Thank you for standing by and welcome to the Evolution Mining March 2024 quarter results call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you'll need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr. Lawrie Conway, Managing Director and Chief Executive Officer. Please go ahead.
Thank you, Darcy, and good morning, everyone. Firstly, on behalf of us all here at Evolution, I express our condolences for those impacted by the tragic and senseless event that occurred here in Bondi on Saturday afternoon. The loss of lives and injuries suffered by many people going about their daily life is hard to comprehend. Our thoughts and prayers are with everyone, as are our thanks and appreciation to the emergency services' response to the event.
Today we released our quarterly report and an exploration update. The exploration results continue to drive the mineral resource growth at Ernest Henry and Mungari. Specifically at Ernest Henry, we're gaining more confidence around Ernie Jr. connecting to the main ore body. This provides potential for additional metal per vertical meter, further enhancing the value of this world-class deposit.
At Mungari, the results are really positive for the potential of additional high-grade mineral resource at Kundana to increase the value of the expanded processing plant. The March quarter saw us deliver materially to our plans despite the adverse impact of the wet weather. The improved performance has set us up for a strong June quarter.
The momentum in the cash build continued from the December quarter, with group cash flow up 7.5% to AUD 85 million at an average price that was $545 per ounce and $1,350 per tonne below the current spot gold and copper prices. With regards to our copper revenue, a key thing to note about the shipments that went in late March will mostly be settled using the average copper price in April, which provides further upside to our cash flow.
The planned higher production in the June quarter, matched with the current high metal prices, will allow us to materially increase our cash flow and further reduce our gearing from the current 28%, which is down nearly 5% from the start of the financial year. We will realize the full benefit of the record gold price with only 10,000 hedged ounces due to be delivered this quarter. Overall, 95% of our production in the next two years is unhedged, while we have no copper hedging. The improved cash generation was driven by the 15% increase in production to 185,000 ounces and a 10% reduction in our all-in sustaining cost to AUD 1,464 per ounce.
Due to the quarter-end happening over the Easter period, our sales were lower than production, and as such, our all-in sustaining cost would have been about 4% lower at AUD 1,405 per ounce and cash around AUD 25 million higher. These benefits will flow through in the current quarter. Northparkes delivered strong, positive cash flow at AUD 37 million in our first full quarter of ownership and post-stream obligations.
This exceeded our expectations and demonstrates the quality of the asset as we set on acquisition that it would be cash-generative from day one. The performance in the March quarter, and specifically the way we ended the quarter, has enabled us to maintain our group guidance. Production will be at the bottom end of guidance at around 749,000 ounces, with the weather across Australia in March adversely impacting production by around 8,000 ounces.
Copper production is expected to be at the high end of the guidance range, around 65,000 tonnes. Our all-in sustaining cost will be towards the high end of the range of approximately AUD 1,410 per ounce, reinforcing our position as one of the world's lowest-cost gold producers. Group capital guidance remains unchanged. Pleasingly, the performance in the quarter was done in a very safe manner.
Our total recordable injury frequency reduced from nine to eight, and a real highlight was the performance at Red Lake, where they reduced their TRIF to its lowest level under our ownership. More importantly, our operations were well controlled to keep our people and assets safe during the difficult wet weather conditions experienced during the quarter. There were many highlights and milestones in the quarter.
At Cowal, we achieved commercial production in the underground with an annualized mining rate of over 1.5 million tonnes achieved in March. This is a mine which Evolution discovered and will transform Cowal into the future. In the month of March post the major plant shutdown, Cowal exited at a quarterly run rate of around 93,000 ounces. When considering the increased contribution from the underground, Cowal is expected to deliver over 100,000 ounces in the June quarter.
Ernest Henry continued its consistent and outstanding performance, generating over AUD 100 million of operating cash flow again. It has now fully repaid all acquisition and subsequent capital investment. This means the AUD 1 billion that we paid to acquire the remaining interest has now been fully repaid in just over two years, and the operation has at least 17 years of life remaining. Northp arkes had a very good quarter producing to plan.
As mentioned, it delivered AUD 37 million of cash flow. The E22 feasibility study remains on schedule, which will provide us with a good baseline of the physicals, economics, and timeframe of the project. Having gained a good understanding of the operation and the options of the many ore bodies, we are now confident that an E48 sublevel cave will be a viable next source of ore to supplement the E26, given the installed infrastructure and timing to bring E48 into production. We look forward to outlining the plans when we host a site visit on 19 and 20 June. At Mungari, the operation delivered a 15% increase in production at a lower cost despite the regional power outage in January and wet weather in March.
Looking at the June quarter, the higher-grade material from Paradigm and an extra campaign of the EKJV material will deliver a further increase in production and lower all-in sustaining cost. The AISC was impacted in March by the need to process lower-grade, higher-cost stockpile inventory due to the wet weather. Good progress was made on the 4.2 project, and it remains on schedule and on budget.
