Thank you for standing by, and welcome to the Ramelius Resources December 2022 quarterly teleconference. All participants are in a listen-only mode. There will be a presentation followed by a question and answer section. If you wish to ask a question, you will need to press star one on your telephone keypad. I would now like to hand the conference over to Mr. Mark Zeptner, Managing Director. Please go ahead.
Thank you, Winnie. Good morning, everyone. Thank you for taking the time to dial in a little earlier this morning. Hopefully, we aren't clashing with too many other calls this way. With me once again is Chief Financial Officer, Tim Manners. Following the usual course of events, I'll run through the operational highlights for the quarter, referencing the December 2022 quarterly activities report released on the platform this morning before passing over to Tim to go into the numbers in more detail. We'll open the line to questions before finishing off with some closing remarks. As most, if not all, of you will be aware, earlier this week, we also announced a significant piece of news with the deferral of the Stage 3 open pit at Edna May.
As stated, this decision was about maintaining a disciplined approach to capital investment and not simply seeking to fill out a production profile with answers that don't meet our financial return criteria. By continuing the environmental permitting processes for the project, we remain ready to be able to revisit the project should key economic variables change, giving the company optionality over a large mineral resource right next to an operating mill. If you happen to have any questions around any of the detail provided on the Stage 3 announcement, we encourage you to put them to us when the line opens later in the call.
Just to reiterate, the deferral of the Stage 3 project does not affect the three-year production outlook released by the company in November last year, which shows a consistent production profile of between 240,000 and 290,000 ounces of gold per year, and also features a reducing all-in sustaining cost profile. Back to the quarterly now. Group gold production for the period came in at 56,756 ounces at an all-in sustaining cost of AUD 2,153 per ounce, while gold sales were 4% higher than the previous quarter at just over 62,000 ounces.
Both of our production centers saw an increase in operating costs during the quarter, with Mount Magnet adversely affected due to less higher-grade feed being available as the Shannon and Vivian underground operations wound down, combined with the ongoing ramp-up of haulage from Penny, and at Edna May was impacted by lower grades from the underground and a higher sustaining capital spent on the plant. Mill throughput at Mount Magnet increased as expected on the prior quarter with the introduction of oxide feed from the Orion open pit, and a total of 458,000 tons was processed. At Edna May, the depletion of historic low-grade stockpiles situated proximal to the mill, led to lower mill throughput compared to the previous quarter, with some 493,000 tons processed.
As has been flagged previously, the second half of the financial year is expected to see an improvement in all-in sustaining cost, driven by the increased ore tonnage contribution from the high-grade Penny mine. This will really start to kick in once the haul road upgrade is completed in February, allowing for the movement of larger loads of ore via triple road trains to Mount Magnet for processing. To date, some ore has been hauled from Penny, less than 10,000 tons in the quarter, using smaller double road trains, which didn't really make a dent in the site's stockpile last quarter, which will continue to grow. That's the stockpile will continue to grow until triple road trains are introduced later in the quarter. We note that currently there is 7,000 ounces of gold ready to be hauled to Mount Magnet at Penny.
At a gold price of AUD 2,750, this represents approximately AUD 17 million in net revenue, which is yet to be seen in the cash flows. Still on the subject of ore haulage, pleasingly, the ore haulage from Tampia and Marda to Edna May increased 13% on the September 2022 quarter, despite a slowdown during the Christmas period, which was mainly related back to good old COVID, which spiked late in the quarter. Haulage for the month of January to date is significantly improved on December, with additional drivers to also shortly become available from the Vivian haulage route, which bodes well for the second half.
The extrapolated figure in the chart in the quarterly uses the average daily haulage figure up until the 23rd of January to arrive at a figure for the month similar to that achieved in October 2022. If we were to use the daily average of the last week of haulage, then we will land bang on our budget rate of around 140,000 tons, which is represented by the dotted line for those with access to the report. It is worth noting also that Tampia exceeded expectations during the December quarter, with the operation recording its best quarterly mining performance with a total of 457,000 tons of 2.26 mined for over 35,000 ounces contained gold.
