Thank you for standing by, and welcome to the Develop September 2026 Quarterly Report Conference Call. All participants are in a listen-only mode. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad.
I would now like to hand the conference over to Bill Beament, Managing Director. Please go ahead.
Thanks, and good morning, everyone, and thanks for joining us. On the call today, we have Dave Lonsdale, our Interim CFO, and our newly appointed Head of Investor Relations, Luke Gibson.
I am very pleased with what we have delivered this quarter. I think when you look across the business, it has been an outstanding quarter for Develop. Importantly, we are delivering on what we said we would do. We have achieved record mining and processing tons at Woodlawn. We have mined our first ore at Pioneer Dome, and we are making tremendous progress at Yitirrti, where development is running ahead of schedule.
At the same time, our mining service business continues to perform strongly. We generated nearly AUD 30 million in operating free cash flow as a company, and we invested nearly AUD 60 million in growing our production base for the future. There is an enormous amount happening across our business, and we are getting some really great progress and achieving fantastic results.
Starting with Woodlawn, the performance has been fantastic. We mined over 202,000 tons of ore. We processed more than 201,000 tons for the quarter. Both are site records and historical records. The plant throughput was up 17%, and we achieved that despite a major scheduled shutdown. That is a terrific effort from the team, and it shows just how far we have come in a relatively short time.
The other really pleasing thing was our recoveries. Our zinc recoveries improved from 75% to 83%, and we are seeing good consistent performance across the other metals. Our copper equivalent production was lower than the previous quarter, but that is for a very good reason. We made a conscious decision to mine some lower grade ore that was not in the original mine plan or the life of mine plan. It was easy to access, it was low cost, and importantly, it contained significant precious metals, which is not a bad gold and silver price. Quite frankly, it was simply too valuable to leave behind. We took the opportunity to mine that.
The really important thing at Woodlawn is what we have got in front of us now. We have developed more than 1.54 million tons of ore grading 2.8% copper equivalent that is ready for production. As people are aware, we consistently push down our capital development to open up more mining flexibility. That is a substantial inventory of developed ore, and it puts us in a strong position moving forward.
We have opened up a lot of additional mining areas, and we're giving our crews far more flexibility in how they operate. We're now getting that separation between development and production that we've been working hard towards. That's important because it allows us to mine more efficiently and consistently. We're now back into the planned grade profile with October feed grade through the mill running at 2.9% copper equivalent. We're very confident in the outlook for Woodlawn, and our FY 2027 guidance remains unchanged.
There's the exploration upside, which I think is particularly exciting. The results we're getting from our project DM15 are outstanding. We hit 12.2 meters at 15.7% copper equivalent in the J Lens, which we'll hit in development at the end of this financial year. We've extended the N Lens, which is a new discovery that we found not long ago. We extended that some 190 meters beyond the current resource boundary. Overnight we got another 90-meter extension to this, which now takes N Lens mineralization below a kilometer from surface.
Anyone that knows geology, with multiple lenses, that's a huge result. They're exceptional results, and they reinforce our view that Woodlawn is a very large, high-grade quality mineral system.
We've now got a dedicated exploration rig working on growth, and we're focused to demonstrate the potential of a 15-year mine plan, which our target is to achieve that in the next 18 months. There's a lot more to come from Woodlawn.
Moving to Pioneer Dome. What our team has achieved in such a short period of time is quite remarkable. We commenced an open pit mine. We mined our first lithium ore. I was down in Esperance two weeks ago looking at the first product at port, and we're on track for our first DSO shipment this quarter, and I think, Dave, we've locked that in for the 9th of November. That's a fantastic result. We've got the mining operation established, the logistics chain in place, and the project is progressing extremely well.
Importantly, we've structured the offtake arrangements to protect our downside through a floor price. That gives us the confidence in the returns we're generating on the capital deployed. We're targeting having our capital outlay recovered by the end of this calendar year. That's an excellent outcome and another example of our ability to identify an opportunity, move quickly, and execute.
At Yitirrti, we're equally pleased with the progress. We completed a record of 991 meters of underground development during the quarter, and we're running ahead of schedule. That's an astounding result, particularly with just one jumbo operating.
On surface, we've got the processing plant construction underway. GR Engineering has mobilized the site and are making very good progress on the earthworks infrastructure and long lead items, and they're pouring foundations for the mill as we speak. Everything is progressing towards first concentrate in June quarter 2028, which is not far away.
