Back to Paul Cmrlec, who will provide an update on operations at the Northern Gold Project following the release of the company's September 2025 quarterly activities report. Please feel free to submit your questions throughout today's webinar using the Q&A function located at the bottom of your screen. At the end of Paul's presentation, time permitting, he will address as many of your questions as possible, and where appropriate, we will group similar questions together. Before we get things started, I would like to remind you that today's webinar is being recorded. Paul, over to you.
Thanks very much, Sam, and thanks everyone for joining the webinar this morning. I just want to start out with obviously a softer production quarter, with some specific issues that caused that. To lay out the position of the company as it stands, I think we're in a fantastic position with a very, very strong balance sheet of over AUD 181 million of cash and gold. We're completely debt-free, and as you can see from our operational cash flow there, the operations are strongly positive. I think we spent just over AUD 30 million on exploration and major project capital this quarter, as planned, and to have maintained a positive cash flow with the lower production, I think has been overall a good result. I think we've built some great flexibility into our production over the quarter, particularly at Scotia, and I'll show you as we go through that.
We have that exploration program in full swing, so it's been over AUD 15 million during the quarter. We have a large number of assays outstanding with our site laboratory due to go to a double shift over the next couple of weeks, which will result in all of those results starting to flow through and into the market. I think finally, it's important to note that our production has recovered well, so September was back to where we expected it to be. October is shaping up with just under a week to go to be right at the upper end of guidance and perhaps a little bit above that guided rate of 100,000 - 110,000 ounces of gold. The company's in an excellent position. Notwithstanding that, production a little bit disappointing at just under 20,000 ounces.
As I said, I'll go through the reasons for that as we go through the presentation here. The result of that is that the all-in sustaining cost is significantly higher than we saw in the previous quarter. Again, our spend on site is very, very predictable in terms of all the activities that we have going, and the amount of gold that is produced directly drives what that all-in sustaining cost is. As you can see, the EBITDA is very strong, and that exploration spend is, I guess, underwritten by a large amount of drilling, over 40,000 meters of combined RC and diamond drilling completed during the quarter. On the safety front, we did have one unfortunate incident where a worker fractured his finger underground. Outside of that, we've seen both the LTIFR and TRIFA continue to trend down through the quarter.
That focus on safety across site is very, very much alive and being driven, and I think we're seeing the results from that. On the community side of things, we've continued on our real focus on education and attracting personnel into the industry. Starting down in high school level and going through university, you can see there that we've hosted individual schools on site. We've continued to support programs into the Northern High School, and we've started now on a scholarship for a WASM student via the WA Mining Club. That focus on education will continue to be the primary sort of focus for our involvement in the wider community. As far as the operation summary goes, I've covered a fair bit of this already, but just thought we should have the overall numbers there.
I think that one of the real drivers to that increase in all-in sustaining costs is that the open pits have transformed from project capital into production and sustaining capital now. The benefit to that is that over the next quarter, we expect to mine in the order of 150,000 tonnes of ore onto the ROM pad, which really underwrites our open pit supplies over the next six months while Gladstone Everlasting is developed and taken through to production, starting at the end of this quarter. The Scotia underground mine is in a great position. We did have through the quarter, one of the reasons that production was slightly down at Scotia was that getting the next level online, you can see we've got a number of levels rolling there now, but it necessitated bringing some lower grade stopes into the production profile just to maintain that overall tonnage.
You will have seen on the previous slide that the grades overall on underground were down. I think the important thing there is that they've reconciled well. There were stopes that were sub two grams a tonne that we were mining at the commencement of the quarter for the first sort of six weeks as we rolled through that. I think through the quarter, though, we've got that flexibility into a great position. You can see that we've started mining those remnant areas at the top of the northern part of the mine. We've also completed that link drive through into the lower northern part of the mine. We should start to see ore development and then production coming out of those northern deep areas, which is really the majority of the mine plan over the coming few months.
We've fully rehabilitated that historic decline, and that decline was not in the original plan, but we've recognized some great efficiency sort of opportunities with that decline. It's in great shape and full size, so it allows us to do up and down trucking loops and also coordinate secondary egress and things, which really make things much more efficient than they would be without it. That's been great. Our ongoing grade control and extensional drilling in the central part of Scotia is looking very good. We haven't put a release out on that yet, but we've got some great visual intercepts. Like I say, there's a big backlog of exploration drilling in front of our laboratory now that should be eaten up over the next six weeks once that second shift commences.