At the end of the quarter, almost 1 million tons of ore feed was stockpiled at the mine ready for haulage to Edna May. Worthy of mention in terms of mining are Vivian and Penny. After seven years of operation, much longer than originally planned, Vivian hauled its last truck of ore to the surface on the 11th of January. Surface stockpiles will be hauled to Mount Magnet by the end of the month. Surface reclamation work has commenced. Provisionally, 260,000 ounces has been produced from Vivian after starting with a ore reserve just above 100,000 ounces. We will provide more reconciled details next quarter. Wanted to thank the Vivian team, many of whom have been retained within the business, for their efforts in what has been effectively a great mine for the company.
We believe Penny will be even better. In fact, a lot of the management and technical staff have just recently moved from Vivian to Penny. While we're still ore driving at Penny currently, we're scoping to begin shortly. We are all encouraged to see the 21 gram bases like the one in the quarterly. On the project front, we're continuing to develop the Galaxy mine at Mount Magnet, with lateral development commenced across to the Mars ore body with upgo-grades also carried out on the power and pumping systems. We are fast-tracking the Symes Project near Edna May as much as possible with mining lease and mining proposal applications pending. We are moving forward with the Rebecca Project pre-feasibility study, and we'll be able to provide a more definitive timeline for the project's ultimate development in the next five to six months.
With that, I'll now hand over to Tim.
Thanks, Mark. As you pointed out, gold production for the quarter was 56,756 ounces, and gold sales were just over 62,000 ounces. Those ounces were sold at an all-in sustaining cost of AUD 2,153 per ounce. Now, whilst the physicals were lower than our internal expectations and the costs higher, we do remain on track for achieving our full year guidance for both of those key metrics. We will clearly need to rely on a strong second half, but that has always been the case for FY23, and recent internal forecasts reaffirm our view that guidance should be achieved. As Mark mentioned, in Q2, Mount Magnet was impacted slightly by delays at Penny, in particular, the haul road upgrade.
Mainly due to the reducing contribution of two high-grade, very profitable sources, being Shannon and Vivian, which are now all but complete. Whilst the full life of mine review of these mines has not yet been done, we know they have both brought significant financial returns to the company. Whilst Penny will be an asset that will more than compensate for their completion, the high grade underground is not quite ready to make that contribution. The Penny Mine, however, is progressing well, and the ore body appears to be performing in line with expectations. As we have said previously, we are hauling material to the mill at Mount Magnet, but at the moment it is at a reduced rate while the haul road is being upgraded.
The quantity of Penny ore hauled and processed at Magnet is expected to increase in quarter three and increase again in quarter four to what we would then expect it to be its natural run rate going forward of approximately 20,000 tons per month. The costs in the quarter were higher than last quarter and higher than our own expectations. While we have seen an easing cost pressure from some inputs like diesel, the single biggest cost pressure remains people, the availability of people, and the interruptions and inefficiencies that come about through the turnover levels that we, our peers, and our contractors are all experiencing. On the positive side, gold price is in a favorable trend. While general market and economic conditions remain conducive to a positive view on US dollar gold price, the strength of the US dollar itself is less favorable and potentially less predictable.
What the AUD gold price does over the short to medium term remains difficult to judge. Having said that, the achieved sales price for RMS rose by 4% over the prior quarter to AUD 2,536 per ounce, a combination of improved spot and improved hedge book deliveries in the quarter. We continue to actively manage our price risk management by progressively settling all hedge contracts as they mature and adding ounces when we see upward movements in the AUD gold price. As a result, the hedged physical, which has remained reasonably consistent for around 18 months now, was 202,000 ounces at the end of December. However, our average price continues to increase. At the end of December, the average price of the hedge book sat at AUD 2,606 per ounce.
Most of the contracts we have added recently have been between AUD 2,850 and AUD 2,950 per ounce. This supports one of our key reasons to hedge, and that is to enable our operations and technical teams to plan and design new projects with a high degree of certainty around a minimum achievable gold price. Lastly, from me, the cash balance for the quarter dropped AUD 10.8 million, and the gold on hand fell in value by approximately AUD 12.4 million. Whilst the operations generated approximately AUD 15 million in cash flow, this was offset by some of the following key expenditure items. AUD 7.2 million was distributed to shareholders in the form of a fully franked dividend for the last financial year.
