I would now like to hand the conference over to Mr. Stuart Tonkin, Managing Director and CEO. Please go ahead.
Thank you very much. Happy New Year, everyone, and good morning, and thank you for joining us today. The December quarter was a very busy quarter for Northern Star. We continued to advance projects to further strengthen the asset base to position us well for significant growth in free cash flow generation. Operationally, we had some key standouts, particularly with increased milling performance across a number of our sites, resulting in 410,000 ounces sold at an all-in sustaining cost of AUD 2,128 an ounce. Our team continues to focus on operational performance, cost control, and capital discipline to create additional value for our shareholders. With the first half delivered, we remain on track with stronger second half weighting to deliver our full-year production and cost guidance. The business is in good shape to deliver for our shareholders tremendous leverage to increased gold prices.
Financially, Northern Star is in an exceptional position with an investment-grade balance sheet that is net cash at the end of the quarter, with ability to fund all our capital management initiatives. As I mentioned, it's been a busy quarter for our team, and I thank them all for their efforts. At KCGM, we completed the East Wall remediation and advanced the mill expansion project. With three portals, we commenced to provide access to higher margin underground ounces both at KCGM and Carosue Dam, and at Jundee, the renewables energy project was fully commissioned, providing a long-term strategic power solution and reducing our carbon intensity. During the quarter, Northern Star agreed to acquire De Grey by way of a recommended scheme of arrangement.
Subject to De Grey shareholder and court approvals being obtained in the scheme's implementation, De Grey's flagship development project, Hemi, in Western Australia is expected to provide Northern Star with an additional tier one future low-cost production center, fully aligned with our strategy to deliver superior shareholder returns. And now to Pogo, a fantastic achievement by our Alaskan team to deliver 71,000 ounces for the quarter as the mill operated at a run rate annualized at 1.5 million tonnes per annum. The underground mine also operated at a 1.3 million tonnes per annum rate, notwithstanding some primary ventilation upgrades and rehabilitation works into new mining areas. As we look ahead to the second half, the Pogo plant is forecast to operate at a targeted throughput of 1.4 million tonnes per annum, with the next scheduled reline shutdown planned in this March quarter.
I'd now like to hand over to Simon Jessop, our Chief Operating Officer, to discuss our operational highlights. Thank you.
Thank you, Stu. For the Kalgoorlie production center, which includes KCGM, Carosue Dam, and Kalgoorlie operations, we sold 208,000 ounces of gold at an Australian all-in sustaining cost of AUD 2,019 an ounce. This production delivered a mine-operating cash flow of AUD 358 million. The region also spent AUD 308 million on significant growth capital projects. This included AUD 139 million on the KCGM mill expansion, AUD 64 million on the KCGM open pit development, and AUD 38 million on the KCGM underground mine development. At KCGM, open pit material movement was 16.5 million tonnes as we prioritized the completion of the East Wall remediation project. After 34 million tonnes of total material movement, the East Wall remediation project was completed in November to unlock Golden Pike North for the future. This is a credit to the open pit team after four and a half years of successful mining.
Going forward, mining is focused on de-stacking the eastern side of Golden Pike North that hasn't had manned equipment in since the 2018 slip. We look forward to increased ore and total material movements from KCGM in the second half of FY 2025 and beyond. Underground mining volumes for the Kalgoorlie region were 1.52 million tonnes with a grade of 2.6 g and delivered 129,000 ounces. KCGM's underground operations increased development to 7.2 km for the quarter, which is a 71% increase from six months ago. The development meters will continue to ramp up as we begin to open up more of the Fimiston underground and Mount Charlotte ore bodies. Two new portals were successfully cut at KCGM as part of the Fimiston underground expansion. The Carosue Dam mines all performed well with 65,000 ounces mined in the quarter.
Over one million tonnes was milled in the quarter at a higher head grade for 66,000 ounces of gold sold. A new underground mine, Millennium, was commenced during the quarter and is being operated by our internal Northern Star Mining Services. The Kalgoorlie operations, underground mines, and mill delivered to plan over the quarter. Processing volumes in the Kalgoorlie production center increased 9% quarter on quarter, while KCGM's head grade was flat due to less high-grade ore available from Golden Pike North and focusing on finishing the East Wall remediation and wet weather impacts late in Q2. The KCGM mill expansion spent $139 million over the quarter, with total engineering progress at 71%, and the major equipment package 91% complete and all parts either at site or in Australia. The concrete pour is 50% complete at 15,000 cubes poured to date.