I'm very confident based on what we're seeing visually there that we're going to see some great results coming out of there. Similarly, the area of Scotia South, that area right on the left-hand side of your screen, has been drilled from surface. We've seen some really good-looking quartz intercepts coming down from there. If you remember that overall growth plan, a big part of that was pushing the southern and central part of Scotia down to a similar depth that we have in the northern side of the mine. Certainly, that drilling's demonstrating, I think, that that mineralization is continuing down there. You should see that tied into our mine plan over the period of this financial year. We've also done some drilling at the Green Lantern pit to the south. Green Lantern was a low-grade pit.
It was about 1.5 grams a ton, but within that, there are several thick and high-grade veins which hold together well for potential underground development. We've undertaken a bit of drilling there and again waiting for the results on that. Scotia now, with the additional levels opened up, as you can see in the long section there, we are sitting at a run rate of about 500,000 tonnes, just a little bit more for FY 2026. We expect by FY 2028 for that to push out to + 700,000 tonnes. A big part of that growth profile that we'll see is go from the 100,000 ounces a year up towards 200,000 ounces a year. The OK mine, OK was really the main driver for our production being below guidance for the quarter. We had a couple of distinct issues there that we've addressed.
The first one was a remote control bogger lost to a stope early in the quarter. That bogger was struck by not a particularly large rock, but a rock that came off the hanging wall about 30 meters into the stope, quite a way in. When we went to recover that bogger, unfortunately, the tow hook which is made for that recovery failed and came off of the bogger. We then had to do some bypass development around and undertake some pretty tricky activities to get that bogger hooked up and dragged out of the mine. Unfortunately, those smaller pieces of equipment that we use at OK are more difficult to get hold of than the larger equipment that we use at, say, Scotia. It's just not as common across the industry. It took a little while to get a replacement loader there and to enable that ongoing remote bogging.
At the same time, we've taken the opportunity, as we've gone deeper in the O2 lode, to develop the decline where we've had central access with closing pillars up until now. We've transitioned that development now so that we're going to have end-on access from both the east and the west in the O2 lode. It takes those pillars away, and it's a very standard method for managing increasing ground stress as a mine goes deeper. In that sort of 600 meter deep range, we start to see the effects of ground stress within the goldfields generally, and we're getting ahead of that and moving that development across. I think that transition has slowed the production out of the O2 lode again in the start and middle of the quarter.
We have those levels back up and running now and on track to continue to do what the mine has done. Unfortunately, the loader was something that couldn't be foreseen. I think as we've recovered very well from that, that has been a real driver to the lower production for the quarter. During the quarter, we did put out right at the start of the quarter the ongoing drilling at the OK mine. You can see there from the center below there, this is the previous resource and reserve line that is shown, that red dashed line. Before we did the update in September, you can see that we drilled there up to 100 meters below that previous indicated and inferred line and continue to get the narrow but very high-grade mineralization that is very typical of the OK mine and Northern generally.
We've also seen some really good lateral extensions to both the east and the west. We're very comfortable that the OK mine is here to stay in our previous sort of mine growth pathways. We had the OK mine finishing in 2028, but I expect when we put that out, that'll push out to 2030 and beyond based on the drilling that we've done in recent time. We have a drill rig continuing to operate at OK for the foreseeable future as we roll on. I think that life at OK will continue to expand as we get more and more drilling into the mine. We move on to the Princess Royal open pits. We've got Slippers, which is pictured here, and Desirables. They've continued on in accordance with the schedule, and they've provided that material into the mill that was previously being sourced from low-grade stockpiles.
As I said earlier, we still have about 150,000 tonnes of ore to mine out of these pits over the next couple of months. These pits will be finished in late December, early January, before we move our production efforts across to Gladstone Everlasting, which are being prepared now. It gives us a really strong stockpile of ore in front of us as we get Gladstone Everlasting up. I should note that we still have + 100,000 tonnes of low-grade down at Scotia to source as well. We have a really good stockpile of ore in front of us as we move into the rest of the year. I really wanted to highlight the very high-grade grade control results that we're seeing at the Slippers pit in particular. Desirables pit will finish where it is. Slippers pit has some fantastic opportunity for underground development.
I think these grade control results, which have in several cases gone into hundreds of grams a tonne, really demonstrate the underground potential of this mine. Because it's just grade control drilling, you can see that it's just focusing down on the areas that we're pushing the pit down on. We do see mineralization along the entire strike of this mine. We have developed this open pit with allowance for an underground portal to be developed at a time in the future. Showing very, very good indications for another high-grade underground mine here. We have surface exploration drilling underway as we speak, drilling below the Slippers pit here. We see an underground being a very real opportunity over the next sort of six to 12 months.