A little less than AUD 20 million was spent on non-sustaining capital, including items such as Die Hardy, which is the next open pit at Marda and also at Penny. Nearly AUD 8 million spent on exploration and resource definition. There was also a small reduction in working capital, which was offset by tax refund of a similar amount. Whilst we experienced a small drop in cash and gold, we remain in a very strong financial position with AUD 154 million in cash and gold and a fully committed yet undrawn debt facility of AUD 100 million. Whilst very healthy, we still look forward to bolstering that cash position with an improved second half to this financial year. Thank you all for listening in today. I'll now hand you back to the operator for any 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. We will now pause for a brief moment while waiting for more questions to be registered. Your first question comes from Paul Kaner from Ord Minnett. Please go ahead.
Hi there, Mark and Tim. Thanks for taking my question. Just on the various moving parts there at Edna May. I was just trying to get a sense of what the production profile is gonna do in the second half of this financial year. I mean, grades came down a bit this quarter. Could you maybe just touch on what you think grades and throughput are gonna do in the second half of this financial year?
Paul, it's Tim here. I think we put in the quarter that we still expect the full year for Edna May to be around about 110,000 ounces, which is, I guess, the midpoint, the midpoint of our guidance. It's produced, I guess, 60,000, I think, for the first six months. You're looking at about 50 odd for a midpoint second half. I think you'll probably get a similar sort of trend. I think, as Mark mentioned, we've largely depleted the low-grade stockpiles at Edna May, so the feed really does comprise Mata, Tampia and the underground.
I don't have the exact numbers in front of me, but I'll be working off a sort of a similar, maybe a slightly lower tonnage figure, and a similar grade as we've seen in the first half. I don't think there'll be a dramatic difference from that first six months to the second half.
Too easy. Then maybe just moving across to Mount Magnet and Penny coming online there properly post the haul road completion. I think you said was that 20,000 tons per month from Penny post the haul road completion?
Yeah, that's correct, Paul. Full sort of production rate is around that 20,000 tons per month, which we should be there from a mining sense by March, and slightly thereafter from haulage. Yeah, you should be hauling 60,000 tons and mining 60,000 tons or thereabout per quarter from Penny. We obviously hauled 10,000 in the last quarter. Just highlighting, you know, what's to come for Penny and how significant that's gonna be.
Yeah. If we take for the March quarter, you'll get 20,000 tons there, post that haul road completion in February, and then you'll have how much from the existing haulage now?
The current rate is running at around about that, you know, 10,000-15,000 ton rate. When the upgrade is done, you're right, we will shift to essentially triple road trains, which on an annualized basis will be running at that 240,000 ton per annum rate. I guess the question will depend when we swing from doubles to triples. When the road is complete and approved. Difficult to say with a degree of certainty exactly when that date will be. I think we'll find that during Q3, we'll run doubles for as long as we can and bring triples in as soon as we can. Q4 will be, I'd imagine, a solely sort of triple structure at that 20,000 ton per month rate.
Just to clarify, Paul, the doubles are not two-thirds of a triple. They're effectively 50 ton load, where a triple is 100. You can get twice the tonnage out of the triple road trains. We could do 30,000 tons for quarter three as opposed to 60 with triples. The reason we did 10,000 last quarter is because we started hauling with the doubles in December, around the same time as the road upgrade commenced. I hope that gives you a little bit of color there.
Yeah. No, that's great color. Thanks. I'll pass it on. Thank you.
Next question comes from Andrew Hines, from Shaw and Partners. Please go ahead.
Yeah, hi, guys. Just a couple of things from me. First of all, on Mount Magnet and the Penny ore coming in. Is the Penny ore body reasonably homogeneous in terms of grade, or is there gonna be sort of grade variability as you ramp up initially, you know, higher grade or lower grade initially? Secondly, on the decision not to go ahead with the Edna May Stage 3. You know, I note that you haven't changed your obviously, your three-year plan, and it doesn't impact on that. You know, clearly there's some implications here for Edna May, you know, beyond 25.
You know, obviously it's a little while away yet, but interested in your early thoughts about, you know, what are your options to keep that mill, that infrastructure, full if you're not gonna go ahead with Stage 3?