Red Lake made good progress towards more consistency during the quarter, with a 26% increase in production to over 30,000 ounces. They have now delivered over 10,000 ounces for four consecutive quarters. The all-in sustaining cost reduced by 15%. This is a positive shift in the performance of the asset. With the higher tonnage and grade from Balmer and Upper Campbell this quarter, we expect production to increase to 40,000-45,000 ounces.
I was on site last week and saw firsthand the good work being done and the high level of commitment for the site to maintain that performance at Red Lake. In summary, at a group level, the June quarter performance will deliver a step up in Cowal underground production, higher grades and additional underground EKJV campaign at Mungari, planned further improvements at Red Lake, and consistent performance at the other operations.
Lastly, we announced in the quarter the appointment of Nancy Guay as the Chief Technical Officer. Nancy is a highly experienced mining executive who will join us from Agnico, and we look forward to Nancy commencing with us on the 1st of June. I'll now hand over to Glen to provide all the details of the exploration successes for the quarter.
Thank you, Lawrie, and good morning, everyone. I'd like to turn your attention to the exploration announcement we released this morning describing recent, exciting drilling results that we expect will continue to drive resource growth at Ernest Henry and underground in the Kundana mine at Mungari.
Firstly, at Ernest Henry, where two weeks ago I had the pleasure of spending a few days with our site geologists to see firsthand some of the exciting drill core intercepts that were proudly on display from the recent drilling program. I always know when an exploration drilling program is going well. Our geologists are unable to wipe the smiles from their faces and can't wait to get me to the core shed to show me where all the action is happening.
It is also one of the easier conversations during the budget cycle, with the success of the program speaking for itself when it comes to asking the business to support continuation of drilling programs that add resources at the rate Ernest Henry has over the last 2 years.
Before I describe the significance of the Ernest Henry results announced in this morning's exploration update, I would like to firstly recap on the journey we've been on since assuming full ownership of the asset at the beginning of 2022. As you heard from Lawrie, we have reached the milestone repaying all the investment and acquisition costs for Ernest Henry and have at least a 17-year mine life ahead of us. The long mine life is driven by a large ore reserve, which we have been able to double since taking the keys 2 years ago.
The drilling results outlined in Figure 1 on Page 2 of this morning's exploration announcement reflect additional upside to the recently delivered mineral resource and ore reserve growth. The new results are important because they will be incorporated in a mid-year block model update that will inform the feasibility study and the associated ore reserve update, which we expect will be completed in the March 2025 quarter.
The drilling has highlighted that the Ernie Jr. ore body is geologically continuous width and joins into the main ore body. This is significant because it will enable us to maintain constant copper and gold grades in the production profile as the cave progresses through this area of the mine. I'd like to focus your attention on the current mineral resource outlines illustrated by the yellow shapes on the long section illustrated in Figure 1.
The more drilling we complete into the areas of open white space, the more the yellow mineralization shapes expand to close out previously modelled waste areas. What's exciting is the potential to convert this growing mineral resource into ore reserves, which we will be able to do with further infill drilling.
The addition of reserves adjacent to the feasibility study footprint is beneficial as this future potential mining inventory can be conceivably accessed from planned development being designed in the mine extension study. Turning to Mungari, where last year at Diggers and Dealers, you will recall we revealed the discovery of the Pegasus lode in the Kundana underground. New drilling has continued to grow the mineral resource, and as I said at the time, I would update our investors as new results come to hand.
What we are seeing in the results on the long section in Figure 2 of the exploration announcement are some exceptionally high grades hosted by narrow intercepts through the Genesis lode. Great thickness intervals across these intercepts range from 10 to in excess of 100 gram-meters. In my experience, anything exceeding 30-40 gram-meters has the hallmarks of an exceptional drill result.
This range of results is similar to that in historic drilling, which delineated the Christmas lode, where we are currently mining in an adjacent location 30-50 meters into the footwall of Genesis. We are confident that the mineralized geologic corridor our drilling is unearthing at Genesis will continue along strike towards the historically mined Barker's ore body. This new search space spans a large area of prospective geology, which was poorly tested by previous drilling.
We will continue to explore this area aggressively, which, if we succeed, is one of the more exciting opportunities to continue to extend the high-grade life in the Kundana underground. In conclusion, there are two key messages I would like to leave with you from this morning's exploration update.
Firstly, the Ernest Henry results are significant in that they are adding more metal per vertical meter in areas adjacent to the mine extension footprint, which we are confident have the potential to convert to additional reserves over and above the large increases we have delivered since taking full ownership of the asset. Secondly, I'm excited by the potential at Mungari, where we continue to learn more about the geology that hosts the high-grade veins that we are mining at Kundana.
Application of this new knowledge is driving success with the drill bit, where we continue to identify mineralization in areas that have been poorly tested by historic drilling. This leaves open the possibility for new high-grade discoveries in what is generally assumed but not by us to be a very mature exploration search space. With that, I'll hand over to Barrie.
Thank you, Glen, and good morning, everyone. During this quarter, we continue to generate cash and de-leverage. Gearing reduced from 30% at the end of December to 28%, and we ended the March quarter with AUD 215 million in cash and available liquidity of AUD 713.4 million, up AUD 24 million from December.
