more particularly in March, Peak had at over AUD 3 million of maintenance and repair costs associated with changing our tail ropes , some major repairs to jumbos and loaders as a result of some tough conditions in the South Mine. These tough ground conditions also changed the sequence to high-grade stopes, which will be expected in the June quarter. Pleasingly, development metres were also higher at peak by 5% for the quarter, which continues to set up the mine for optionality of production. Having these development metres ahead of plan continues to provide options for stopes if conditions are providing challenges.
I'll move on to slide seven on Dargues. Dargues has continued to produce in line with their plan, with production, drilling, and stoping, keeping up with the monthly production targets. The plan has been re-sequenced to bring additional ounces into FY 2024 from FY 2025, to allow a smaller tail of production and move to closure sooner in FY 2025. At present, stoping is sequential and providing good reconciliation grades. Closure planning is well underway at Dargues, so we are ready to execute the preferred plan post Q1 FY 2025, once production is completed. The sale process is well underway, with several in the frame in the processing plant, which we finalize in the coming quarters. We're now in the end of underground production.
The teams at Dargues are also looking at extracting valuable items from the mine that we can reuse at Peak or Federation to offset future capital requirements. At Federation on slide eight, we continue to be firmly committed to deliver Federation's first ore in Q1 FY25, with the team modifying the mine plan to accommodate the lost time in January, where we experienced rainfall events that we did report. At present, the project is slightly behind on decline development, which we have plans in place to recover in the coming quarters. With all the focus on infill drilling work during this quarter, the geological team is getting ready to release the block model in late April for the production profile of the Federation mine.
Other key milestones include two shafts being completed and a third nearly completed, all in Q3 , which is a fantastic result for the team. Also decreases the first stope ore risk, as it relates to having ventilation and unknown geotech issues when you get with the shaft raising. The first on-road construction and sealing has been completed, and now it's fully functional and accessible under all wet conditions with our heavy equipment. As highlighted, we've downgraded the capital for FY 2024, based on several non-critical projects slipping in, including earthwork on the surface for future ROM areas, delivery of main ventilation fans, and other items that we decided to re-scope or remove from the project. None of which will stop first stope ore or the associated ramp up.
Operations ramp is progressing as we employ the operations management team to assist building on the operations into the future, in line with the regional operating model. The team is taking the best information from Peak and rebuilding for the Federation site. Lots still to be done over the coming quarters, but the team is committed to the plan to achieve our goals. Now I'll pass on to Andrew to talk more around the exciting exploration results we released recently. Over to you, Andrew.
Thanks, Bryan, and it certainly was a very strong quarter for exploration. I want to take the chance to recognize the entire exploration team, who are really doing an amazing job. For those following along, we're on slide nine, which talks about the Federation exploration update that we released to the market on the fifth of April. If you hadn't had a chance to read this, I would strongly recommend that you do. The release included two standout results. Firstly, we drilled below the Main Thrust at Federation and hit some very high-grade mineralization over very good metres. Now I'm talking kind of 27.9% combined lead zinc over 14 metres. So the question, I suppose, is why is this result important, and why are we so excited about it? Previous drilling below that Main Thrust yielded kind of disseminated and sporadic sulfides.
This high-grade result was our first high-grade result below that thrust. It's offset about 35 metres to the south, and it really gives a strong suggestion that the high-grade Eastern Lens at Federation continues to depth. Now, perhaps more excitingly in that release, the exploration team tested a concept to the west of Federation, really testing whether it's offset actually to the north in this area. Now, what we had seen to the west is strong alterations, but we weren't getting the mineralization. So it really pointed to something being there. The team did some excellent work to chase this concept of an offset, and drill hole 215 intercepted massive sulfides about 140 metres north of the strike of the main deposit.
Now, if you do go to our release from April, you can see a photo of this outstanding core. The results of that northern offset are visual at present, and we'll provide assay data once it's available. But it's a great result that demonstrates the potential for the high-grade Federation mineralization to continue out to the west. Now, just turning the page, the other very strong exploration result this quarter was from Nymagee, which was the subject of a release on the twenty-second of February. We touched on this, I believe, at our half-year result call. The exciting piece here really for us, as well as the very high-grade zinc mineralization in the Western Lead Zinc Zone , were multiple thick, high-grade copper lenses, and now I'm talking 29 metres of 2.3% copper in one of our holes.
