Thank you for standing by. Welcome to the Ramelius Resources corporate update and takeover offer for Musgrave Minerals. 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 will need to press the star key, followed by number one on your telephone keypad. I would now like to hand the conference over to Mr. Mark Zeptner, Managing Director. Please go ahead.
Good morning, everyone. Thank you for dialing in at short notice. With me, as usual for these events, is CFO Tim Manners, and between us, we'll cover two important announcements this morning. The first is the production update for the June 2023 quarter and the full year ending 30 June 2023. The second announcement, which we'll come to shortly, is the joint release by Ramelius and Musgrave Minerals, outlining our agreement to move forward with a recommended takeover offer by Ramelius for 100% of the issued capital of Musgrave. Before we discuss this, I want to first focus on the standalone results released by Ramelius this morning.
We're very pleased to announce that our June quarter and full-year production guidance targets have been met with a total of 68,752 ounces produced in the June quarter, giving a full year production of 240,996 ounces. This achievement was coupled with an impressive quarter of operational free cash flow of some AUD 42.6 million. Remembering this is a total cash movement figure with nothing left out except the AUD 75.1 million, which was acquired via the Breaker acquisition. This gave Ramelius an end-of-year cash and gold total of AUD 272.1 million.
In the current environment of high costs and a tough labor market, the ability to generate cash at these sorts of levels is an outstanding result for Ramelius, and is a testament to our entire team who focus on producing gold for the lowest expenditure whilst maintaining high standards of safety. Whilst we have not finalized our all-in sustaining costs just yet, we expect them to be within guidance, but closer to the upper end of the AUD 1,750-AUD 1,950 range. Despite Penny being in its early phases of stope production, the contribution of this high grade ore obviously helped push production, gold production, and cash flow higher at Mount Magnet. We also benefited from the high-grade open pit ore from Marda and Tampia feeding into the Edna May plant.
The cash flow benefit, that is, of reducing all stockpiles built over the last 12 months, we should see that positive cash flow trend continue. On to the Musgrave offer, which I'll hand over to Tim for, who, along with his BD team, have done the bulk of the work bringing this to fruition. Tim?
Thanks, Mark. Good morning to everyone. As you will have seen, Ramelius and Musgrave Minerals are in a position today to announce a recommended takeover offer for Musgrave, owner of the Cue Gold Project, just 35 km north of our own Mount Magnet processing hub in the heart of WA's Murchison Province. As addressed on slide five of the presentation, also released this morning, for those of you who have it handy, the offer is in keeping with our strategic objective of executing value-adding acquisitions to sustain and, where possible, grow production from our two existing WA production hubs at Mount Magnet and Edna May.
Whilst Magnet has had, for some time now, a solid pipeline of production opportunities in front of it, the potential to add a high-grade, low-cost project like the Cue Project is an exciting development for all of Ramelius shareholders, including, obviously, those Musgrave shareholders open to accepting our offer. For those unfamiliar with Musgrave's flagship asset, the Cue Project currently contains a total Mineral Resource of 12.3 million tons at 2.3 grams per ton for 927,000 ounces, including the very high-grade Break of Day trend deposits, which contain 928,000 tons at 10.4 grams per ton for 327,000 ounces. The deposits discovered at Cue to date have only been drilled to a relatively shallow depth and all remain open at depth. There are...
There also remains significant potential for additional gold discoveries within the broader 310 sq km tenement package. If you have the presentation, you turn to slide seven. The key offer details are outlined there. We are, of course, very pleased to have secured the endorsement of the Musgrave board for our offer, which comprises one Ramelius share for every 4.21 Musgrave shares held, and an additional AUD 0.04 in cash per share held, representing an implied offer price of AUD 0.34 per Musgrave share. This is a 19% premium to Musgrave's last close on 30 June, a 39% premium to the five-day VWAP, prior to Westgold's announcement of its unsolicited offer for Musgrave on June 6, 2023, and a 47% premium to the 30-day VWAP prior to the Westgold offer.