Operating cash flow increased by 14% to AUD 384 million, with all operations cash positive before major capital. We are very pleased that Northparkes generated strong operating and net mine cash flow during its first full quarter of ownership with a contribution of AUD 37 million. Net mine cash flow for the group was AUD 139 million.
Our focus continues to be on margin, and I was especially pleased that the quality of our portfolio was clearly demonstrated by our all-in cost margin per ounce increasing 40% from AUD 676 per ounce to AUD 947 compared to only a 3% increase in the achieved gold price. Since the September quarter, it is up 82%.
The AISC per ounce was down 10% quarter-on-quarter at AUD 1,460, driven by decreases at Ernest Henry, Red Lake, Mt Rawdon, and the first full quarter from Northparkes. The quarter ended over the Easter weekend, resulting in 7,000 produced ounces not being sold. This would have lowered the AISC by 4%. I'm pleased to confirm that there's no change to our original cost guidance, with our AISC expected to be at the top end of the range of AUD 1,410 as the benefits of the final quarter material uplift in gold production is realized.
Group cash flow for the quarter was AUD 85 million and AUD 164 million for the last two quarters during which we expected to start de-leveraging. We paid AUD 60 million of stamp duty and other transaction costs for Northparkes, paid the AUD 32 million working capital adjustment to CMOC, and received AUD 32 million from the share purchase plan. All material transaction costs related to Northparkes have now been settled.
We are significantly leveraged to the current high spot gold and copper prices and have only approximately 5% of gold sales hedged over the next two and a half years. This is aligned with the capital expenditure for the Mungari 4.2 project. You will note that the average realized gold price in the March quarter was AUD 3,171 and the copper price AUD 12,885.
With gold and copper currently trading significantly higher and with our production increasing materially, cash generation and de-leveraging will build further momentum for the remainder of this financial year. I will now hand you back to Darcy to open the line for questions. Thank you.
Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Rahul Anand from Morgan Stanley. Please go ahead.
Good morning, Lawrie and team. Thanks for the call. I've got two questions for you. First one's on Red Lake. Obviously, you've been talking about the second half of this fiscal being the baseline for next year's production, and today's result was pretty much in line with consensus. But what I wanted to check on was a couple of things on Red Lake.
Firstly, fourth quarter expected rates of 30,000-45,000 ounces would indicate a higher run rate than what your second half average is, which equates to 140-150 for next year. So any particular reason why we shouldn't be using the fourth quarter as your exit rate? And then also, if you can update us on the plans around the asset as well, mainly around, obviously, the Upper Campbell area, is it still targeted to be 50% by FY2025?
Then are you still hoping for 200,000 ounces that you outlined in October last year to be the medium-term run rate for the asset? That's my question on Red Lake. I'll come back with a second on Northparkes. Thanks.
Thanks, Rahul. Look, I'll try and address all those three subpoints of that question. You can't just take one quarter as the rate that's going to continue for the next four quarters into FY25 because at Red Lake, we've got the three main mining areas: Balmer, Cochenour, Campbell. We'll be mining areas that will finish this year that we won't be mining next year.
So when we look at it, as we've said in the report today, we look at the second half of this year where we're getting some more reliability around development and mining. That will give us an average 70-75 that sets a baseline going into FY25. And then as the team's working through now the mine plan for the next few years and specifically FY25, where the focus has not changed from what we said in January, it is not to chase the ounces.
It is to make sure that the ounces we're producing are starting to make money. We've invested a lot in the asset over the last few years, and it's time for it to start to generate cash back to the business. So what John and the team are now working through is what delivers that. So what we see is that 140-150 as the baseline heading into FY25. They've got to build on that through 2026 and 2027. So we're not chasing 200,000 ounces as a target. We're chasing cash out of that asset.
Okay. Understood. And then just a bit of color on Upper Campbell. Obviously, that's a higher grade part of the ore body. Are development rates enough there to still get you to 50% of the mix by FY25, or is that also under consideration?
Look, it absolutely is under consideration because we've got to look at what the development costs are to get to there. And if you remember that we're running two processing plants and how they get fed, so you do need to be running Balmer, Cochenour, and Lower Campbell and Upper Campbell. So what John and the team are looking at is what's the optimal way to feed tons to both of those plants and keep them running, and what's then the mix going into next year. We certainly see, as we go into May and June, a higher contribution from UC. And then what we bring into FY25 is currently what's under review with John and the team.
Okay. All right. Look, second one's hopefully a bit of a quicker answer, I guess. Northparkes, you've had the keys now. Any initial key takeaways in terms of how the asset's been capitalised in the past? What are you seeing in terms of capital requirements, and where should we think sustaining capital ends up for the asset in the medium term?
I'll give you part of an answer, and I'd ask you to maybe wait until the investor day in June because we are working through all of those options that I just talked about on the call. I think if you look at it in the first three and a half months of ownership, well, as of today, it's four months. We've seen an asset that has been well built, well capitalized, with a highly engaged workforce that is safely going about delivery of the plan.
