Thank you for standing by, and welcome to the Ramelius Resources quarterly teleconference. 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 the number one on your telephone keypad. I'd now like to hand the conference over to Mr. Mark Zeptner, Managing Director. Please go ahead.
Good morning, everyone. Thank you for taking the time to dial into Ramelius's March quarterly conference call. Alongside once again is Chief Financial Officer, Tim Manners. Following the usual course of events, I'll run through the operational highlights from the quarter, referencing the March 2023 quarterly activities report released on the platform earlier this morning, before handing over to Tim to go into the numbers in more detail. We will then open the line to answer any questions that you may have before finishing off with some brief closing remarks. As you will have no doubt seen this morning, we reported gold production of 54,244oz at an all-in sustaining cost of AUD 1,873 an Oz for the three months to 31st of March.
Production was 4% softer than the December quarter, primarily due to the conclusion of mining at Vivian and delays securing approval for the newly upgraded Penny haul road. This affected output from Mount Magnet, but was offset to some extent by a 29% improvement in the head grade at Edna May compared to the prior quarter. The delay with the Penny haul road approval has meant that we have had to persevere with running double road trains with a max payload of 50 tons on day shift only, as opposed to stepping up to a 100-ton payload quad road trains around the clock. This has resulted in the buildup of some 30,000 ton ore stockpile that currently sits at the mine. However, we are confident that Main Roads' approval for the larger configuration will be received on or before the 10th of May.
Once that comes through, there is a schedule in place that will see the stockpile effectively reduced to nil by the end of June, as well as ensuring the additional tons that are mined through the quarter are also hauled to Mount Magnet, obviously. We plan to do this by utilizing twice the number of road trains we would need in normal circumstances, giving us a monthly haulage capacity of around 40,000 tons per month for a period of time, instead of 20,000 tons per month capacity that will be needed going forward.
Down to Tampia and Marda, all haulage to the Edna May plant from Tampia and Marda during the March quarter remained comparable with the December quarter, but we did see some decent improvements in March and for the month of date in April so far, as we're able to redirect some haulage capacity from Kevin, as I mentioned, where mining is now concluded to those operations further south. The upshot of the March quarter performance is that we have tightened our full year guidance to 240,000-250,000oz at the upper end of the all-in sustaining cost range of AUD 1,750-AUD 1,950 an oz. If you do the math, this means that we are forecasting a very strong finish to the year.
Our best quarter of the year, with June quarter guidance being 67,500-77,500oz at an all-in sustaining cost of between AUD 700-AUD 1,800 per oz as more of the Penny ore feeds through the Mt Magnet plant. We therefore expect the June quarter to be an excellent one from a cash generation point of view, as the higher gold production will combine with lower non-sustaining or growth capital expenditure from underground projects such as Kevin and Galaxy and from the Die Hardy open pit at Marda.
Moving to exploration, there have been a few highlights to note, including those from infill drilling at the Galaxy underground mine, where if I just focus on the broader intercepts only, have included 3.9 meters at 166.7 grams per ton, 12 meters at 9 grams per ton, and 2.1 meters at 44.6 grams per ton. We'll be commencing ore driving at Galaxy shortly. From the Rebecca project, where infill and extensional resource drilling has returned results including 32 meters at 1.68 and 15 meters at 3.4 grams per ton at the Rebecca deposit itself, and 25 meters at just over 2 grams per ton at the nearby Duchess deposit. A more in-depth summary of exploration conducted can be found within the quarterly itself.
The PFS for Rebecca is progressing well and remains on track for completion by the end of June. Noting that if we are successful with the Breaker takeover, this may prompt a rethink, as I believe I have mentioned previously. At Symes, approximately to Edna May, the PFS was delivered during the quarter with positive findings that were pretty much in line with the previously released scoping study. The board has given approval for development of Symes to go ahead once we've received all regulatory approvals, and we expect those by the middle of the calendar year.
On a final note, before I hand over, on 20 March , Ramelius announced the recommended all-scrip takeover for Breaker Resources, owner of the Lake Roe gold project, 100 or so km east of Kalgoorlie, which is in close proximity to our own Rebecca project. We have discussed the rationale behind combining Lake Roe and Rebecca at length on previous calls, so I don't intend to go into that in detail again this morning. Just noting that as of the close of business yesterday, we had reached acceptances of just over 39% from Breaker shareholders after declaring the offer best and final last week. With that, I'll hand over to you, Tim.