Additionally, the Ramelius offer represents a 27% premium to the implied Westgold offer price, based on Westgold's closing price on Friday, 30th of June, and includes the added certainty of a cash component. These various premiums are set out clearly on slide eight. Along with the recommendation of the Ramelius offer, we have secured pre-bid acceptances from the directors of Musgrave and Musgrave's largest shareholder, Westminex, and its associated entities for their holdings in the company. Together, the pre-bid acceptances total 12.13% of Musgrave's issued capital and provide a strong starting point for the offer. It is our view that Ramelius has the financial capacity, the operational experience, and exploration expertise to continue the excellent work done by the Musgrave team to date at Cue, and together maximize the value of the asset for both sets of shareholders.
Musgrave shareholders that accept the offer will also benefit from having an equity position in a company with two established production centers in WA, thereby reducing exposure to construction, commissioning, and cash flow volatility that can be experienced by single asset companies. The financial health of Ramelius and the significant positive impact on cash flow from the high-grade Penny Mine, now operating at close to full capacity, is evident in the production update Mark has already discussed. As we have made clear over the past few years, another strategic objective of ours is to add a third production hub to complement Mt Magnet and Edna May. It's important to note that should the Musgrave offer be successful, it will not in any way impact our financial capacity or our operational capability to continue to pursue that aspect of our growth strategy.
Further details regarding the Musgrave offer will be contained in Ramelius' Bidder's Statement and Musgrave's Target's Statement, which are expected to be dispatched to Musgrave shareholders by mid-July. The offer is not subject to further due diligence and only subject to limited conditions, including achieving minimum acceptances of 50.1%, along with standard regulatory conditions you find with nearly all off-market takeovers. I will now pass over to the operator to open the line up for questions. Thank you.
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 Alex Barkley with RBC. Please go ahead.
Thanks. Good morning, Mark and Tim, and thanks again for the call. Just a question on, given you've got a few potential mining options at Mt Magnet already, and even a few sites that weren't in your three-year outlook, like that Hill 50 Scoping Study looked pretty interesting. Why have you gone for this alternative ore source? Should we be reading anything into your thoughts on your own pipeline, or was it just really compelling value? Just want to sort of understand how you've gone for this external alternative. Thanks.
I'll go. Thanks, Alex. Thanks for the question. Look, we just saw value, and it really fits our, you know, hub-and-spoke model. It's very close. We truck much further than this. It's by road, it's sort of 50, 60 km. It may displace, may well displace some lower grade and push out, which we, but, you know, the mine life at Mount Magnet, which we're very confident in. We've got a lot of faith in Mount Magnet, over 6 million ounces to date, and lots of projects on the go. High-grade, open pit ore and then underground ore, is valuable, and we see value, you know, with the offer that we've made. Tim, do you want to add?
I was gonna repeat, Mark. That's pretty much the logic behind the move. We think it's a quality asset. We think it's something that would fit very nicely into the Mt Magnet profile. As we said, Mt Magnet does have life, absolutely. One of the things we've always sought to add into our portfolio is a higher grade feed, source of feed that can follow on from Penny. We believe this certainly gives us that opportunity to maintain, obviously, you know, a consistent base load through all of our operations. The addition of high-grade feed is always a little bit more challenging to find, and I think this gives us the opportunity to keep that high-grade component in the mix for much longer.
Yeah. Okay, sure. Just a quick one on the operation. Edna May looked a little bit softer quarter-on-quarter. Is there any issue to call out there? Also, Symes' Find , I think you had that in for guidance next year. Is the permitting and development of all that going on plan?
Firstly, on Symes, Alex, we're going through the process of permitting. We're confident we'll get that near- term. We, you know, we'd like to think that it's about a 12-month mine, that we'd get that mined largely in FY 2024. We'll have more to say on that, hopefully, come the full quarterly, later in July. Nothing out of the ordinary at Edna May. Edna May is, you know, it's got the underground, it's got Tampia, it's got Marda, and the trucking of those latter two sources has improved over the year to be more stabilized as the trucking labor force has improved. Nothing out of the ordinary there. I think it just looks lower compared to, you know, Mt Magnet, especially in the quarter with that Penny impact.
Yeah, understood. No, no major issues. It's all good. Thanks very much for that, guys.
Thanks, Alex.
Thanks, Alex.
Your next question comes from Andrew Bowler with Macquarie. Please go ahead.