It delivered the plan in the March quarter. It's doing what it needs to do in April. So in terms of that, we see that it's going to deliver to the guidance or better for this year. As we go into FY25 and beyond, as I said on the call, we see E48 as the next ore source that will supplement E26.
It's a mine that they finish mining in December, but with the installed infrastructure and the minimal amount of development that's required, the team on site believes that this is the logical one to bring into production next, which has obviously a lower capital intensity. We'll work through that plan and outline it in June. In terms of sustaining capital, though, it's not going to be much different to the assets like Cowal and Ernest Henry in terms of sustaining capital that it requires.
Okay. Understood. All right. I'll pass it on here. Thanks.
Thanks, Raul.
Thank you. Your next question comes from Matthew Frydman from MST Financial. Please go ahead.
Sure. Thanks. Good morning, Lawrie and team. Can I ask some questions around the ramp-up of the CAL underground and perhaps along a similar line to some of those questions that Rahul just asked about Red Lake? Obviously, the CAL underground's going to be a key part of delivering on your guidance, I guess, not just for the remaining June quarter but also your production growth into FY25.
So I'm just interested in understanding, I guess, the buffers that you guys have been able to build up through the system now that you've declared commercial production at the CAL underground, how you're positioned in terms of development meters, blasted stocks, and also, I guess, mined ore. It does appear that you're taking all of that mined high-grade material straight to the mill, which makes sense. But is that the case?
Do you have sort of blasted and mined stocks available from the underground? And then I've got a couple of follow-ups as well. Thanks.
Thanks, Matt. I mean, if you look at the underground, the mining and the development wasn't the delay in getting to the commercial production. It was the delays in the paste plant starting. So what we've seen is that in terms of being able to mine the underground, it has not been a problem. We've achieved those mining rates. We've been able to get the development meters.
As we come into the June quarter, we'll see that 1.5 million tonne annualized rate lift up to the 1.7. We'd like to end the year and exit at around a 1.8 million tonne mining rate. As we go into FY 2025, you look at that lifting to 2 million and above and then ultimately moving into FY 2026 of achieving a 2.5 million tonne mining rate and staying around those levels.
So as I said, the mining hasn't been the problem in terms of the ramp-up, so we'll see that into this June quarter. And I think, as we always say, not taking the June quarter or the one quarter as the reference for FY25. We do have to consider, as we go over the next 18 months, two years, that you get stage H in the E42 pit starts to wind down. So you're seeing the underground ramp up, those grades offsetting that, and then you'll see E42 coming to the end where you start to then see those grades decline.
Yeah. Got it. Thanks, Lawrie. And you've preempted my follow-up question, which is, I guess, around how you're expecting the ramp-up of volumes from the underground and still clearly guiding to sort of 2.4-2.5 million tonnes per annum by FY26. Can I just ask, in terms of mining costs now that you've declared commercial production, how should we think about that, maybe on an AUD-per-tonne basis? And should we expect that that cost will decline incrementally as those volumes do creep up to 1.8 million tonnes per annum and beyond?
Yeah. Look, we'll come back to you specifically on that, but what we would see is exactly that matter. As we go through the next 18 months and we ramp up to full production, you absorb those fixed costs underground. I think it's fair to say, though, that from when the mining started to today, that has happened through a period of high levels of inflation. So those mining costs have trended up over the last 12-16 months. We've seen those stabilize, obviously, in the last few months. And then, yeah, that will be partly offsetting some of that benefit we'll get from the fixed. But we'll certainly be able to provide just some information on the unit mining rates.
Okay. Got it. Thanks, Lawrie.
With me right now.
Yeah. I can't recall off the top of my head what the assumed unit cost was in the PFS either, but it sounds like, subjectively, you're saying that with inflation, etc., that that's probably crept up over time.
It has crept, and in some quarters, it left.
Understandable. Okay. That's all from me. Thanks, Lawrie.
Thank you. Your next question comes from Hugo Nicolaci from Goldman Sachs. Please go ahead.
Morning, team. Thanks for the update. I just wanted to follow on from Matt's question around CAL and specifically looking at the fourth quarter and then rest of this calendar year. I mean, if I back out the affirmation of guidance, it looks like you're still embedding a pretty good uplift in feed grade to hit that. So are you able to just provide some color around how much of that uplift in feed grade's coming from drawing down underground stockpile that you've already mined versus, I guess, where you see the grade going to at the underground for this quarter and the rest of the year?
Yeah. Hugo, I mean, we don't have a large stockpile there. I mean, obviously, the mining of those stopes has been predicated on having the paste plant running and being able to fill those stopes. So it's not really about the building of the stockpile. We will build some of a stockpile.
As we go into this quarter and into the rest of the calendar year, what we mine from the underground is what we will see getting processed. So essentially, what we see is, in the June quarter, we see that lift up in mining rate in the underground that I was talking about, no shutdown. So we actually will see at least 150,000 tonnes more going through the processing plant with a lot of that coming from the underground. The E42 is also into a good mining area where we see a tick-up in the grade.