So really good result, and certainly we'll be back at Nymagee in financial year 2025 doing further drilling. Now, not to be outdone, we were also very busy at Peak, and we've touched a little bit on that in our quarterly report. We haven't got any assay results from that drilling to share with you today, but we will bring you those results from those programs throughout this current quarter. Suffice to say, look, we've been very pleased with the results we've been seeing for our efforts at Peak. I'll pass on to Martin now, who's gonna cover off on balance sheet.
Thanks, Andrew, and I'll turn to slide 11. And as you can see, our balance sheet remains very strong, with just under AUD 107 million on cash on hand at the end of March. Our loan note is undrawn, and that results in available liquidity of over AUD 114 million . It was, as Bryan said, another strong quarter from Dargues, and they generated AUD 10.5 million of operating cash flow, and we expect that strong cash flow to continue in the June quarter. As for Peak, cash flow was negative this quarter, but mainly driven by the timing of concentrate production.
After we resolved the issues that Bryan talked about in the plant and completed the shaft work, the operation had a very strong March, which benefited production but left us with elevated stocks on hand at the end of the month. We're working with our logistics partners and have secured additional capacity to move that product this quarter. The silver lining from this is that production is likely to be sold at higher prices than what we achieved. Peak also did incur some additional maintenance costs, which were not planned this financial year. In addition to the OSA repairs, we had the unplanned repairs to a loader and a jumbo, and we had to replace the tail ropes on the cage after wear was detected during our regular testing regime.
We do remain focused on lowering our unit costs through productivity and cost out programs, and AUD 100/tonne mining cost remains our goal. The material that we plan to mine in the June quarter, coupled with the sale of concentrate that built up this quarter, is expected to result in a materially stronger result in terms of cash flow. For Federation, we spent AUD 20.4 million this quarter, and that was lower than we had planned, driven by the interrupted quarter due to weather. But pleasingly, it did include spend on completing the sealing of the Burthong Road and development of the surface ventilation shafts. The spend this quarter takes year to date to just under AUD 50 million, and we're forecasting around AUD 15 million to 20 million to be spent in the final quarter.
With this, we've therefore reduced our guidance slightly at Federation for capital to AUD 65 million to 70 million, reflecting that some of those non-critical items have been deferred. The project does continue to track within the approved capital budget of AUD 143 million. Andrew just touched on exploration, and spend was consistent with the previous quarter, and it does continue to deliver some fantastic results. We've spent AUD 8.5 million on exploration year to date and tracking well within the guidance issued of AUD 10 million to 15 million. And you'll finally notice on the chart that we did receive the tax refund in January, which I've talked about previously. So whilst not specifically called out on this slide, I just want to make a few further comments on our all-in sustaining cost this quarter.
For Dargues, their All-In Sustaining Costs was in line with our expectations, and I just want to commend Angus and the team there on how they're managing the operation in its twilight period. At Peak, their All-In Sustaining Costs this quarter really suffered from these lower sales. The cost of sales adjustment that we put through in All-In Sustaining Costs doesn't recognize the same benefit that we get when we sell the concentrate, and we're also not able to recognize the gold in the concentrate in our All-In Sustaining Costs denominator. So with the strong production that Bryan flagged for the June quarter and the additional sales from production this quarter, we expect Peak's All-In Sustaining Costs, and therefore the group All-In Sustaining Costs, to reduce materially.
I've mentioned previously that we'll look to changing our cost metric for reporting purposes to better reflect the business that we're moving towards, which is focused on base metals. Thanks for your time. I'll hand the call back to Bryan now.
I'll just move on to the key focus areas for the final slide. Look, as I highlighted in previous quarters, we're very committed and focused on delivering the right mining sequence, the right value, lower cost of Peak. And as Martin highlighted, we had a tough first couple of months, but the third month of the quarter, the Peak management team really dive in and got a great result considering the headroom in place. And it's a credit to them to bringing home the back end of the quarter strong, despite the challenges. So obviously, going forward, there's still much work to be done in terms of reducing our costs and efficiencies and getting better productivity.