We remain very pleased with the on-ground construction activities all being built in parallel to the existing operations. The project remains on time and tracking to plan. At our Yandal production center, including Jundee and Thunderbox, we sold 131,000 ounces of gold at an Australian all-in sustaining cost of AUD 2,254 an ounce. This production delivered a mine-operating cash flow of AUD 202 million, while we spent AUD 81 million on growth capital projects primarily at the Orelia open pit, Wonder underground, and Griffin underground. At our Jundee operation, development advance was 7.4 km, with over 2.8 km in development drill platforms completed in H1. The drilling will follow as platforms become available to test a range of geological targets. Griffin development continued to ramp up over the quarter as a future new ore source begins to be developed while processing was on plan.
Jundee's renewable project of a 16 MW solar farm and 12 MW battery system with 24 MW of wind has now been declared commercial as Northern Star's largest renewable project to date. The Thunderbox underground mines, including Thunderbox and Wonder, achieved 656,000 tonne of ore for 35,000 ounces. The Wonder underground mine continued to ramp up ahead of plan with 1,634 m developed, with one jumbo averaging 545 m per month. It's a credit to the Northern Star Mining Services who are building this mine with the Thunderbox technical team ahead of plan. For the quarter, the underground and open pit operations successfully mined 2.2 million tonnes of ore, which is 47% above the expanded mill's quarterly nameplate. At the Thunderbox process plant, we achieved nameplate on a quarterly average of 1.5 million tonnes milled and sold 58,000 ounces of gold.
The mill throughput averaged an impressive 791 tonnes per hour for the quarter, while a major shutdown was also completed. December mill performance was 588,000 tonnes for the month, well above the 500,000-tonne nameplate and averaged 890 tonnes per hour for the month. I would now like to pass on to Ryan, our Chief Financial Officer, to discuss the financials.
Thanks, Simon. Good morning, all. As demonstrated in today's quarterly results, Northern Star remains in a great financial position. Our balance sheet remains strong, as set out in table four, page nine, with cash and bullion of AUD 1.2 billion, and we remain in a net cash position of AUD 265 million at 31 December. The company has recorded strong cash earnings for the first half of FY 2025, which is estimated to be in the range of AUD 1.13 billion-AUD 1.17 billion. A reminder that our dividend policy is based on 20% to 30% of cash earnings. Pleasingly, all three production centers generated positive free cash flow, with capital expenditure and exploration fully funded.
Figure 8 on page 10 sets out the company's cash, bullion, and investments movement for the quarter, with key elements being the company recording $692 million of operating cash flow, an 18% lift on the prior quarter, and this includes the semi-annual coupon payment on the notes of $18 million and $21 million respective annual insurance premiums. After deducting CapEx of $496 million relating to the KCGM expansion, plant and equipment and mine development, $64 million of exploration, and $60 million of lease payments, quarterly free cash generation was $72 million. Investment in sustaining capital, growth capital, and exploration are tracking to plan. On other financial matters, depreciation and amortization are in line with company guidance provided of $775 to $875 per ounce sold. First-half depreciation is at the midpoint of the guidance range of approximately $829 per ounce sold.
For the quarter, non-cash inventory charges for the group are a credit of AUD 37 million, primarily from increasing in stockpiles at Thunderbox. AUD 5.3 million Northern Star shares were bought back and cancelled during the quarter. Please note a blackout period applies up until and including our first half results release on the 13th of February. The company also received CAD 189 million from the conversion of its debenture with Osisko, resulting in a pre-tax gain of AUD 35 million. As previously mentioned, the company is expecting to begin paying corporate tax on its Australian operations in the third quarter. The current tax payment forecast to 30th June, which will be dependent, of course, on gold price, is approximately AUD 60 to AUD 80 million.
Note also Pogo operations have paid $27 million in taxes for the first half, with estimates of $40 to $50 million payable in the second half, again gold price dependent. In respect of hedging, Table 5 on page 11 sets out the company's committed hedge position at 31 December. During the quarter, the company delivered 120,000 ounces into contracts and did not add any further commitments. I'll now hand back to the moderator for the Q&A session. Thanks very much.
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 Andrew Bowler with Macquarie. Please go ahead.