So you saw it go from 1.21 to 1.34, I think, in this quarter, and you're going to see it go over about 1. And then, depending, as I said, into the rest of this calendar year and starting into FY25, we ramp up towards that 2 million tonnes, obviously, at the higher grade of 2.5 grams coming from the underground, displacing the lower-grade E42 material.
Great. That's helpful. And then maybe just one on Northparkes. We'd appreciate the study is progressing and no doubt a focus for the site visit in June. But if you maybe just build on your initial comments earlier around the preference for the sublevel cave still being what you're targeting and any kind of updates working through the study that's reaffirmed that preference?
Yeah. Look, Hugo, that was actually on the E48. So the E22 feasibility study will be finished on a block cave. That's what it started out as the chosen path of a feasibility study. What the study team is doing at the exact same time or in parallel is looking at what the sublevel cave option would be.
They also believe there is a viable path for that, but we did not want to distract them from finishing the feasibility study to get that baseline whereby then we look at the options between the block and the sublevel cave, which we'll talk about on the visit in June because they've not finished that study yet. And the E48, which finished mining as a block cave in December, has a number of levels below that that we believe can be the next ore source as a sublevel cave.
That's something that the site team is recommending. That's a way to move forward with the asset.
Great. Thanks, Matt. I'll pass it on.
Yeah. Thanks.
Thank you. Your next question comes from Andrew Bowler from Macquarie. Please go ahead.
Hello, Ellie. I think a lot of the fourth quarter operational questions have been answered. I might just add on to Matt's previous question, just talking about the underground volumes in the fourth quarter at CAL. You sort of comment in the quarterly that the paste plant does continue to ramp up, and I think you alluded to it in your previous answer there as well. But is there any risk that a slower paste plant ramp-up in the fourth quarter or sort of not hitting those targets in the fourth quarter could impact underground volumes, or are most of the stopes still primary and there's not really that much of a backlog to fill?
Short answer there, Andrew, is no. The paste plant is not the bottleneck. It's enabled us to get to those mining rates by being able to keep up with the mine during the quarter. It performed well, particularly through March and has further improved in early April to be able to match those mining rates. We don't see that as a bottleneck to the underground for the fourth quarter.
All right. That's all from me. Thanks, guys.
Thanks, Andrew.
Thank you. Your next question comes from Jon Bishop from Jarden. Please go ahead.
Morning, Lawrie and team. Can you just get me through where you're sort of seeing as the upside levers for your full-year guidance? Obviously, Red Lake's a big one, so 40,000-45,000 ounces. But if I look through the rest of the assets, you've alluded to 100 from CAL.
The Ernest Henry should be relatively flat at 20. Mungari, it's sort of 30-35 and Rawdon around 20. I'm still sort of only pulling 215 arithmetically for the June quarter under that basis versus sort of the 245 to get to the low end. So I guess it's probably all to do with the CAL underground, but can you give me a bit more color as to where you sort of see the major swing factors to live on that low end of guidance?
Yeah. Sure, John. So if I start with CAL, it will get at least 100,000 ounces. It's tracking above that. It's got to get 102 to get to its guidance, and that's where they're staying at the moment. And that is predicated, as which we've talked a few times on this call, is getting that more material coming from the underground. And as I said, if you look at the March performance when we finished the shutdown, the rate that it exited March, it was around 93,000 ounces.
If you then take that we had wet weather in March, which hampered the open pit, you're essentially looking at a 10,000-ounce lift in that run rate into the June quarter, which then is provided through the E42 material and that ramp-up in the underground. So that's that first thing.
Mungari moves from 32,000 ounces to over 40,000 ounces coming from the EKJV, an extra campaign, Paradigm, which we couldn't bring that high-grade material down from Paradigm because of the wet weather in March. So we'll see that lift at Mungari to over 40,000 ounces. Red Lake, which we've talked about, getting more material coming from CYD, consistency at Cochenour, and we're actually getting more tonnes at higher grade at Balmer that puts it into that 40-45 range.
Ernest Henry, yes, will be consistent, around the 20,000. Northparkes, you'll see a tick-up, not material given the size of the asset, but it will have more material coming from the two open pits, the E42. But we obviously do have that major shutdown in the quarter as well, but you will see a few thousand ounces coming in there. And Mt Rawdon will be over that 20,000-ounce mark.
As we look at it, Mount Rawdon right now is into an area of the pit where it's actually only mining ore. There's very little waste, so we see that. That's what gives us that ability to get to the bottom of guidance, John.
Right. That's really helpful. Thank you. And just on the CAL OPC project, you're still under public consultation. Is anything else outstanding in terms of permitting? Have you sort of seen any real shift in government department engagement from that perspective, or is it really just down to the public consultation process, and what's the timeline they're in?
So John, we're not in public consultation. That's closed. We've responded to the regulator whereby now they will come back with their responses to our responses and what those consent conditions would look like, in which when then we go through and respond to that. So if we look at it, we're basically now sitting in the hands of the.