But the team have that on the problem, which is that they're fully aware of. In terms of maximizing cash generation from Dargues, obviously, as Martin highlighted, it's been a strong quarter for Dargues. We will see if this will continue on for this current quarter. The team's got a very clear plan in front of themselves, and like I said, it's been a good quarter result, and they continue to sort of deliver exactly to the plan, which is fantastic. First stope of Federation in quarter one, FY 25, and the ramp up. So all efforts on really getting the decline development done, getting it ready for the ore development to commence for the first stope is a high priority.
With our company partners on site and management on site, everyone's got that first stope and the ramp up as a key sort of focus area right now, and so the leadership of the organization. In terms of progressing optimization of the Cobar region, Andrew Graham and his team are really looking at how we're progressing the optimization work in terms of taking the current base case and seeing if it's more value and potential value upside, and doing a few things differently. We'll continue to work on that and present it to the board in the coming months, and then we'll obviously release it straightforwardly at the right time. Exploration deliver for future growth. Obviously, Andrew talked about that.
Some really exciting results, both that have been released and that will be coming, and like I said, it's one of those things that's gonna help us really define where we go, what we do next, beyond Great Cobar, which is obviously fundamental to our organization in terms of our growth in the base metals position. Last but not least, you know, without the right people, it's, it's obviously very hard to build a business, and our focus at the moment is really attracting in the right talent into our regional, into the Cobar region, under our regional management team or regional operating model.
That's obviously still key to us, and we've been able to attract and retain some very good talent, both have started and are coming soon to the team, to really look at how we can build our organization going forward. So really, obviously, our focus in summary is to safely deliver our operating performance and our growth agenda, which is really about filling our mills with quality ore, as I've said from time to time, and that's still on the agenda and still very much our medium-term objective. Nothing's changing, and obviously, this quarter results are sort of testament to, we've got the capacity, we've got the horsepower, we've had a few headwinds, but we've pushed through them, and now we're seeing ourselves up to FY 2025 as well as delivering in FY 2024.
So last but not least, I'd like to thank the team. We're really a team. Everyone's really worked hard this last quarter to make the results come out the way they have, and this ongoing team that's gonna continue to deliver us going forward. So Rochelle, I'll hand it back to yourself and to pose any questions people may have.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Daniel Roden with Jefferies. Please go ahead.
Good day, Bryan, Martin, and Andrew. I was just wondering, it's probably just given guides is coming towards the end of the financial year. You know, we're in a pretty you know, standing gold price environment, so just wanted to I guess, ask and unpack if and what the ability for some legacy stopes there to be I guess, reclassified into a reserve component and is there any opportunistic ore that you might be able to sneak out from the asset?
Yeah, thanks. Thanks, Dan. At this stage, we've reviewed that. Management's reviewed any opportunistic ore stopes that may sort of fit into the current sort of economic situation. There is actually one stope that actually fall into this financial year and re-sequenced in this financial year. They're continuing to look for those opportunities, but at current, that's the only one we've identified so far. But obviously, that is part of their agenda. If they could get extra stope ore and it's economic, they will go for that, but currently, we don't have any other options on the table that on the recovery outline.
Yep. Yep, noted. And I guess, just with Federation, you know, obviously Q1 FY25, I just wanted to, I guess, unpack the, you know, the ramp up profile a bit more of the, of the asset and the underground there, and I guess, what it understands, you know, what that transition looks like to, you know, the asset becoming, you know, free cash flow positive, standalone. So it's not drawing down additional funding. You know, it looks very healthy at the moment, but just unpacking that a bit more just to, you know, as it's becoming closer.
Yeah. Dan, hi, Martin here. I'll preface this response by saying we are working through our life of mine planning process at the moment. But so that might just be something we talk further about when we come to guidance for next year. But essentially, first ore in the September quarter, we are looking at a commercial production rate somewhere six to nine months after first ore is the timing. That really hasn't changed too much. You'll recall from our previous calls and conversations, and again, I'll revisit this when we do the life of mine plan, but around 20,000 tonnes a month of mine production is where the operation, you know, is commercial in the sense that it breaks even from a cash flow perspective.
The ramp-up period from then is around 12 months after that, 12 to 18 months, where you get to that 50,000 tonnes a month. And really, the key deliverable there is getting the decline progressed deep enough so that you've got those multiple levels that you're stoping on. Andrew, I might just throw to you just for any other comments.