G'day all. Just noting some comments you had about the weather impact at KCGM. Obviously, last financial year to third quarter was pretty savage for all in the goldfield. Just wondering if you can make some comments on how the business is prepped for the wet season this year and sort of how it compares to last year?
Yeah, thanks, Andrew. I think you're right. I think it was the March quarter or maybe January, February that copped a lot of those fallouts from cyclones, etc. But, well, we've got good diversification of production centers. We've got good stockpiles sitting next to our plants and a lot of runway that we're very confident to deliver into the full year guidance. So it's around sequencing and timing, etc. But as you know, we pretty proactively will park up fleets on wet ramps and those sorts of things and just reschedule so it's not a case of it's turned off, it's just in a different order. So all those preps are in place. But yeah, we're not expecting, again, massive regional seasonal outbursts like last year, but mining's mining. So I think it's diversification of production centers that really protects us.
And is it fair to say that, given obviously high grades in the bottom of the pit at Golden Pike, is that a little bit more sensitive to wet weather than, say, the South Cutback?
Oh, not so much. I mean, it is around access to the ramp, safe access to the ramps, but things dry up pretty quick too after some rain. So the reason why we typically don't put either road trains on haul roads or big trucks on ramps is more to damage the ramp and the repair afterwards. You get a bit of rain, you just don't want things slipping around. You wait till it dries and you're back on it. So it's not a huge impost. It's when you've got low-lying causeways and those sorts of things around lakes, etc., bunds being built around new mines. Those are the things that I think the industry experienced in the goldfields last year. So yeah, we understand those things and even last year, in the end of the day, it didn't materially impact the full year.
There was intra-quarter movements, but ultimately we managed to reach those issues.
And last one from me, just on Thunderbox, obviously hitting its straps in terms of throughput, just trying to skim you quarterly now, but it seems like you had a very strong final month. Is there anything special in the blend there that sort of allowed for that higher rate of throughput, or it just happened to be quite a good period and we should expect a normalization back to six million tonnes per annum? Or what would it take, or what would it have to take for you to get more confidence that you can do above that six million tonnes per annum consistently?
Let Simon answer that on the stability of the throughput and sources, if you can.
Yeah, thanks, Andrew. It's just a combination of getting the crushing circuit really into the sweet spot now, as well as getting the stability and runtime through the process plant. So pretty impressive in terms of the averages we achieved throughout that month. So we can see that plant capacity's there. We're certainly starting to bed that operation down as business as usual, but at probably a higher rate than we expected. So there's not a soft blend going through there or anything like that. It's purely around getting the circuit really humming between the SAG and the mill and the pebble crusher.
No worries. That's all from me. Thanks very much.
Thanks.
The next question comes from Levi Spry with UBS. Please go ahead.
Yeah, G'day Stu, Simon. Thanks very much for your time. Happy New Year. Maybe could you just step us through the ore mining rates at KCGM and how they ramp up over the next few quarters? Just maybe remind us of the targeted rates, your exit run rates, and how we should think about the step-up Q1Q. I guess that was probably what was a bit softer this quarter versus my numbers, so both from underground and from the pit itself.
Yeah, thanks, Levi. Simon here. Really our focus last two quarters in particular was just finishing the East Wall. Now we finished that late in November. It's obviously very unproductive type mining, but we wanted to focus on that to really enable the full access to the bottom of the pit with our manned equipment. Really we're full-on into the de-stacking on the eastern side, but at the same time we've still got continuity of ore flow out of Golden Pike North, the sort of half of Golden Pike North. You'll see some material step-ups in ounces from Golden Pike North now that we've got full access to the base of the pit. Very, very exciting for the team after four and a half years of work to be almost conventional mining down the bottom of the pit.
So really it steps up massively with a strip ratio for that Golden Pike North of sort of about two and a half to one over the rest of those ounces. So every time we're moving out, every second ton is some more.
Okay, thanks, mate, and from the underground, so how does a step-up look like there? I thought we were targeting sort of this 5 million tonne run rate, correct, for next year versus the 470 in the quarter, so less than two?
