Thank you for standing by, and welcome to the Ramelius Resources three-year production outlook and study updates conference call. 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 would now like to hand the conference over to Mr. Mark Zeptner, Managing Director. Please go ahead.
Thank you, Cameron. Good morning, everyone, and thank you for taking the time to dial in this morning. With me, once again is Chief Financial Officer Tim Manners. Although it's not a quarterly call today, we'll still follow our familiar process, in that I'll provide an overview before passing over to Tim to delve into the numbers in more detail. We'll then open the line for some questions. To set the scene, following the release of FY 2023 guidance in July this year, and a steadying of market and operational conditions, the company is pleased to now provide a three-year outlook being a medium-term view of consistent production and a lowering all-in sustaining cost profile. Noting that this reducing all-in sustaining cost is largely due to the increasing contribution from the low-cost Penny Mine over the period.
As one of our analyst friends put it, we are getting a sugar hit from Penny in the next few years, but that probably underplays the excellent work that has been done elsewhere to bring new projects into production and keep the processing plants at both Mt Magnet and Edna May as full as possible. Now, most of you will be familiar with the guidance set for this financial year, given that it was first provided back in July when we presented our June quarterly report. Now we have forecast for production of between 250,000 oz and 290,000 oz in both financial years 2024 and 2025, with an all-in sustaining cost of between AUD 1,500 and AUD 1,700 per ounce in financial 2024, and between AUD 1,400 and AUD 1,600 an ounce in financial year 2025.
The data used to establish these forecasts has been extracted from the mine plans prepared annually by each operation and represent a subset of the longer mine life expected at Mt Magnet and, should stage three open pit be approved, also at Edna May. Just to run quickly through the main deposits that are included in the outlook. Feeding through Mt Magnet, we have the Eridanus, Orion, Galaxy and Brown Hill open pits, and the Hill 60, Penny and Vivien undergrounds. While feeding through Edna May, we have the Edna May underground as well as the Tampia, Marda and Symes' Find open pits. That means a number of deposits and projects have not been factored into calculations. Providing everything stacks up as we move these projects forward, they'll come into the mine plan over the following years.
This list includes Eridanus Underground, Hill 50 Underground, which I'll talk about more shortly, Morning Star and Bartas East, all at Mt Magnet, and the stage three open pit at Edna May. Importantly, there's also no production assumed at this stage from our greenfields exploration project at Rebecca, where we are targeting a long life operation in its own right. Now, we acknowledge the interest in the stage three open pit. At this point, there is not a lot to update on beyond what was said in the September quarterly. Contractor pricing will be received and assessed this quarter. All other sections of the PFS are largely complete, and development does need to commence next year to meet the mine plan schedule outlined in 2021.
According to the schedule, meaningful production from stage three is not required until 2026, which is obviously outside the three-year plan timeframe being discussed today. The more meaningful project updates in today's announcement relate to Hill 50 Underground at Mt Magnet and the Symes' Find deposit, which is down the road from Edna May. Scoping study on completing the rehabilitation of the Hill 50 Underground decline to mine the depth extension of the Hill 50 banded iron mineralization, as well as the remnant mineralization left behind at the bottom of the mine when it was closed in 2007. The mineral resource at Hill 50 is currently 1.9 million tons at 6 g for 360,000 oz.
The scoping study itself incorporated, and I'm using some ranges here, 880,000-960,000 tons at 7 g-8 g for 210,000-230,000 oz. This does include a proportion of unclassified resource below the classified resource. This material is an exploration target where ranges are used, and that range is estimated between 150,000 oz-230,000 oz at 5 g-12 g, thus the use of ranges when discussing the overall results of the study. Before we progress to a PFS, further work is required to convert this exploration target to mineral resources and ideally upgrade the inferred mineral resources to the indicated category.
This will either be completed through surface drilling of deep diamond drill holes or through the rehabilitation of the decline to a deeper position, followed up by underground diamond drilling. A decision will be made on this early next year. On to Symes' Find, a small but relatively lucrative project. Following the completion of an RC infill program, we have updated the resource model, and the mineral resource now sits at 1,400,000 tons at 1.7 g for 75,000 oz. We have completed an initial scoping study incorporating, if I use midpoints, 550,000 tons at 2 g for 36,000 oz with relatively modest pre-production capital of AUD 4.5 million and an all-in sustaining cost of AUD 1,650 per ounce.