You still there?
Yeah. Can you hear me, John?
Sorry, you just dropped out. Beg your pardon . I missed the back end. You were waiting on the responses to the responses.
Yeah. So as I said, the public closed. We've then responded to those submissions. It now sits with the regulator. They will then come back to us with any additional information they need or what consent conditions they would want to apply for us then to respond. So we're now through that process that in the coming months, we wait for the regulator to respond, and then we're ready to go from there.
Great. All right. Thanks very much.
Thank you. Your next question comes from Levi Spry from UBS. Please.
G'day, Lawrie and team. You can hear me okay?
Yeah. It did drop out a bit there, Levi, but we've got you now.
Roger. Thank you. And thanks for your time. Looking forward to the site visits, I guess, just casting our mind forward a little bit to what the FY25 might look like. Can you sort of just recap on the three-year CapEx guidance you gave a little while back and the levers that may have changed into that, and just sort of confirming that the capital at Northparkes is a couple of years out, which I think has been a bit of a concern of some guys in the market?
Yeah. We just finished the March quarter, Levi, and you want to talk about next year, but that's okay. I think the things there, we're going through each of the projects. There's been no material change in terms of that capital profile over the next three years other than, obviously, introducing Northparkes, which will lift that sustaining capital.
They obviously have a minor amount of major capital that they have to do, and then there's going to be the sequencing through E48 and E22 and then E22 either as a block or a sublevel cave. So we're working through that to be able to give an outline in June at Northparkes as to what that profile will start to look like.
I think then as we look at each of the other operations, CAL, the OPC, will depend on when we get that regulatory approval and board approval for it. The overall capital for that project has not changed from what we talked about at the investor day.
Similarly, the Ernest Henry study is ongoing and due for completion in the March quarter next year, but a lot of that capital is into 2027 and beyond. And as Glen has outlined, the successes we're having gives us the optionality as to when we time that versus trucking and installed infrastructure. So look, in short, it's a little bit early as we go through each of these studies that are progressing in terms of what the capital is.
But in terms of that profile over the next few years, it has Northparkes, and we don't see that Northparkes is going to see a major shift in that major capital that's required in the next few years because we see it after E48.
Yeah. Got it. Thanks, Lawrie. I understand it was a bit cheeky, but thank you. Thanks for that.
Thank you. Your next question comes from Daniel Morgan from Barrenjoey. Please go ahead.
Thanks, Laurie and team. First question is just the CAL continuation studies. If you do get permitting approval, is it your expectation to push that to FID, or might you look to perhaps not advance it and come back a while later and just get a lot more cash from processing stockpiles or cash flow? Is it competing against the other projects in your portfolio? Thank you.
Yeah, Dan. Look, I mean, I think it's fair to say the OPC or the open pit continuation study is well advanced as a feasibility study, so there wouldn't be a lot on that. It's a really good question, and it aligns to what we've said for a while that we do have some timing optionality around CAL with the large stockpiles that we do have. We do have to take into consideration, though, that losing a mining crew and then bringing them back into CAL in West Wyalong is something to take into consideration. I think it's fair to say until we get further advanced on the permitting approvals, we won't be making that call on it.
We've done studies with the team as we're going through our life-of-mine plans now as to what does it look like as a base case if it starts at the start of calendar year 2025? What does it look like if it's delayed beyond that and we process stockpiles in terms of production versus cash? So we do have a lot of those scenarios, but we're going to wait for the regulatory piece first.
Is the other overlay on that decision weather-related? I imagine Lake Cowal is pretty full, and it's my understanding, is it not, that it would be better to execute on this project when it's empty? Thank you.
Yeah. Look, it is, Dan. I think one of the things that we've seen as we've been progressing the study is that the way the open pits would sequence is there is an option for us to start that bund wall move in the northern end of the operation because certainly, the water is lower there. And then as we move that and start the pit and waste dumps, by the time we then need it at the southern end, we would be hoping that the water may have receded. But having read the report today in the Australian where El Niño's finished and La Niña's on its way back, we might be getting a lot more rain in the second half of this year. So it will have an impact on what we do there at Lake Cowal.
I think the team isn't working on the basis that we'll be doing a dry Lake Cowal move.
Yeah. It's been a hell of an El Niño. Such a drought that we've had.
It lasted all of five minutes, I think.
Separately, just pivoting to Red Lake and the follow-up on the 140-150, which is sort of flagged as the base until further notice. I mean, is that intrinsic in that? Is that shutting down potentially feed from Cochenour and maybe one of the plants, or is it all of the mining areas contributing to that 140-150? Thank you.
No. Excellent point there, Dan. And really, what John and the team are looking at is what development and mining's needed to keep both those plants full for the whole year or for not just next year. And then if it wasn't, what are the mining areas, and do you go back to Red Lake as a campaign milling? Because what we've said is the first priority is to make cash out of the asset.