Good day, gents. Just wondering, a bit of an update on the PFS for Rebecca. Are you expecting to push that out and include the breaker stuff in that now that that's all done? Are we expecting that shortly with another update a little bit later?
Thanks, Andrew. I think I've flagged publicly previously that, it makes a lot of sense for us to combine the two projects. And in certain aspects, Lake Roe, has got a bit of catch-up to do, so we'd look to most likely push that out, and have a combined project rather than, come out with details on Rebecca, and then have to take a step back and get our arms around Roe as well. So, a bit more detail, probably in July quarterly, also on that one.
No worries. Thanks.
Your next question comes from Paul Kaner with Ord Minnett. Please go ahead.
Morning, Mark and Tim. Thanks for taking my question. Firstly, just following on from Alex's question a little bit, how do you sort of see or view Cue fitting into the mine and processing plan at Mount Magnet? Would this give you justification to increase that processing capacity at Checkers? Or is it more to sort of provide mine life longevity, post Penny completion, assuming you don't find too much more there?
Tim here. I think, you know, as we responded to Alex, you know, the high grade nature that the Cue Project offers is a logical addition to Mt Magnet, in that sort of 18-24 month time frame from here. The expansion is something that is always there for us to consider, I think at the moment, you know, we're focused on firstly, getting this transaction across the line. There's a lot of studies, as you know, being done on Hill 50 Deeps and on, and Bartus and the like, around Magnet. We're not in a position at this point to really go back and have a look at that expansion opportunity.
I'm sure we will at some point, but from a cash flow modeling perspective, I would assume that the mill stays as it is. The expansion just remains options for us at a potential later point in time.
Yep, too easy. Then just secondly, on that time frame, just permitting and, assuming the deal closes, how long would it take you to sort of get that material to Magnet and through the mill?
Well, the work we've done, our view would be no earlier than 18 months, two years. Look, we could be pleasantly surprised, but we also don't wanna overpromise. We know there's complexity coming in with various new bits of legislation that we all need to get our head around. The team at Musgrave have done a lot of great work on that, but I think at this point, we don't wanna be saying six, 12, 18 months, when in reality, it's likely to be closer to that 18-month, two-year time frame, at this stage, from what we understand.
Too easy. Thanks very much. That's all from me.
Thanks, Paul.
Cheers, Paul.
Your next question comes from Andrew Hines with Shaw. Please go ahead.
Thanks, guys. Well done. This effect is certainly calling out for consolidation. You guys are doing your bit. That's three acquisitions in the year now. We'll start calling you Pac-Man soon. The question I had, really two things. One is the nature of the, how you've done the acquisition, largely with scrip, and yet you're sitting on now a cash balance, I think it's AUD 275 million, coming to the end of June. Why scrip, and why not use up some of that cash on this acquisition?
Then the second question I had was, I mean, this is clearly great news for Mt Magnet, all the existing internal options and Cue down the track, I mean, that operation will be, you know, running for a decade or more. The issue, I guess you've got, is with Edna May. Have you got any updates for us around, you know, what's happening with Edna May, about potential ore feed for that operation beyond two or three years out?
Andrew, thanks for the question. I'll certainly ask the first one, let the boss go to the second one. Obviously, you know, you are right. We have a very strong balance sheet, AUD 272 million at the end of June. I think at the end of the day, we felt in discussions with the Musgrave board, major shareholders and the like, that, as we have done, a small component of cash was viewed favorably. But I think one of the overwhelming themes was that they wanted to retain exposure, and they also liked, I suppose, what the Ramelius share position offered. At the end of the day, we sort of tried to strike the balance between scrip and cash.
This is sort of where we ended up, with a, obviously, it is predominantly scrip, but throwing a bit of cash on the top, to give, some, I suppose crystallize some value straight away. That's where we got to in terms of those sorts of thoughts and structures.
Andrew, in terms of Edna May, not a lot's changed there, other than the fact that the BD team, looking at any and all options to add to Edna May. Obviously, there's, it's probably fair to say there's less opportunities in that region, as opposed to sort of the Murchison Mount Magnet region. We're looking at all options similar to Symes, but they're probably 12-month options that they give you. We'll leave no stone unturned in terms of what we can feed into the mill. In terms of larger feed options, it's really Stage 3 that is probably the largest option that we have. We will retain that option, and we'll see where we're at in, you know, 12 months' time.