I'd like to think we're at five million tonnes next year, but not quite that high, Levi. Really it's that development for the rest of this year. We're starting to access Union Jack, Golden Plateau areas in the Fimiston underground. So ore driving's continuing to ramp up, stoping starting to follow in that part of the mine, as well as Carosue Dam is focusing on the decline, parallel decline, and then we're into the main Carosue Dam ore body, which is just below the surface. So you'll see the Fimiston area focused on development. We're getting ore tonnes and ounces from there for the rest of this financial year. Not a huge jump up. Mount Charlotte will continue to ramp up as we access more of the northern ore body and a greater portion of Mount Ferrum.
So last quarter we prioritised really some development between the Hidden Secret Mount Ferrum link, and that really gives us a lot of access to that area to increase production, so yeah, you'll see it lumpy as it is as we're growing, but really the most important thing at the moment is the development opening up the areas.
Yeah, Levi, I think what we just heard you said was about 500,000 tonnes per annum growth each year. So not million steps sort of step up, and it's the leading indicator Simon spoke about, which we're very impressed with, which is that development.
Yeah, 500 gross. But what's the exit rate for this year on what number, I guess, from combined underground production?
The exit rate, well, you'll just continually see it step up quarter on quarter. So quarter four will be a big step up because we've got a lot more development in place. But you'll sort of see closer to that three, three and a half million tonne sort of run rate.
Yeah, so we said about two and a half to three. That's basically each year from that three going basically growing out 500,000 tonnes per annum.
Roger. That's all I was after. Thank you. Thanks.
Your next question comes from Kate McCutcheon with Citi. Please go ahead.
Oh, hi, Stu and Ryan, and happy New Year. I guess free cash flow was a bit weaker than I'd thought, and it looks like CapEx was one H heavy. You've kept guidance. Maybe just talk through the area that steps off into H, I guess, or how to think about that.
So that's CapEx. I'll let Ryan just go through.
Capital. Yeah, Capital's been the first one. He was a bit weighted to the first time.
Yeah. G'day, Kate. How are you going, Ryan? Yeah, you're right. So if you look across the assets, aside from Kalgoorlie they're sort of tracking in their run rate. As sort of Simon was mentioning, the focus for the first half has been at KCGM, the East Wall, remediation. And we've mined obviously a lot of that material, put a lot of activity there, and then equally put a lot of activity in Great Boulder. So those two areas are growth. I guess we allocate costs to growth because they're not production mines, essentially. East Wall, we're effectively moving waste, and then Great Boulder's got the big cutback. So I guess the costs, which are fairly fixed from an open pit perspective, if you think of people and equipment month on month out, they really just get allocated to where the work's being done.
So that first half is just really a reflection of the activity and where the work's being done. And as Simon said, now with access to Golden Pike, that is in production, those costs then will move back into obviously you'll see ounces lift, but costs in OpEx and sustaining capital will then be reflected there effectively.
Okay, that makes sense. Thank you. And then it looks like the De Grey acquisition is still expected to close in May. What is the top priority, I guess, for Hemi when you get the keys?
Yes, thanks, Kate. Look, we won't speak a lot about that prior to closure or completion, so we'll update the outlook for the inclusion and integration of Hemi into Northern Star's portfolio as we would do for the forecast for FY 2026. But ultimately they've got a progressing project that is going through all the usual approvals and tendering and long lead items and securing all those things and building their team, which we're aligned with. So it's really just looking at those critical path items and making sure that those things progress as per plan.
Okay. And will we have to wait for a little bit after May to get some updated numbers for how you're thinking about that project?
Yeah, I just look using the DFS and published numbers today and timelines is probably key. We're not going to come out day one with a torn-up, changed plan. They've done a great amount of work to get where they've got. We've had oversight of those things, and it's a pretty thorough project. So yeah, we're not going to wholesale modify and change things there. It's really just going through the critical path items, and that's really the activity through it for the next few months.
Okay. Thank you, Stu and Ryan.
Thanks, Kate.
Your next question comes from Alex ander Barclay with RBC. Please go ahead.
Thanks. Good morning, Stuart and team. Question about Pogo. The milling you had in the quarter was quite strong after the upgrade, but I see you still needed some stockpile and maybe development a little bit softer than you wanted. Can mining reach that 1.4 million tonnes per annum, maybe even 1.5 rate, or is a bit of extra kit required? Is that the long-term target you're thinking about internally? Thanks.