Thanks, Mark. Gold sales for the quarter were 52,787oz , with an average realized price of just under $2,600 an oz, generating revenue of approximately AUD 137 million. The underlying cash flow was AUD 8.4 million, which was an improvement on the AUD 21 million outflow reported in the December quarter. Nearly a AUD 30 million improvement, which was largely a result of reduced expenditure compared quarter-on-quarter. The positive cash flow result was after the investment in the development of our asset portfolio as touched upon earlier, including AUD 16 million on underground development at Penny and Galaxy, AUD three and a half million on the Die Hardy pit at Marda, and AUD four and a half million on exploration.
There was also the first and final stamp duty payment of AUD 8 million that was made in January for the acquisition of Apollo Consolidated, which owned the Rebecca project. That AUD 8 million was accrued for in the financial statements of 30 June 2022. Our cash and billing position as a result of the above ended the quarter at AUD 154.4 million, which is slightly ahead of where we were at the end of December. We still have the undrawn AUD 100 million debt facility in place should we wish to access it for any growth opportunities we see. Projected non-sustaining CapEx requirements for FY 2023 have increased, however, to just under AUD 71 million, with AUD 12.8 million now forecast for the June quarter.
The increase in CapEx relates primarily to the development of the Die Hardy open pit at Marda and the Galaxy underground at Magnet. I'll touch upon both quickly, in general, these are timing differences or reclassification differences only. At Die Hardy, waste material was moved in preference to ore mining during the March quarter. There was no impact at Nguma, or its gold production as there was sufficient stockpiles for haulage to continue uninterrupted. Essentially what we've done there is bring forward waste removal costs while overall mining costs for the pit remain within expectations. At Galaxy, ore development will commence during the June quarter, as Mark noted, as progress is made towards reaching commercial mining physicals, which is slightly later than previously forecast.
This will result in more capital costs being classified as non-sustaining as opposed to sustaining. Not a material change overall, more of a reclassification from one category to another. On the hedging front and gold price front, we did take advantage of the strong eight dollar gold price during the quarter, which despite today's spot, the quarter averaged $2,770 an oz, which seems like a world ago. The contango in the forward curve enabled us to achieve an average price in the quarter for new contracts of $2,911 an oz, with the highest contract being more than $3,200 per oz.
At the end of the quarter, forward gold sales consisted of 222,000oz at an average price of $2,702 an oz over the period April 2023 to September 2025. Lastly, in line with managing margins, not just the top line, we have started a very modest program of fixing diesel prices. It's one of the few input costs you can actually hedge, so we have dipped our toe in the water on this front. As you will have seen, we've only secured prices on a very small quantity of the diesel we expect to use. Importantly, we have the facilities to expand that if we see fit. With that, Darcy, can we please open the line for questions?
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on speaker, please pick up the handset to ask your question. Your first question comes from Alex Barkley from RBC. Please go ahead.
Hi, Mark and Tim. A few questions around that Penny trucking. I think previously you mentioned an upgrade to triple road chains. Why the change to quads? Also, what exactly was, you know, the permit delay? Is that something to do with the quad trains you're looking at? Once you do get the permit, how are you looking for the fleet and the appropriately ticketed operators? Is that all good to go once you get that permit?
I'll go with that one, Tim. Thanks, Alex. I think that to answer the first question about triples and quads, there is little difference. They both haul approximately 100 tons. One is a PBS triple, which means that you can haul slightly more per trailer, as opposed to more of a traditional quad. The reason why we're now talking about quads is in line with our, the contractor we intend to use for the Penny haulage, who have quads available. PBS triples are a special order in a way, and we use them for the Marda and Tampia haulage routes. So it's more about availability.
It's the same category of haul road approval, largely, without getting into the detail of that because there's a whole number of network categories that Main Roads use. There's no difference in the tonnage at the end of the day, and we're lining that up with availability. That probably answers your third question. The contractor we have awarded that work to has trucks coming off another job ready to go and have obviously people with that as well. We're pretty well positioned timing-wise for that. The delays, I think it's a process that we've done a number of times before. Unfortunately, in this case, it's probably been the longest process that I can remember, and I can put it down to probably a couple of things.
New people that we've had to deal with two shires, Sandstone and Mount Magnet. We've never dealt with Sandstone before, dealing with new people and new people even at Mount Magnet Shire and new people on our mine, up until the recent changes with the Vivian team going down to Penny. I think just generally, local government shires are taking longer to put in place road usage agreements and are asking for more. Just like most approvals processes, they're typically a bit longer. There's been a few learnings for us out of this. Our approach in the past hasn't been as effective this time around. Ideally, we catch up by June 30, and all is forgiven, in inverted commas. Yeah, it hasn't been ideal, and it's taken longer than we would have liked.