This is going to be another significant producer for Develop. The work we're doing now is laying the foundations for a substantial step up in production and cash flow in the coming years. Our mining services business continues to deliver as well. We generated AUD 46.4 million in external revenue for the quarter. Development rates at Waihi are increasing. In fact, we just hit a record there two days ago. BP33 is progressing well, and both contracts have plenty more to contribute as they ramp up to their steady state run rates at the end of this financial year.
The quality of our people and the ability to execute underground mining projects remains a real competitive advantage for Develop, and we're going to continue to be selective about where we deploy that capability. We want high quality projects, good counterparties, and long-term opportunities.
On the financial side, we're in a very strong position. We generated AUD 30 million in operating free cash flow during the quarter. We invested AUD 59 million in growth. We made over AUD 12 million in debt repayments, and we finished the quarter with nearly AUD 96 million in cash. We've also got approximately AUD 504 million in undrawn facilities. So we've got the financial capacity to continue delivering on our growth strategy.
Importantly, we're doing all of this while we maintain an excellent safety record across the business, with our lost time injury frequency rate remaining at zero. That's a real credit to our people and our teams out there in the field.
So look, when you put all that together, I think it's been a pivotal quarter for Develop. We've got Woodlawn delivering record mining and processing volumes with a substantial inventory of developed ore and some outstanding exploration results. We've got Pioneer Dome moving into production and first sales this quarter. We've got Yitirrti being built with underground development ahead of schedule. We've got a mining services business that continues to grow and deliver.
We're building a portfolio of high quality, long life mines producing the metals the world needs. We're doing it with our people, our own capability, and a very clear focus on execution. The opportunity in front of us is enormous. We've put a huge amount of work into getting these assets to where they are today, and we're now starting to see that investment translate into real operating performance. It really is coming out of the ground across all three assets.
As these projects continue to ramp up, we're setting ourselves up for strong and rapid growth in free cash flow. So I'm extremely pleased with the quarter. I'm very proud of what our teams have achieved, and I am genuinely excited about what's ahead. So with that, I'll open up for questions.
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 then two. If you're on a speakerphone, please pick up the handset to ask your question. The first question today comes from Joseph House from Bell Potter Securities. Please go ahead.
Yeah. Hi, Bill and team. Thanks for taking my questions. Firstly, I just would like to get a better understanding of your decision to mine lower grade out of plan ore. I would have thought in this copper price environment, it would make sense to mine or maximize your copper production over the quarter. Or was there a technical issue if you hadn't mined what you mined during the quarter that perhaps it would have been technically difficult later on in the mine plan?
Yeah, look, good question, Joe. So as you're well aware, we've probably got three distinct lenses. We've got zinc rich lenses, we've got copper rich lenses, and we've also got lenses that are rich in precious metals as well, and lower in base metals. So it depends where you are in the sequence of what you take. But we are finding a lot more precious metals in some of these lenses that we didn't have in the model originally. And even this month, mate, 42% of my revenue this month is gold and silver.
So, we're not going to leave that stuff behind. So if it's there, it's cheap, it's incremental, we're going to take it, especially when gold's sitting at AUD 6,000 and silver's at sort of AUD 88. So, it just depends where we are in the sequence is what our, I guess, our mixture of metals is.
Okay. Understood. And so you're guiding to about 45% of your FY 2027 copper equivalent contained production in the first half. Just given your first quarter performance, sounds like, yeah, obviously, as you pointed out, the higher grades will come through in the second quarter. Should we also be expecting higher mining and processing rates as well in the second quarter?
Yeah. So our guidance that we put out there, Joe, a couple of weeks ago was 45% of. It was actually 45% of tons in the first half and 55% in the second half. We're actually 6% above our guidance in ore tons mined. So yeah, look, we're very confident. As I said, our grade's running at 2.9% copper equivalent this month. As I said on the call earlier on, is we maintain our guidance for FY 2027.
Okay. All right. As you said, mining and processing rates were impressive in the first quarter. That was despite a plant shutdown. Are you able to talk to what you've done with the plant during that shutdown? I am just trying to get a sense if there is any operational debottlenecking or operational improvements that is being implemented there that could potentially improve processing rates down the track.