Look, yeah, I think last quarter we said we've sort of lifted the expectation of 1.4. We know the mill can obviously do 1.5, and I think you'll appreciate there's not a huge amount of real estate to generate big stockpiles. So we know we can mine at those rates or I guess any rate. It's just around that stockpiled or this time of year it's largely stockpiled underground. Seasonally through the summer we can create some temporary stockpiles on the surface, but you're pretty much only having 50,000, 100,000 tonnes buffer as opposed to Australian operations where we can have millions of tonnes stockpiled adjacent to our plant. So it's a bit of hand-to-mouth, although we've disconnected some of that for weeks and months.
On an annualized basis, we're pretty much going to match our mining to our milling, and we can probably store up to about 80,000 tons underground, although that does congest the mine a bit. So yeah, it's a bit of just a bit of the balance, and you'll see in the last quarter it was a bit of catch-up because there was a lot of material stockpiled underground. What you may see is the difference between development ore and development waste change throughout the quarter in that regard. So if we've got full stockpile ore, we'll be prioritizing waste development, which can go pretty much straight to the surface, and then we just want to make sure that mill doesn't stop.
Okay. So it sounds like you are happy with achieving 1.4+ from now. Is that right?
Yeah. So we lifted that last quarter to say that's the minimum expectation, not 1.3, but you've seen us work at 1.5. We want to keep pushing and testing overall what they can do. On instantaneous, it's gone up to sort of 1.7, but then the whole circuit has to do that consistently, and the more we put through it, the more frequent the shutdowns and relines have to occur, and it performs differently throughout the season. So we're really honing in on any capital or any smaller things that can happen to improve and give that consistency there. But the other level we've got, obviously the balance between stoping and development ore and the grade, we can manage as well. So we're pretty happy with where Pogo's at, and the cash generation, it's knocking out of U.S. dollars is very impressive.
From here, the jaws open up and it really starts to stockpile U.S. cash, which is very helpful at these exchange rates.
Okay. Sounds good. Thanks very much. That's all from me.
Thanks, Ry.
Your next question comes from Ben Lyons with Jarden. Please go ahead.
Oh, thank you. Good morning, Stu, Simon, Ryan, everyone on the call. On KCGM, please, just to the Levi's questions around the material movements, especially maybe on the open pit, as you're planning to hook into more of that Golden Pike material in the second half, obviously we'll be expecting an increase in the open pit grade. Just wondering if you can give any indication of what that grade profile looks like over the second half, please. Thanks.
Yeah, I'll sort of put Simon. I think this is something that's been months, years, four years in the making, and to step us from last year for 50, this year 550,000 ounces, and then next year 650 consistently out of KCGM till the mill expands. It's all hinged on the Golden Pike ounces in the pit floor. So I guess this is right at that inflection point that the grade contribution from the lower part of the pit is restored, which ultimately brings the ounce profile back up to that 650, which is from the pit, from the stockpile, from growing underground. And then ultimately, as the mill expands, more stockpile comes in as well. Grade-wise, Simon, do you have granularity of average grades across that, or do you want to pause that for a later call?
Ben, it's just a weighted average, obviously, from your two gram material from the base of the pit, which is the same as pretty close to what we're mining from an underground, but the contribution is, as the half goes along, we'll get more and more access to Golden Pike North, and you'll see the head grade sort of materially step up through the process plant. So instead of sort of sitting at that one and a bit gram through the process plant, you'll see 0.2, 0.3, 0.5 kicks as the contribution of the two gram material kicks in. So some of those benches down there are 45,000, 50,000 ounces, so you get a lot of ore very, very quickly, and obviously we'll prioritize and grade blend as we normally do and put the best material into the process plant.
So you will see some big kicks in the grade as we get more and more access post-de-stacking the eastern side of the pit.
Okay. Thanks, Simon, and sorry, just a bit more granularity around the timing of that de-stacking event on the East Wall there. Is that expected in the current quarter or sort of towards the end of the calendar year?
No, it's sort of we've got access to Golden Pike North, but at the same time, we're still finishing de-stacking the eastern side, which is more conventional manned equipment in the area, drill and blast, etc. So quarter three is still a heavy activity in terms of just de-stacking the eastern side, but at the same time, we've decoupled half of Golden Pike North and still getting that contribution coming through. So each week that goes by, month, we get more and more access to Golden Pike North.