Okay, thanks, guys. Good job.
Thanks, Andrew.
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 Richard R.K. Hart with Top Wheel. Please go ahead.
Thanks for taking the call. Good morning, Mark and Tim. I can only assume you're both claiming overtime at quite a rate of knots at the moment. Brilliant work on cash flow and production, and congratulations on the new venture. I hope it all goes well. I suppose my question is. Oh, one question about actually the result. I know for next year, the all-in costs are coming down by maybe AUD 100 or something. Now, trucking seems to be back to a good level, and you've got the Penny stuff coming in. Do you see the all-in costs being affected, like, in this quarter, that we've just started? Or is it going to just reduce over the year?
Richard, I'll take a stab at that. We are sort of... Well, we're more than midway through our budgeting process. We're coming close to the end. We will obviously come out with guidance once all that is complete. I think it's, at the end of the day, what we do know is that the next year's all-in sustaining costs, we think, should be pretty much in line with what we've said publicly in the past. How that breaks down quarter on quarter, half on half, will still be sort of finalizing. We'll provide that information when it's available. It's probably just a little bit too early at this point to make too much of a comment on it, Richard.
In terms of the three-year model that we put out or plan that we put out, Tim's referring to that. We should be in line with that, which, as you quite rightly point out, Richard, there's a reduction from this year. Ideally, there's another reduction in FY 2025, as Penny makes an even bigger impact with a higher percentage of high-grade stoping.
Yeah. Look, I appreciate your stab at it. I also know black swans fly over on a regular basis nowadays, so you hope. My main question was about the third hub, which we've been talking for weeks. You have been talking about for some time. I mean, I'm aware there's a possible hub in care and maintenance, but it's very close to you. I'm just wondering, could you give me a bit of an idea about the criteria for the third hub? Because I sort of tend to make an assumption that you've got Mt Magnet and Edna May, sort of north, south, and I've sort of been assuming the third hub will maybe be east of that.
Are you able to give any criteria about where you're looking for a third hub, or does that give away information you don't want to give away?
No, Richard, we're happy to share what our criteria is. We do and have done in the past, put that in a lot of our presentations. Obviously, WA is where we operate, and clearly, that would be our preference for a third hub to be located in our in our backyard. We do and are capable, obviously, of looking further afield, but the focus very much at the moment is on WA. In terms of the asset or type of sort of aspects that we're chasing, ideally, it is something that has the ability to produce around about 100,000 ounces per annum as a target level. Also, ideally, it's an asset or a hub that is, if not in production, then it's very close.
We'd love it to have some solid exploration potential. It doesn't necessarily have to be the cheapest operation in the world. We think we can add value when it comes to costs and managing costs. As long as it's got the ability to be reasonably competitive, you know, that would suit us. I guess every man and his dog is looking for those sorts of things, we are, I suppose we're match fit, we're ready to go, if something does crop up that we haven't already looked at, we'll be ready to take it on. It does need to meet those criteria, obviously, the other one is that it needs to be a suitable rate of return for our business.
Also, it may not initially have 10-year life, but maybe have a view to a 10-year life, because life is something that we see is quite valuable. Whether it's east, west, north, south of project XYZ, which is obviously that's a bit harder to pin down, but WA is a good place to start.
Yeah. Look, again, I'll just say, as a shareholder, thanks for all the work you do, and congratulations.
Thanks, Richard. Appreciate it.
There are no further questions at this time. I'll now hand back to Mr. Zeptner for closing remarks.
Thank you, Ashley. In summary, we see the offer as an excellent opportunity for both Musgrave and Ramelius shareholders to benefit from the good work done by the respective teams at our close proximity Cue and Mt Magnet projects. We do hope that Musgrave shareholders join us on the journey that, as we've shown with the very strong free cash flow generation in the quarter just gone, promises to be a very exciting one. Thank you once again for dialing in. Enjoy the rest of your day.
That does conclude our conference for today. Thank you for participating. You may now disconnect.