Mate, we had, I think, a five-day shut, otherwise we would have done probably another, what would that be? Another 12,500 ton of process. Because we grew our stockpiles quarter-on-quarter. That five-day shut was actually a major crusher shut. That was our issue there. My memory served me right, I think it was something to do with the chute going into the tertiary crusher, but that is all been fixed. It was more of an optimization piece and the crusher is working extremely fine now.
Yep. Just maybe shifting focus to Pioneer Dome. Just keen to get your read on DSO markets. Is there more or less interest in DSO shipments now versus six months ago?
Well, I have just got back from LME Week, so it was a very interesting sort of, I guess, viewpoint on all commodities. But I have not met anyone yet that can explain why the lithium price has come off 50% in seven weeks. Inventories are getting drawn down very quickly, to the point that the sort of view of the major traders that we sell to is, potentially there will be as e very time in history that China has drawn down all those inventories, when it gets to that critical level, it V-shapes back very quickly. The expectation is that is probably the June quarter next year.
So, that is probably the view of the major trader in the world. But outside that, we are protected with a floor price. We can get our capital back on that. We will just keep monitoring that situation. Yeah, look, obviously it has come off a long way, but the beauty is we did structure our offtake with a floor price for a period of time, so we can get our capital back and reassess as that price comes back later on this calendar year.
All right. That is all from me. Thank you.
Thank you. Once again, if you would like to ask a question, please press star one on your phone. The next question comes from Hayden Bairstow from Argonaut. Please go ahead.
Hey, good day, Bill. A couple from me. Just on Pioneer Dome, just given your strategy at Woodlawn was to chase that stuff when the prices are better on precious metals, is it safe to assume that you will think about doing the same thing if you get confidence that lithium is going to be better middle of next year, you have got plenty of financing between now and then, and just hold off on a few of these DSO sales and just wait for better prices? But I understand you got a floor price.
Yeah, look, we're protected for the first 150,000 tons, Hayden. That gives us good runway to get our capital back. Yeah, look, obviously post that, we'll reassess. Even Trafigura last week offered us, if the price doesn't recover, they want us to keep mining, and they want to finance us to keep mining. That probably gives you a bit of confidence about a recovery in the, when I said quarter two 2027.
We'll just reassess that. It is a capital. We set it up, and I didn't say it on the call, but I think we told the market it was going to cost us AUD 30 million to build that operation. It's cost us AUD 18 million and we're up and running. That's a big win from the team.
Obviously it was a year pit and then it was going to go seven or eight years as an underground. Seven weeks ago, the belief being it would generate AUD 150 million free cash flow a year. Seven weeks ago. We've set it up very capital light.
Look, I've got a FID document in my inbox ready for the board, but there's no point giving it to them at this lithium price. The carry is to get the underground up and running. The bottom of the J-curve is only AUD 41 million. Really, we've set it up extremely well.
What the team have done on securing camps, haul roads, permits, third party agreements on haul roads into the Port of Esperance. We got Shed4 locked up. Good luck anyone trying to get product through there. All that work is a huge body of work and success from the team to get that operation up and running. We'll just keep assessing it, mate, as it goes. We're protected for the time being.
Yeah. The only thing you do know about lithium is it'll be volatile whatever happens. Just on mining services, what's the run rate we should think about for external volumes? I presume there was a bit of a final Bellevue payment in that quarter. I presume call ramps up over the year as you get that underground moving and what's the sort of lumpiness like at Waihi?
Yeah, we guided in our guidance revenue AUD 100 million-AUD 110 million this financial year. We've gone pretty well in the first quarter, but obviously Bellevue's ramped off now. I'd just stay with that guidance. But to give you an idea of our exit run rate, at the end of this financial year, I think next year we're like AUD 175 million, AUD 180 million revenue in that division of those two contracts.
Yeah, okay. Beauty. All right. Thanks for that.
Thank you. Once again, to ask a question, please press star one on your phone. We'll pause for a moment to allow any additional questions to come through. At this time, we're showing no further questions. I'll hand the conference back to Bill for any closing remarks.
Yeah. Thank you, moderator. Look, thanks again for joining the call. I also want a big reach out and thank you to all my staff, all my service providers, suppliers and contractors in the business. It shouldn't be understated what's been achieved in the last three months. We've just finished building one mine and we're building another two. There's not many people that build three mines in three years. We're building a decades long business here and I really appreciate the effort that people are doing out in the field and here in the Perth office. With that, thanks for joining the call today.