Okay. Cool. Thanks very much, Simon. The last one from me, maybe for Ryan or Stu, just on the capital side, maybe if we can ignore the KCGM expansion, but the rest of the bucket that's allocated to growth capital, as you sort of cast your mind forward into fiscal 2026, I think we've got additional TSF capacity at KCGM coming up. But just holistically, bigger picture, is there any reason to expect the growth capital allocation to reduce into coming years, or should we just sort of think about you're still opening up satellite ore bodies and punching new portals, etc., etc.? So maybe just a general answer around that sort of growth CapEx allocation, please.
Yeah, I think 2026 is still a flat, well, investing year. To your point about the TSF brought forward for the larger mill throughput starts to step up, and there's still continuing waste stripping to the southern part of Great Boulder and the Super Pit, which is still a lot of material. And you've seen the volumes of the Super Pit change when we move the fleet to the bottom of the pit versus sitting up at the top. And you'll sort of sit between, well, even 60 up to 80-90 million tonnes per annum movement. Ultimately, that's the capital that Ryan also spoke about of allocating it to waste stripping or operating, sustaining down the bottom of the pit. So those CapEx numbers will be swung on that, although dollar millions effectively will be the same spend with the fleet and the people.
Regionally, you'll just see those satellite mines being turned on. Your Yandal region, you've already got Griffin being developed this year. Down at Thunderbox, you've got your Bannockburn developments. We've got some new undergrounds we've just established at Millennium and other thin end of the wedge. We're not only talking tens of millions, not hundreds of millions in that growth capital, but essentially just life asset plan being delivered. The big lumpy ones is TSF, KCGM, as well as the mill expansion, which will be the final year in 2026. Then obviously that continued waste stripping to the southern part of the Super Pit.
Then incrementally for that development rate to be increased at Mount Charlotte and Fimiston, as those development meters get up to from 7k , 8k , 9k s a quarter, you'll see the capital associated with that again, in tens of millions to open up new production centers there. Other than those things, Hercules in 2026 could be in development phase, which is South Kalgoorlie , but most other things are incremental to existing production fronts.
Okay. Awesome. Thank you very much, Stu. Appreciate it.
Thanks, Ben. And then, obviously, to Kate's question and probably further, that is heavy development. The capital associated with that, I guess it's well understood, but it's more about when it starts, and that's all approval hinged.
Yep. Got it. Thank you.
Your next question comes from Matthew Frydman with MST Financial. Please go ahead.
Yeah, sure. Thanks. Morning, Stu and team. Can I ask one on, I guess, cash balance and shareholder returns? I'm sure it's one that we'll talk more about at the financial result, but just looking at the numbers at the end of the quarter, you've got over AUD 1.2 billion in cash and bullion, AUD 265 million net cash. Obviously, hopefully that continues to go up with the cash generation you've alluded to in the second half and also a chunk of cash potentially coming in the door with the De Grey acquisition. You've got a buyback that's mostly complete. And as Ryan outlined, you've got a dividend policy as well, which is pretty clear. So a chunk of that cash is going to come back to shareholders with the first half dividend.
So I guess the question is, can you remind us how you're thinking about what sort of ranges you want to see the balance sheet in, and you want to see that sort of dry powder cash balance sitting out, given the gold price environment, given your outlook on, I guess, cash generation and spend? How much cash do you need on hand versus is there an option to maybe repurchase the U.S. dollar bonds, which have obviously had a negative currency impact, or what are the other options for retaining that cash? Thanks.
Yeah. Maybe just Ryan just speak to the general. We don't have covenants, I guess, but general planning around balance sheet, and then I'll talk about some potential uses. Thanks.
Yeah. I mean, yeah, good position to have, Matt. It is. So we always want to be. I think we've always kept, as you know, kept balance sheet in good nick simply because it gives us opportunity, allows us to invest, whether it's exploration, organically, all the things really. That's what it allows us to do. So to be nimble to be flexible to get returns on our investment, essentially invest. Look, as the company gets bigger, it's good to have more liquidity. You're right. The beauty of those US notes is that they do have the ability to buy them back. I probably wouldn't buy them back at this exchange rate, but they're 10-year money, so you've got opportunity there over the cycle to potentially do that. We've got a dividend policy that's pretty clear. It doesn't include growth CapEx.