No, look, nothing more than what you've talked about there, Martin. I think the ramp-up profile we've previously shared, largely still holds. We'll obviously update that once we have life of mine, but we are looking at being ramped up to full production in about 18 months from when we do start stoping.
Yeah.
Yep, perfect. And that life of mine guidance, is that coming with FY 24 results as well?
Yeah, that's the intention at the moment. Whether it's also, whether it's at the, the June quarterly, it'll be somewhere in there.
Awesome. Awesome. And might just sneak one more in, bit of a light one, but, the Glencore arbitration process, you've mentioned that's gonna be confidential now. I'm assuming that indicates that there's not likely to be a financial outcome in that, that is disclosable. So what options are being explored there, I guess? And, you know, can you-
... share any additional information on that?
Well, what we're progressing at the moment is the arbitration process. So, you know, that is our preferred option to get resolution on the application of those historic contracts associated with Hera. So that is the focus right now.
All right. No worries, guys. Thanks for your time. I'll pass them on. Cheers.
Thanks, Dan.
Your next question comes from David Coates with Bell Potter Securities. Please go ahead.
Thank you very much. Good morning, Bryan, Martin, Andrew. Thanks for the presentation this morning. Just a couple of questions there. Can you just run us through the obviously sort of provided the guidance that you some of the projects have been deferred. Give us an outlook on the CapEx profile for the next three quarters with those changes updated.
So, Dave, we're going through that reforecast process at the moment, you know, as part of the life of mine. So, you know, we've got 15 to 20 for this quarter. I've been previously talking about, it's around about a AUD 30 million capital bill to get you to first to commercial production. And then, you know, from there, that would be a cumulative spend of around AUD 100 million, and then you progressively spend the balance over the next 12 months or sort of 18 months, really, because there's a bit of a tail in that capital.
I'd prefer to just confirm 15 to 20 for this quarter, and then when I come out with guidance, I can give you full detail on what that updated capital profile looks like, for 2025.
Sorry, fair enough. And just a quick one, the all-in sustaining costs, and you mentioned you've been considering changing the methodology, but if you did include, if you backed out the costs related to those sales, what would your all-in sustaining costs have been this quarter, roughly?
Look, it's a... Yeah, I've got an estimate. You know, group all-in cost would be around AUD 200.
All right. Okay. And just finally, the, the exploration below the thrust zone, you talked about that, in the presentation. It looks, it sounds like it's about 140 metres away, if I read that correctly. Assuming, you know, hypothetically, if that were to evolve into a, you know, exportable deposit, what type, what, what, just the notion of what kind of infrastructure would you need going there? Would just be an extension from current workings? Would you need extra ventilation or how, how could that possibly... What, in what way might that work?
Might run with this one, David. It's Andrew here. Just,
Thanks, Andrew.
A couple of things. So two things. Firstly, the, there's two elements there. There's the exploration below the thrust, and then there's the northern offset down to the west. Two very different things. The exploration below the thrust is also about 30-odd metres to the south. It'll just be a continuation of the mine as we know it. The stuff to the west, it's early days to know what that evolves into. I think the real success for there was the fact that the ore body continued to the west. We really thought it would. We were getting some really good alterations to the western extent of the deposit there, but we just weren't getting the ore. So it's great that, you know, teams got on to this offset extension.
It's only 140 metres, you know, underground mining, not far, that we would use existing infrastructure, assets, accesses and all the rest of it to, to access that. And, and the real plus, if it evolves into something, is the potential for additional tonnes to vertical meter, which, which would be great. But early, early days. You know, you put a hole through it, it's certainly an exciting result, but, you know, we need to do a lot more work then.
Yep, I understand that, but it sounds like one that's got a pretty, pretty path to exploitation, you know, assuming the right exploration success.
Oh, absolutely. Agree totally.
Okay. Thanks very much.
Thanks, David.
Your next question comes from Adam Baker with Macquarie. Please go ahead.
Morning, Bryan and team. Apologies if I might have missed the start. Just on the zinc guidance reduction at Peak, could you just quickly delve into the on-stream analyzer and exactly what occurred there, and if it's expected to be recurring or not? Thank you.