In terms of the grade at Penny, I suppose it's as homogeneous as a gold ore body can be, which is not very homogeneous. You will see that the grade of material truck to Mount Magnet to date and the stockpile grade is slightly lower than the average reserve. That's based on the fact that you're at the top and the peripheries of the ore body and your ore driving, so you're taking more, typically more, more dilution than you would from a scoping point of view. In the early part, that's expected. Once you're into full stoping, we should be hitting around that 15 grams per ton. At the moment, we're more like 10 or 11.
Encouraged by, you know, sort of the 20-plus gram faces that we're starting to see on just the third level down, if you refer back to the, to the long section. In terms of Stage 3, yeah, look, we do have some time. We'll look at options in the area to extend life, both with our own portfolio such at Holleton and also, you know, in the region. Southern Cross is not too far away, for example. We did make the comment, I think we were asked the other day that Edna May Stage 3 provides at the moment the longest life potential.
It doesn't mean that we won't look to tack on a year or two here and there, which again buys more time for Edna May Stage 3 to potentially come back at a later date, under the right economic conditions.
Yeah. Okay. Thanks, Mark. Thanks, Tim.
Bye, Andrew.
Your next question comes from Steven Matthews from WAM Capital. Please go ahead.
Yes. Good day, gentlemen. Negotiating a Native Title agreement can be a fraught exercise. Can you provide a bit of clarity around Rebecca and the mention there of progress in a Native Title review and application?
There's two mining leases at Rebecca. One has already been granted, and the second, which is much smaller, extension effectively to that granted lease is subject to Native Title. We're in the processes of establishing relationship with the Native Title group and going through the process. And that'll all be part of the sort of the Gantt chart timeline for development of the Rebecca project. We don't have a agreement, and we didn't inherit an agreement, but we'll be working on one going forward.
Okay. Thank you.
Thanks, David.
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 from Tael Partners. Please go ahead.
Good morning, Mark and Tim. Thanks for your time. Just one little question. I saw your results from the joint venture at Infinity this morning. I'm aware there's been big delays in laboratories, and I'm just wondering, firstly, is that improving at all? Secondly, could you give me a rough idea of any results that are particularly significant that you're waiting on?
Thanks, Richard. It's Mark. I don't get a sense that things have improved that much in the turnaround of samples. If you're gonna go and drill a diamond drill hole, you've got to drill it, get it cut, get it to the lab, you know, you're talking like a three, four-month process. I'm obviously not aware of significant re-results that are coming. We release them, not every hole we get, but we release them in, I suppose, reasonable batches. Otherwise, we would be, you know, updating the market sort of for every hole. We don't think that makes sense. I'm not aware of anything that's outstanding. They'll come in from all parts of the portfolio, as they come in. There's quite a lag, as you'd appreciate.
Right. Okay. When I said that significant ones come in, obviously you don't know they're significant till they arrive.
Mm-hmm.
trying to get some idea if there was anything you guys were particularly excited about and waiting for. That was all. I imagine you won't tell me, so it's fine. Look, I won't keep you. Thanks very much for your time again, and look forward to pre-manual.
Thanks, Richard.
Thanks, Richard.
Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. We will now pause for a brief moment while waiting for questions to be registered.
Doesn't look like there's any more questions. Thanks, Winnie. Just to wrap up now, I'd like to emphasize three points. One, as expected, Ramelius posted a quarterly result that was somewhat similar to Q1. Although the lack of hauling and processing of Penny material made it look worse than reality. We have approximately AUD 78 million worth of ore ready to truck to Mount Magnet at Penny, and we'll be up to full mining and hauling run rates by Q4. Haulage rates was better, this is Edna May haulage rates. Whilst better in Q2 than Q1, we're marred by a somewhat poor December. Despite this, January to date, figures show or support the fact that we're back on track and that road train driver shortages are slowly becoming less of an issue.
3, we have shown capital discipline with our recent decision to defer Edna May. True to our mission of delivering superior returns, we trust that this gives investors the certainty that they were looking for and allows us to focus on delivering the cash flows that are expected from the current portfolio. Thank you for listening in today, and enjoy the rest of your day.
That does conclude our conference for today. Thank you for participating. You may now disconnect.