The company is paying a very healthy dividend, and that cash earnings number over AUD 1 billion, that's effectively the sustaining free cash of the business. As Stu said, the CapEx will still hold up, as in we're still going through that investment phase next year. But as it winds off in the years ahead, there's going to be significant free cash there to generate. We want to keep the balance sheet investment grade. That means gearing and leverage need to be at a reasonable spot, albeit we're getting to be a bigger diversified company now. Those things can, I guess, be tested a little bit more to keep our investment grade ratings. Yeah, we've got plenty of options, and we're paying good, healthy dividends. We've got buybacks. I think, again, we're close to completing that.
I think it'll be a tool that we use going forward as a business, and it's something that you can turn quickly on and complete, really. I don't know, Stu, if you want to add anything more to that.
No, you said its growth doesn't affect the cash earnings figure, which doesn't affect the dividend payout. And that midpoint of the forecast cash earnings for the half is $1 per share. Very impressive generation for six months, $1 per share cash earnings. Obviously, dividend policy sitting 20%-30% of that continues, and the buyback ultimately as well. We're able to complete some more. We're more out of blackout, as people may appreciate once De Grey got announced. We were able to continue on with that buyback as we've got through now till September. So we're doing it all. We're exploring growing resource reserves. We're dividend paying through cash earnings generation. We've got a buyback active. We're building cash, and we're net cash. So I think these are all very good, healthy signals of a strong business.
Attitude generally will be around good, effective ways to generate those returns for shareholders, and we're not afraid to hand them back.
Okay. Thanks for the details, Stu. Thanks, Ryan.
Your next question comes from Paul Kaner with Ord Minnett. Please go ahead.
Yeah. Hi, Stu and team. Thanks for taking my question. Just a quick one on mill recoveries there at KCGM. That's been a little bit lower for a few quarters. Is that mainly grade related, or is there something else to call out? And I guess, what should we be assuming with these higher grades coming through over the next sort of 18 months or so?
Yeah. I can sort of speak to that and Simon cover, but it's somewhat head grade related with the low grade you've got a fixed tail, but 80 still, we see some improvements off that 79-80 to where historically has led, so a lot of those float plants are all around stability, and on the expanded plant, we've got a whole recovery sort of project that was targeting much more improved recovery, so we're not spending a huge amount of time on those longer-term things because it's got to last the next year until the new expanded plant's online, but we're aware that stability is probably the best thing in all source or type head grade affecting that.
But at the moment, we want to make sure that for the longer-term fixed larger scale plant, recovery is 1% on a 900,000 ounce profile, pretty significant losses of gold if not dealt with. And then it draws your head to the pressure ox scenario for Hemi, getting 90% recovery. It's a different method of taking that concentrate and oxidizing it. So they were the type of things that we see as strengths of that asset because we've got that refractory capability across all of our plants. It's effectively looking at those recoveries in the business case to make sure the infrastructure supports it. So yeah, we see what you see at KCGM presently.
Yep. No, understood. That's it from me. Thanks very much.
Your next question comes from Hugo Nicolaci with Goldman Sachs. Please go ahead.
Morning, Stu, Ryan, Simon. Thanks for the update and Happy New Year. First one, just on Jundee. We were able to just talk through the lower equipment and heading availability issues in the quarter. Specifically, what were the issues on equipment? And then as a kind of flow-on effect, how do you expect that to impact access to higher grade material and production into the second half? Do you expect FY 2025 gold production at Jundee to be sort of around the same levels as FY 2024, or maybe that should be down year on year now?
Yeah. Thanks, Hugo. Just on the development, as I sort of mentioned, in the first half, we've done 2.8 km of drill platforms across a whole range of areas at Jundee. So it's not one drill platform. It's lots and lots of drill platforms around the operation. Those headings are typically set up as potential declines and return airways and things like that. So there's slightly larger development. So with a real focus on some of those areas of the mine, we've sort of backed off a little bit on development to bring up production areas. So it's just balancing those two things. So that's really one of the changes at Jundee that has taken away from some of the production areas short term.
Just in terms of jumbo availability and trucks and boggers, every now and then we go through one of these cycles where we seem to get on a roll for downtime. We're through all that now and sort of back on deck at the start of Q3, so nothing long term, just one of those cycles that had some impacts as well as larger headings not opening up quite as many ore areas as we typically do, but it's better for the long-term position at Jundee.
Got it. So in terms of the impact into the full year, you'd expect similar sort of gold production from last year?