Yeah, look, so the on-stream analyzer generally has a life of about seven or so years, and this thing, this actually one prematurely failed, which is over three years in. So, it hasn't failed, to my knowledge, beforehand in the same way. So what actually, what actually eventuated this? As I said, this machine actually, it takes the material from the slurry samples and other different streams coming into the circuit and tells the operator exactly how much lead and zinc is actually coming into the feed, and then... And also the concentrate and tailings stream, and then they can adjust the chemicals and also work with the concentrate grades and recoveries.
So if that goes down, you really require both the metallurgists to visually look what's going on and then take samples every four hours to check, you know, in hindsight, what went through and what actually happened. So during that period, we obviously, as soon as the on-stream analyzer went down, they moved to lower grade lead and zinc, so we can obviously throw the good stuff out into the tails. And that was obviously something we had to do very quickly. And then obviously, we went to a copper, a lower grade copper as well, which has lower variation in the feed or lower variability in the feed, so that can actually visually keep things in control as much as possible.
And then once they run out of the lower grade copper and lower grade lead and zinc, they had to move on to higher grade, which we actually did lose some of the higher grade into the tailings, unfortunately. So the OSA has been obviously put back in, in order, and, you know, you would expect it's not going to have the same situation again. However, we are working through looking at changing it out to a sort of a variation-based circuit, which is available in Australia. And that's something we're looking at right now, to sort of change that system out, as soon as we can, and once all the sort of assessment work's been done on it, to have it localized anyway. Does that answer your question?
Yeah, that's really good, Tyler. Thanks. And just on the underground unit mining costs at Peak, obviously, up until today, it's been pretty, going pretty well, getting that unit mining cost down. And you know, I suspect it's just a blip on the radar in the short term. But do you have an aspirational target of when you think you can get to that AUD 100 a tonnes mining cost level?
Yeah, well, like I said, some of the costs were one-offs. The tire ropes was actually planned next financial year. That was obviously, that was planned and had come forward. And then we had two loaders that had actually a fair bit of money spent on them in terms of one was over AUD 500,000, and another one was a couple of thousand. What, what they were actually damaged in the stopes in Kairos, which is obviously where some of the tougher stuff. We also had a jumbo damaged as well, with its boom in the same area. So effectively, they, they're one-off costs. We haven't seen them before, obviously, and conditionally based on what we saw in the underground working area.
Look, the overall challenge is to keep that focus there in terms of we've got a sort of working smarter process, which is looking at, you know, how do we load every truck to get full productivity out of trucks? We're looking at increasing utilization by cage riding to improve, you know, people on the job, you know, much an hour a day longer than what we're currently getting now. So there's a bunch of initiatives which sort of drive us down to that sort of AUD 100/tonne sort of focus we have. And obviously, that's gonna come out of this next budget process we're going through for FY 25. But there's plenty of initiatives and plenty of different activities we're working on to bring that cost down.
It's just a matter of these one-off costs hit us this month and this quarter.
Thank you, Bryan.
Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Ashley Chan, a shareholder. Please go ahead.
Hi. Sorry. Hi, thanks, everyone, for great result, great exploration results. I just got three questions, as a shareholder. First one is, I guess, the positive one. Are you able to give any color on the target or size for Federation West and Nymagee? Are you looking at something that's incremental target, that would incremental production, incremental target? Sorry, whatever you can say and take into account ASX rules. Was it something that's significant, or are they company making targets? The second question will be on hedging. And in the future, do you see that before you make any hedging policy, that you consult with the major shareholder and active institutions, and also get an independent consultant to review any potential hedging policy that's independent of lenders?
The third one is, bearing in mind your competitor, comparable peer company, what level of flood or weather event protection do you have? Are we protected against a one-in-100-year flood, or a one-in-500-year flood, or against a one-in-1,000-year weather event? Thanks.
Thank you for the question. I'd like Andrew to answer the first one, then Martin and myself, you know, from the order. Thank you, Andrew.
No problem, Bryan and Ashley, thanks very much for your, your questions. On the... Neither of the drilling programs, Nymagee or the Federation results, that we can sit here and say, "It'll be X, it'll be Y, it'll be company making, or it won't be." From my point of view, the Federation discovery is company making, and from the point of view, we've got all that infrastructure there in Cobar, and we can exploit it with super high grade, in that case, lead zinc material. You know, certainly getting, particularly that western extension, offset piece, at Federation, very exciting. From the point of view, it has the potential to extend Federation to the west. But until we put more holes in, we really won't know. On Nymagee, there's already a reasonable resource in our, reserve and resource statement on Nymagee.