As it stands at the moment and the life-of-mine plans that John and the team are working through isn't finished, they believe they can come up with a plan that does allow us to keep both plants operating for the whole year or full-time. And because if you look at it, Cowal is that base feed into the asset.
Balmer's that next piece, and then you've got to work out how much of the Campbell mine and development you do to keep the plants full, or do you wind back some of the Balmer? So they're looking at all of those scenarios right now with a focus on what ounce profile can they deliver that generates a better cash outcome than what we've achieved in the last couple of years.
Thank you. I appreciate this is not the most material of your assets now, but it's entering its last year. Typically, when mining operations are entering that period, it's not the best operational performance necessarily because you've taken the high-grade ore. Just wondering what you can say about the performance you'd expect in the last year of its life?
Yeah. Look, I think a credit to the Rawdon team, Dan. It's 25 years operating. We will go to day shift only at the end of this month. The mining team has remained committed, and we will see that change at the end of this month. We'll then, through to the September quarter, finish mining out the pit. Now, the wet weather we've had this year has actually meant we've been drawing down on a lot of that low-grade stockpile material.
So as we look into the June quarter and then the September quarter is when we'll finish mining out that pit, the grades for Mount Rawdon in terms of their asset are very good, and there's not a lot of stripping that's needed. Then from September through to the end of FY25, we'll be processing only the stockpiles.
We won't be mining into the second or the last three quarters of FY25, and that's when the operations finish, generally, at the end of FY25.
I would imagine probably a better cash flow contributor but then an earnings contributor because I imagine you've got some costs that go through that are non-cash in nature.
Yeah. And that'll be the anomaly when you look at Rawdon into FY25. It'll have an elevated AISC because as you build up the stockpiles, they go on a net realizable value basis, and therefore, you're holding them at a higher cost. When we bring those off, you don't use the cash other than the rehandle and processing. So yes, we'll see a higher AISC but a lot stronger cash flow out of that asset as it finishes the operation.
Sorry, last question. Just Northparkes, I mean, the choice to go sublevel rather than block, and I appreciate we'll explore this more thoroughly on the site visit. I imagine in part that's the competition for capital within the broader group. But given the strong uplift in both of your key commodity prices, your cash outlook looks a lot stronger than it did before. Does that change anything about the competition for capital in the portfolio?
From my perspective, Dan, the competition gets harder because we need the money for other things like dividends and debt. So what we see is in the first four months working with Rob and the team on site, there is a very clear understanding that both a sublevel cave and a block cave works, and it's not just purely on the capital.
So what we need the team to do, finish that feasibility study, that gives us the baseline on which to compare the sublevel cave option, and they'll finish that work in the second half of this calendar year to then make that decision. And when we look at it, it'll be on an NPV, IRR, payback period, capital intensity. All of those metrics will be looked at. We want to make sure we get the right outcome for E22 rather than saying, "Well, prices are up.
Let's just go with the block cave option, which obviously is capital upfront. Generally, it will give you a greater NPV. But if the sublevel cave can give a very similar NPV and change that capital intensity, it's something we definitely have to look at. And through this pathway of bringing E48 forward, that gives us some time to do that comparison between the two.
Okay. Lawrie and team, thank you for your perspectives.
Thank you. Your next question comes from Al Harvey from J.P. Morgan. Please go ahead.
Yeah. Good day, Lawrie. Just a very quick one. Can you just give us an update on the pumped hydro study, just key timing for milestones on that and how you're thinking about what that could impact for your gearing levels going forward if you're thinking that that could deliver a value uplift?
Yeah. Look, I mean, the pumped hydro in the last quarter has progressed similar to what we said in January and in February with the half-year results where the engagement continues to actually increase with the government and the government entities that they've put in place for renewable energy projects. So there's a lot more frequency in discussions around it.
I think it's still on the same timelines of finishing the technical feasibility study through this year and getting a commercial outcome by the middle of next calendar year. And at the moment, Jake won't give me a commitment on how much money we're going to get for it. But it is fair to say, as we've always said, the monetization of that will go towards either the deleveraging of the balance sheet or dividends into the mix.
Sure. Thanks, Lawrie.
Thank you. Your next question comes from Mitch Ryan from Jefferies. Please go ahead.
Morning, Lawrie and team. Just a quick one. I was wondering if you could talk to the tonnes and grade that are in your forecast for the CAL underground in your 4Q numbers and how that compares to the month of March volumes that came out of the underground.
Yeah. So Mitch, we exited in March at a 1.5 million tonne annualized rate. We saw the grade is at or above the average, which is the 2.5 grams per tonne we will see into this quarter. As I said, we move up towards that 1.7. We'd like to exit at 1.8 million tonnes. And there is certainly some higher-grade material that will come through in that quarter based on the scopes that are planned to be mined. I don't have off the top of my head what the uplift in the grade is for it, but we can follow that up for you.
No. That's fine. It was more just the direction of change. I don't understand anything. Just sort of on the back of Levi's question with regards to thinking about FY25, you'll be pushing the assets hard in the June quarter. How do we think about sort of the quarter-by-quarter moves inside FY25? I'd assume that September, obviously, the assets take a breather. Can you give us any color about how we should be thinking about that profile?