Yeah. Jundee is a project that cycles up and down depending on the areas. I think you'll read one of the notes in there. March quarter grade outlook will be slightly lower before quite a kicking Q4, and that's just what we see in the schedules.
Thanks, Stuart. And then just second one around exploration. Four-year guidance at 180 million. You spent 118. Is that so far in the first half? In two parts, I guess, how should we expect that work to flow through first half drilling and exploration to come into the FY 2025 reserve and resource update? And then I guess going forward from here, how do we think about that exploration spend rate going forward beyond the second half? Maybe if you could sort of remind us on what areas are in focus next for some exploration work.
Yeah. Thanks, Hugo. It'll be sort of success-driven. So you see us each year give a bit of a boost out of the gates to get ahead on the drilling and get the information because you've obviously got to get through assays and interps, etc., for a March end resource reserve calc. So sometimes through that period, you have a little bit of hiatus. We'll just assess the second half. We're not afraid of spending a bit more if it's success-driven. And also some of the allocation can be around those drill drives, even Simon indicated, that will be at the Jundee's or particularly around Fimiston, Charlotte area on drill drives. So yeah, we see the run rate. If it's delivering low-cost answers to our resource reserve growth, we're very happy with that return. But it's a discretionary spend, so we assess it pretty regularly.
Great. Thanks for that, Stuart. Pass it on.
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 Al Harvey with J.P. Morgan. Please go ahead.
Yeah. Morning, team. Quick one from me, Ryan, just to follow up on the capital returns. You noted that the buyback, you like the flexibility of that and could continue into the future. So just wanted to get a sense if the current program had made more sense in light of that low franking credit balance recently and I suppose how you balance up returning cash to shareholders from divs versus the buyback.
Yeah. Thanks, Al or Stu. Maybe you're coming after me, Stu. Yeah. I mean, obviously, we've got a pretty clear dividend policy at the moment. I think it works well, as Stu said. Cash earnings per basic shares, really nice growth, right? So we want to return that money. You're right. I mean, the buyback we initiated, there was a couple of reasons around it. Obviously, we look at our own value internally and we say, "Well, we can get a good return on that money to where we see the market being." So there's one element. The other element is, you're right, we didn't have franking credits. So again, it's a helpful way to give returns back to shareholders. So they're all in the mix. I guess what I'd say is we've got a pretty clear dividend policy. I can't see that changing in the near term.
Surplus cash, we either need to find a really good place to put it to get a return, or we should look at the best ways to give it back. So yeah, I think the share buybacks worked well. I think we've been asked about it for a long time. We've been a little bit stop-start. That's been opportunistically. I think we've done well. I think we're averaging in just over AUD 10 a share. So it's worked well. And I can see us in the future where we've got excess money, that being in the mix of the discussion of the board to potentially increase or add a further one. But we've got to be making the returns in our own business to do that. We see them in the future. I don't know, Stu, if you want to add. I mean, on the franking, we will return.
As mentioned, we will return or we will start paying tax, which means we'll get franking credits. It's unlikely that this interim dividend is going to be franked. But the full year, that's when we start to generate them. So they'll come back into play, but I don't think we'll think differently about a buyback just because we've now got franking credits. I don't know, Stu, do you want to add any of that? Anything there?
It's the only two elements include depreciation effectively can generate another tax shield, so it has the continuing franking kind of shield, and therefore buyback was a bit more effective, and then I think one of the original questions around the bond, given we're trading pretty strongly on a healthy balance sheet with those bonds, they're not at a discount or illiquid, and it's good cost money, so it's unlikely bond repayment as well with exchange rates where it is, so capital returns through divestment or through a capital return is probably the only other avenue we haven't done before, but that typically has to be triggered by an asset sale and get tax approvals and those things on it.
So we just think between current dividend, special dividend, and buyback, as well as all the other organic investments, there's not many other options left that we're showing we were able to do all of them.
Yep. Understood. Thanks, James.
There are no further questions at this time. I'll now hand back to Mr. Tonkin for closing remarks.
Thank you, and a happy new year to everybody. 2025 is going to be a fantastic year. Our second half is going to be much stronger, giving us a great springboard into 2026. Look forward to updating you as we continue to advance our profitable growth strategy, and thank you very much and have a good day.
That does conclude our conference for today. Thank you for participating. You may now disconnect.