I should mention before I step off of this that we're only a few hundred meters away here from the historic North Royal mine that we've talked about previously. North Royal produced 1.8 million ounces of gold at 17 grams a tonne in a mine that's less than 350 meters deep. That will also be immediately accessible from the development that we foresee here at the Slippers open pit and real potential for another very major operating center there. Really excited about the grades that we're seeing at depth here at Slippers. In terms of the exploration program, you can see all the areas marked in green here where we have ongoing surface exploration. Just over half of that drilling that was completed over the quarter was from these surface areas. They're all coming together with some great-looking intercepts. We've got results starting to filter through.
We've talked previously about the opportunity at the southern end of the main field in the Butterfly area for an underground mine to come from either the OK mine or from Bullion mine. That work is continuing to support there. Daisy South is a new one that we haven't talked about a whole lot yet. We'll see what the results come back from that. Again, some pretty exciting core visually. I think we've got a really good period ahead of us in terms of news flow from exploration. In terms of the exploration from the Bullion decline itself, the Bullion decline, we've rehabilitated substantially more than 5,000 meters of decline there. Now that decline is ready for us to take off with a new production center as soon as we are ready to do that. We've started drilling very much focused in that Crown South area.
You can see there, again, typical widths and grades for what you'd expect at Northern. Really an outstanding success. Every hole that we've drilled through that Crown South area so far has intercepted the structure where we've expected to intercept it. Pretty excited about getting some more holes through that area. That drilling is ongoing. We're only in the order of sort of 300 meters from the drill platform that we've developed for that drilling to be out there and in and developing that Crown South area. The access drives to drill the Crown reef itself are now being rehabilitated. We'll be drilling along the strike length of that Crown reef before too long. We have also been developing towards the Butterfly area, the southern area of the main field. We will have some drilling to go there.
Finally, you can see some of the sort of core that we are seeing out of the Bullion West area. If you refer to the release that we put out a couple of weeks ago on the drilling from the main field, you will see we are getting some very, very high-grade mineralisation well beyond, you know, 50+ meters beyond where development finished previously on the Bullion West ore bodies, seeing this really coarse visible gold and very high grades. That ore body is completely open to the west. There is some real opportunity there to jump off very quickly from the drill platform we are using at the moment and to be in that mineralisation, looking very, very strong. In summary, it was a disappointing quarter as far as production goes, but we are in a fantastic position now. We have a great balance sheet with no debt.
We have a huge amount of growth activity underway and lots and lots of drilling completed with assays starting to trickle back, which I think will support that development of at least two underground mines during that next financial year, which has been our stated aim for the past 18 months now. I think that we are in a great position to take that to reality. Thank you very much for your time today. As Sam said, we are happy to take questions.
Paul.
At the moment, we haven't got any questions, but we'll just give it 30 seconds or so and then see if there are any. Otherwise, we might just wrap up there today. The first one, Paul, is are you able to give us some rough tonnage guide for each mine?
Yeah, sure. The Scotia mine is sitting between 40,000 and 50,000 tonnes on a monthly basis, and the OK mine is sitting at approximately 20,000 tonnes per month. That's sort of 60,000 - 70,000 tonnes a month coming from those two undergrounds at the moment, the remainder being topped up by open pits.
Thank you. Next one. Following the disruption in the quarter, given you've maintained guidance, how should we think about further contingency in the guidance range? Do you still think you have contingency built in if you get a similar magnitude of disruption?
Yeah, look, I do. I think we've built some good contingency into that overall guidance range for the 100- 110. As we've said from the outset, Scotia continues to become an easier proposition right throughout the year as we get those additional zones online in the northern areas of the mine. We have multiple levels operating. It gives us the flexibility to have a number of stopes open at any one time and really pick that production up. Scotia is a real driver to that. I should say, though, that we are seeing great results and just preparing for development into what is called the O3 load at OK. That is basically in a similar position to the O2 load, but extending to the east in the upper areas of the mines with some very high-grade results.
Also, the main load at OK, which was the original load that was developed in the 1930s and was really all by handheld methods. We're drilling in the lower areas near the levels that we're working on at the moment and getting some great results with lots of visible gold. In fact, for the first time, some of that main load went into the resource upgrade through this last resource reserve upgrade. I'm pretty confident we're going to continue to see that in the upper levels of OK as well. I think there's additional working areas coming into OK and across all levels of the mine. Importantly, it's not all completely at depth. As those things come on, we'll expect the production to really increase through this year as we roll through. I think we've got some good contingency there, yes.
Thanks, Paul. On costs, I appreciate the dollar spend is reasonably fixed at site, but are you able to give a rough split on where the underground and open pit mining costs are tracking?