Okay. What gives you confidence in that tenth of May date, which is quite a specific date you've given there?
I've had to dig into the processes quite closely to understand and to have some confidence. The final step in the process is when Main Roads actually load onto their system onto their heavy vehicle mapping system. Once it's loaded onto that, which is basically an online system, you're good to go. They do that every Wednesday. We've actually got a site inspection tomorrow of the section of road that needs to be upgraded.
There's about a 27 km section that we've upgraded that needs inspection by Main Roads Geraldton. There's a process of inputting the data and updating the mapping tool. Talking to Main Roads in Perth, there's a possibility it could be a bit earlier. I've shot for the tenth of May, which you'll find is a Wednesday, giving it enough time for the inspection and the information to flow through to Main Roads Perth and for them to upload.
Okay. That's all quite clear. Thanks very much, guys.
Thanks, Alex.
Thanks, Alex.
Thank you. Your next question comes from Paul Kaner from Ord Minnett. Please go ahead.
Good morning, Tim and Mark. Thanks for taking my question. Just on that increased capital expenditure guidance. I know you mentioned that at Die Hardy, you've preferenced waste mining. Does that mean we can expect growth CapEx to be a bit lower in FY 2024 at the Edna May Hub?
Paul, it's Tim. If you like, the shuffling costs has come a little bit out of the quarter we've been in and will come a little bit out of the quarter that we're about to be in now and the subsequent ones. There's no particular sort of period or month that has suddenly now come down by AUD 5 million. It's just a case of, as we often do, we recheck and update our schedules on a monthly basis. Given the amount of stockpiles we have available to us, the most optimal sort of dirt moving during the quarter was to move the waste. We've done that. It will end up sort of meaning we move less in subsequent quarters. Look, it's not gonna be July, for example, is suddenly AUD 5 million lower. It'll be spread across a three, four month type timeframe.
Yeah. No. Understood. Maybe just to follow on from that, how should we really think about group growth CapEx in FY 2024 relative to FY 2023?
From where we sit today, we would expect it to be lower. Obviously we have broken the back, I would think of certainly places like Penny, and the Galaxy mine. There's not a huge amount of development left at the Edna May Underground. Mount Magnet, you never know. There's always areas which require development, as we move along. I think all else being equal
On the Edna May Hub specifically, Paul, we've got the Symes project, but that's not a.
That's not big.
big capital item. I think that's less than AUD 5 million. You're getting into some real rats and mice. Overall, I expect that number to be lower.
I think the next big-ticket item, you know, is more than likely gonna be something along the lines of Rebecca or one of the other potential projects that sit within the Mount Magnet sort of sphere.
Yep. No, that's very clear. Thanks, gents. I'll pass on.
Thanks, Paul.
Thank you. 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 Hart, Private investor. Please go ahead.
Thanks very much. Good morning, Mark and Tim. Thanks again for your hard work and your presentation. It looks like an exciting quarter from the production point of view, cash point of view, and the takeover point of view. I wish you well. I'm sure you'll be up to your neck in work, but good luck with all that. One query about the report that occurred to me, the Galaxy underground drill results, Often in the past, they would have been referred to as bonanza, which as a shareholder I like because it immediately affects the share price. I'm just wondering about the criteria. You rarely produce drill results. I'm wondering, are there criteria you use to decide whether drill results should be independently notified or just added to a quarterly like this?
Good. Thanks, Richard. Good question. Mt Magnet is one of those places where you can get numbers that on the surface of it look like they need a separate report. You know, whether we think it's processes or material, we think this is more typically what you get at Mt Magnet. You know, it's a mixture of high grade, lower grade. The GOs thought that this was something that needed to be reported separately
Then we'd go along those lines. In saying that, you know, we're quite happy with those numbers, and we can't wait to get into those ore drives at Galaxy. You'll have some patches of really good stuff, and you have some patches that are a bit lower as well. That's Mt Magnet. I suppose history has taught us not to get carried away with an odd result here and there, as much as, you know, shareholders would like us to.
That's almost the answer I thought you'd give. It's all about context, I suppose, rather than those. Again, it's being selfish as an investor because whenever bonanza is mentioned, it does have a healthy effect. I understand where you're coming from, so thanks for everything.
Thanks, Richard.
Thank you. Your next question comes from Ashley Chan, private investor. Please go ahead.
Hi, Mark. Hi, Tim. Thanks for the update and quarterly report. I just got a usual question on if you're able to provide some color or an update on the hedging strategy going forward. If I'm looking at page 22 of the quarterly report, it looks like that the strategy previously was hedging half of production two years ahead. You see that for the coming quarter, you've hedged 34,000oz , if I'm correctly reading it, at $2,568.