Look, it was a little bit early, but the context is that if you look at it, CAL continues to mine E42, and the underground ramps up. So I wouldn't say they're getting a breather in September. Ernest Henry is consistent quarter in, quarter out, the two major shutdowns in the year. Then when you look at Northparkes, it's ramping up the E31, E31 North, so you get those pits will operate through FY25.
Nothing materially changes for Mungari until you get into FY26 and the process plant coming on stream. Mt Rawdon, as I explained to Dan, finishes mining in September and then processes stockpiles for the rest of the financial year. Red Lake, as we've also talked about, exits at the 140-150 range, and John and the team then work out what that looks like going into next year. And I've missed an asset.
I think we've put out. I don't think I did.
I don't think you did.
Okay. Perfect. Appreciate the call.
Thank you. Your next question comes from Matthew Frydman from MST Financial. Please go ahead.
Sure. Thanks. Just a quick follow-up. So thanks for taking them, Lawrie. But great to see the appointment of a CTO over the quarter. But can you give us an update on where the COO search is at currently, please?
Yeah, Matt. Look, it's well advanced. We're down the short list, and we expect to have something in due course within this quarter.
Okay. I guess without being prejudicial, but any thoughts on sort of whether you'd like to push for an internal or an external candidate or wait and see?
I think it's the latter. Matt, we'll wait and see.
Okay. Understood. Thanks, Lawrie.
Thanks.
Thank you. Your next question comes from Jared Lucas from ABC News. Please go ahead.
Yeah. Good morning, guys. Just on Mungari, wondering if you'd give us a bit more color on how that expansion ramp-up is going now that the contractor's mobilized on site, sort of key milestones when the workforce might peak, that sort of thing?
Yeah. Jared, look, I mean, it's certainly been pleasing for us since we approved the project. So GR Engineering Services are now on the ground, the civil works. We had our largest pour of concrete slabs there last week, and so the civils are progressing well. So where we are right now is through the course of the next 12 months, we'll see that ramp-up in the workforce that's required.
We're actually in tender, as we speak, to a point for the mining village that needs to be installed for Castle Hill. So that tender's in the final stages that allow us to then commence the installation of that village later this year. And then in terms of the actual mining contract for the mining of those areas is also where we're into the market.
As we stand today, the actual project for the plant and the expansion is tracking very well. The surface and civils are on track, and all the long lead items have been ordered and should come in so that we meet that timeline for the project in FY26.
Thanks for that. Just at Kundana, obviously, Glen talked about those pretty positive drilling results there. What's the current mine life based on the current reserves and resources there and sort of what's your sort of view on it? How bullish are you?
Thanks, Jared. It's Glen here. I'll take that question. So the underground mine life at Kundana is currently sort of tracking in that sort of 5-7-year range. What we're doing here is looking at options based on sort of developing a geological understanding that's driving us into new areas that haven't previously been considered. So a lot of the work previously was done sort of around the known and existing locations. And what we've been able to do is understand or develop an understanding of new areas to explore, which is what we're seeing in Genesis, so a brand new vein in a brand new location not previously known before.
And so exploring these things along strike in the areas that have not been previously drilled, we think there's a real opportunity to sort of continue to extend that underground mine life, which, as Lawrie mentioned earlier, enables us to sort of keep that high-grade production sort of up for many more years to come as we transition or to commission the 4.2 plant that will come online in the future.
Thanks, Glen. If I can just ask one quick one just on the 4-day power outage you had at Mungari during the quarter. And obviously, you had the wet weather challenge there as well, so you still had a good result. But being at the edge of the state power grid, obviously, it's notoriously unreliable. Now that the plant expansion's going ahead there, are there some alternatives in terms of a renewable energy solution that the team are looking at there on the ground at Mungari? Obviously, a lot of other miners in the Goldfields region here have gone down that road.
Yeah. Jared, I think as part of the expansion project, the team's looking at all the different alternatives in place to make sure we've got sufficient power for when we commission the plant. And as a part of it, over time, we want to transition into that renewable piece as well. So I think when you'd understand from where you're based that you are relying on Western Power, and therefore, you're relying on a government to provide the infrastructure and connections into the grid.
Thanks very much for your time, guys. Appreciate it.
Thanks, Jared.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Conway for closing remarks.
Thank you, Darcy. Thank you, everyone, for joining us today. We really do appreciate you making the time. March was a quarter where we purely delivered to our plan. We generate some cash. I think it's fair to note if you look at the gold price that averaged in the quarter was around $3,150 an ounce. The spot price is above that. We've got a large quarter in June quarter. We've got a plan where each of the operations have got very clear pathways to what they have to deliver for this quarter. So with that uplift in production and the high gold and copper prices, we expect that material increase in cash flow to occur this year, which allows us up moving into FY25.
We certainly look forward to hosting those of you that can make it to the Northparkes in CAL investor visit in June where we can showcase those two high-quality and valuable assets. Thank you again for your time.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.