Yeah, look, I can. I don't want to give an exact number, Sam, because I don't have it here in front of me. The overall cost per tonne where the undergrounds have been sitting at sort of AUD 180 for OK and AUD 120 for Scotia is very much grade driven. In terms of the cost per ounce, I don't immediately have that number on me, Sam, on the split between the two. I think it's pretty proportional to the overall production result that we will have seen from both those mines, the all-in sustaining cost coming up a little bit.
Understood. The next one is, can you please outline the sales volumes and realized prices to derive revenue of AUD 101.7 million?
Yeah, the sold gold was 19,700 ounces, or just above. The realized price was just over AUD 5,800.
Has the board had any recent consideration to shareholder returns?
Look, with those, as far as returns go, we've made pretty clear that we want to be well and truly above AUD 250 million at bank, so between that sort of AUD 250 million and AUD 300 million, to ensure that we're fully underwritten on all of the growth activities that we're doing going forward. There's obviously some real opportunity for additional underground mine development that will come in the near term. There's obviously also real potential for big discoveries. We're starting that regional exploration now, and we've started that drilling below North Royal. I think there's a real prospect there that we see some big ore bodies that we want to throw a lot of money at quickly to bring those into the plan. We will make sure that we're in that very strong position before we give any returns. Like I say, AUD +250 million in cash.
Post that, yes, we've certainly considered where we haven't finalized yet whether we will consider buybacks or dividends. As I've said previously on this webcast, that will also be driven by our tax position where I think, by the end of this financial year, we will have used the tax losses that sit within the company. You can then do frank dividends, which start making dividends look more attractive than they do when you don't have that available.
Thanks, Paul. The quarterly mentioned increased oxide feed through the plant. What are the pros and cons of that?
Look, the oxide material, which has a pretty high clay content, messes with quite a few things in the plant. Yes, it's softer and everyone assumes that you can bundle a whole lot more through, but our crushing capacity at Northern is large. We put that in from the start, and putting the blue rock through is not an issue. It is more a materials handling issue with that oxide. It also affects the densities in the tanks and things like that. It is just a change in the operating conditions. It doesn't change the recovery that we're achieving. We've had to put some density modifiers in to manage material going over the tailing sticker and things like that. It is really just the operating team getting comfortable with the changed conditions and ensuring that we can keep those throughputs up.
I think, as we said in the quarterly, we've addressed that through the quarter, and for the most part now, we're sitting on that sort of maximum rate as we have previously.
In production percentage terms, how should we view FY 2026 half on half? Will FY 2027 be second half weighted as well?
Yeah, look, I think that it's not going to be a massive difference, but the second half of the financial year should be materially different to the first half. It does continue to grow. In percentage terms, 55% - 45% in that sort of order. Into FY 2027, yes, I expect that you will continue to see that growth. We've made pretty clear that we expect to turn on a couple of additional underground production areas within the main field. Those unfortunately can't turn them on and have them at full production rates as you go. That production from those areas will continue to grow through FY 2027 until we're up at that full rate.
One final one here, Paul. Has the higher gold price environment changed mine planning in recent months or impacted other aspects of plans?
Look, it hasn't made any major changes. Obviously, you can see there were decisions made to mine some lower grade stokes at Scotia through the period. Really, you know, getting those additional levels online and the high grade reserve grade stokes on the next levels have very much driven us to drive into those lower grade areas. I guess the change in the gold price has allowed us to do that where we could go and mine those lower grade blocks and still generate some positive cash flow out of it. I don't think it's changed our overall planning per se. We're very much focused on maximizing the margins out of the mine. You can see from our commentary in October that there's a real focus on achieving those reserve grades. When we do that, we make huge amounts of money at the current gold price.
That's how we'll continue to plan. It does give us that contingency, I guess, to dive into some lower grade material when we have to.
Thanks, Paul. That's all the questions we've got today. I'll just hand back to you for some closing comments before we wrap up today's session.
Great. Thanks very much, Sam. Thanks everyone for your time and your questions. I guess just to reiterate that we are in a great spot here at Northern. There's a huge amount of drilling going into the ground. There's going to be a lot of data coming out of the operation over the next sort of three to six months and ongoing beyond there. I think that, you know, I don't see that exploration program slowing down at the end of this financial year. I think we'll keep that going. All of our focus is really on ensuring that we continue with that positive cash flow, but really getting all that material data that we need to achieve that growth up to 200,000 ounces per annum. I think it's on a really good track to do that.
Thanks, Paul.
Thanks, Sam.