That would have been done a couple of years ago, hedging half of your forecast production. I just want some comment on whether you're keeping a track of the cost of this. If you multiply the current spot price by the hedging price, you're coming out to something like $15 million a quarter. That of foregone revenue. Whether you've got some comment on how that relates to how much you'll be hedging going forward, given that you're also focusing on hedging your on trying to fix your costs as well. Thanks?
Actually, it's Tim here. I'm happy to respond. The policy, broadly speaking, in terms of volume, is essentially a year's worth of production over no more than three years. We have a policy that weights production to short term rather than long term, or weights oz, sorry, to short term rather than long term. I would, and I mentioned it in my call, it's very easy to say, well, the price today is $3,000 an oz. The average price for the quarter just gone was approximately $160 an oz higher than what we achieved. Yes, there are some dollars that are being foregone. It's in the order in the quarter just gone of some AUD 7 million-AUD 8 million, if my mental maths is right. That does vary.
We would expect that to reduce over time as the price in our hedge book increases. At the moment, you know, we value the certainty that we get through contracts. There are some legacy contracts, as you pointed out, in our book. Certainly some of the shorter-dated stuff from here was put on a number of months, even years ago. When the prices went through $2,000 an oz, it was deemed to be sort of a, if you like, a whole new brave world. To lock in margins at those levels was considered, we felt, to be quite prudent, and we stand by that. We will always monitor the policy.
The policy is set by the board. We implement it. It's reviewed and tested at least quarterly, if not more frequently. I think if you were to sort of need a guide as to what to expect going forward, I would be working broadly along those assumptions. As I mentioned, that approximately one year worth of production, so 240, 250 at the moment, over no more than three years, with a weighting towards short-dated positions rather than longer-dated positions.
Thanks, Tim. Much appreciated.
No problem. Thank you. Thanks, Ashley.
Thank you. Your next question comes from Josh Chiat from Stockhead. Please go ahead.
Hey, Mark. Just following on from that a bit, a little bit more generally, you know, we've seen gold equities tick up. You noted that you had a hedge contract there at $3,200 an oz. Do you think that the corner is sort of being turned for sentiment and investor interest in the gold space?
Thanks, Josh. Yeah, no, it certainly has improved in recent times. You know, 2022 was a pretty ordinary year for gold. Everything else seemed to be more popular. It comes and goes quickly, Josh. At the moment, yeah, it's certainly a better place to be. For the gold price to be around $3,000, there's been a bit of catch-up on the gold price as compared to cost increases that we've all seen. There's probably a bit of evening out where margins are, have, you know, stabilized. Obviously in the case of Ramelius, with our lower end cost profile actually starting to expand again, which is something we're looking forward to.
On the cost profile, obviously you've spoken quite a lot about Penny and the impact of having the higher grade ore coming in, but are you seeing any easing of some of the more general costs around the industry, labor shortages, availability, and things that give you confidence you can sustain a margin at the moment?
Josh, it's Tim. I might just jump in on that. We're obviously seeing a little bit of pullback in some of the input costs like diesel, for example. I think slash hope that the pressure that we've seen on the labor market, I mean, I guess the short answer is I don't know, but from what we're seeing, the situation seems to have sort of stabilized. It's certainly not on its way back down, I think that's gonna take some time to happen. Sort of I hate to say it, but hopefully the worst is now behind us.
We still have periods where vacancies pop up. They seem to come in waves. At the moment we're, you know, in a lot better place than we were 12, 18 months ago, that's for sure. In terms of costs, labor is a key part of it, both our own employees and those who work for our contractors. It's an area that we have to be very mindful of and closely watch because it does drive probably 60% of our underlying costs are people and the ancillary costs that flow from people as well. Yeah, hopefully that gives you some sense for what we're seeing.
Cheers. Thanks. I'll pass it back.
Thanks, Josh.
Thanks, Josh.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Zeptner for closing remarks.
Thank you, Darcy. Just to wrap up, I'd like to emphasize if I could just three points. The quarter was okay. Without a significant contribution from Penny, we were able to still generate over AUD 8 million of free cash flow, and that's before the stamp duty payment for the Apollo transaction last year. The June quarter looks extremely strong for the company. Higher oz, lower costs, both OpEx and CapEx, leading to significant cash generation expectations, both internally and I'm sure externally. Three, the Breaker of takeover. The Breaker takeover is progressing well towards 50.1%, and the offer then being declared unconditional, which we will expect it to generate further momentum in the process after that point. Thank you for listening in today. Enjoy the rest of your day.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.