Had some pretty good copper grades. This drilling will hopefully extend that, and we'll do that through the MRE process in a few months' time. But it does actually flag the possibility of there being much, much more of Nymagee, of really great, good grade material, and of copper material. I think in the past, they really chased the lead zinc material when they thought about Nymagee. So for us, it's about putting more holes in, really understanding what's there, and then seeing if that flows through to a mine plan. So the goal obviously is to see a mine at Nymagee.
... Andrew, I'll actually jump on to if Martin's here, just around hedging. So I'll just give you a bit of background as to, you're obviously looking at a hedge book that's out of the money at the moment. So just that we put in place and how we think about it. So if you cast your mind back, we put the financing in place May last year, and we were embarking on a, you know, quite a capital-intensive process starting in August, where we were gonna commit to the, you know, significant balance sheet capacity to deliver Federation. At the time, we had Dargues coming to an end, and Dargues is an important funding source for funding Federation, and we wanted to lock in the returns from Dargues.
$3,000 an ounce gold price generates an attractive return for us, and we hedged it, as I'd updated you before. You know, I'm still comfortable with the hedging that we did. It was the right move to do at the time. I'm very happy with the fact that it's out of the money because we did retain exposure to upside price movements, and we're benefiting from them now, as I mentioned in my section. In terms of consultation, yes, we did consult with major shareholders before with the hedging program, and the overwhelming feedback was that if we could lock in the returns from Dargues, and get that good cash and really, you know, provide a bit more protection and balance sheet protection in terms of delivery Federation, then that was the right move.
Some of those people are on this call, funnily enough. And certainly around advice, yes, we do get advice. We have a group that we use on a retainer basis who are advising us on the market and advising us on what is happening in the hedging market, what is happening in the forward market. So, we do get that advice, but ultimately, it comes down to the management team and the board around managing the balance sheet, and we make the final call on whether we're going to hedge or not, but we do take input from externals. So, I hope that answers your question.
Yes, it does. Thanks. Thanks for that.
Great. Thanks.
And look, your question around protection from rainfall events relative to our peers. Obviously, we've had some major rainfall events in the Cobar region and Nymagee region. And obviously, our Peak perform and deliver and can handle those events. If I can just reiterate in terms of Federation, Federation is a project, and we are in the process of, you know, building the infrastructure and establishing all the infrastructure in that region as we build that project. And in January, we were obviously caught short of having all those things in place. By nature of the project, they weren't due to be in place.
We are also looking at some additional water mine water dams, which were planned to come on board in the future, bringing them forward to also provide additional insurance and working through those optionalities right now as well, so we can really sort of secure ourselves to not be affected by these, you know, one-off major storm events that we actually have seen recently. So, I mean, that's kind of the storyline we're going at the moment. And if you look at Dargues, Dargues has a large capacity of water, that they do experience significant amount of rainfall. They will finish the mine, obviously in quarter one, FY25, with obviously excess water that we need to actually remove as we close the site.
But there's no risk of those, of that rainfall affecting that dam or the operations either. So in summary, yeah, we are very conscious it's a risk on our register, and we're working our way through it, and effectively, we'll fund the various activities we need to make sure those risks are reduced for us in terms of our operations.
Thank you.
There are no further questions at this time. I'll hand back to Mr. Quinn for closing remarks.
Yeah, thanks, Rochelle. Look, our vision is to be a developer and operator of choice of critical base metals. And we believe we're well on track to do that. We obviously have a lot of foundations we're putting in place to get there. We are transitioning ourselves to the Cobar region over the next 12 months. We're actually an exciting business. We have one sort of project under study, one project being built. We have an operation that we're optimizing, and we have an operation that we'll be shutting in the coming period of time.
So there's a lot of, a lot of work going on, and the team is really well set up to deliver the plans we have, especially for the FY 2024, that we've already communicated against the guidance, and we're preparing ourselves for the long work to get that final over FY 2025 and beyond. So, we thank you for dialing in. We thank you for your questions, and we look forward to providing results in the next quarter. And once again, I'd like to thank the Aurelia team bringing to this exciting portfolio we have right now. So thank you very much, and we will speak to you the next quarter.
That does conclude our conference for today. Thank you for participating. You may now disconnect.