The majority of the resources at Symes' Find are located on granted mining leases, but we are applying for some additional tenure that will host supporting infrastructure and expansions of the main pit. Detailed hydro and geotechnical assessments are underway, and contracted pricing will be chased up shortly. Now let me pass over to Tim for some more detail on the assumptions behind the production operating and capital cost estimate over the outlook period. Tim?
Thanks, Mark. In relation to the outlook provided to you today, there has been a lot of consideration given to both the key costs and physical input parameters used. As most would appreciate, as actual costs change in our business, it requires us to reassess our forward-looking assumptions. This can, in turn, affect parameters such as cut-off grades at each mine, which in turn change physical and financial outcomes, and so the process rolls on. The iterative process is complex and needs a great deal of input from each site-based mining and processing team, technical support, and the accounts team here in Perth. The point being, this is not a model that has been pulled together at a high level. This is a bottom-up costed model that forms the basis of our short and long-term planning process each year.
This outlook is a snapshot of the first three years of each site's longer-term production and cash flow models. As part of the preparation for this three-year profile, the focus was on confirming a robust physical profile based heavily on high-confidence material. Indeed, 97% of the contained ounces in this profile are based on ore reserves or measured and indicated resources. We have then looked closely at where our input costs have been and what a reasonable forward projection of these costs may look like, particularly in areas that are likely more sensitive to the inflationary environment we are in today. Our major costs, be it directly or indirectly, are people. The recent trends in salary and wage movements have been used to guide future costs where we feel appropriate.
We've also used current prices for all of our major consumables like steel, diesel, and reagents, and considered whether or not, on a case-by-case basis, to apply further cost escalation to what the industry has already seen. Hopefully, you'll understand that we have not simply applied an inflationary factor to historical costs across the business. We have worked hard to put forward a model based on sensible assumptions around physicals and costs. However, as always, one thing is certain, and that is that those assumptions will be wrong. But we would like to think that the end results will fall within the AUD 200 per ounce range provided in the all-in sustaining cost figures and the AUD 20 million per annum range in capital. The other big driver in any all-in sustaining cost calculation is grade.
While the all-in sustaining cost is simply an amount spent on producing gold, the cost for each ounce is driven as much by the ore source as that expenditure itself. As most will be familiar, the underground at Penny is progressing well towards a meaningful contribution in the second half of the current financial year. As you can see from the chart, it's no coincidence that the increase in ounces from Mt Magnet and the reduction in costs over the three years correlates well with the increase in ore from Penny, and importantly, the shift over time as the ore is sourced more and more from high-grade stoping activities, the development costs of which would have already been expensed.
While Penny is a significant contributor to production and reducing costs, it can only generate those returns due to the reliable large tonnage operations to underlie Mt Magnet over this timeframe, like Eridanus's open pit and other large tonnage undergrounds like Galaxy. While we are yet to make a decision on stage three, the production from Tampia, Marda, Symes' Find, and the Edna May underground generate excellent cash returns from the capital invested to date, and as we release the inherent cash flow from the plus 1 million tons of high-grade open pit ROM stocks, particularly at Tampia. Overall, we believe the outlook provided is a robust view of the Ramelius business out to 2025. This profile provides a solid base upon which to grow our business through organic opportunities, some of which are discussed in the release itself, and inorganic opportunities if and when they arise.
As the release makes mention, there is also an excellent opportunity we have at Rebecca for it to become its own standalone operation once drilling and studies are complete. None of this excellent potential has been included in this outlook at this time. On balance, this outlook should further add to the financial strength of Ramelius and build upon our balance sheet strength and positioning us well as we continue our goal to deliver superior returns to shareholders. I will now hand you back to the operator, Cameron, to open the line for questions. Thank you.
Thank you. Once again, if you do wish to ask a question, please register by pressing star then one on your telephone and waiting for your name to be announced. If at any time you wish to cancel your request, you can do that by pressing star and then two. If you are on a speakerphone, please pick up your handset before asking your question. The first question comes from Andrew Bowler at Macquarie. Please go ahead.
Morning, gents. Just looking at the Hill 50 scoping study. Correct me if I'm wrong, but it looks like it's, you know, roughly one and a half kilometers deep. Can you just give us an indication of what the ground conditions there were like back in 2007? You know, are you expecting any difficulty at that depth or is it, you know, pretty decent like the rest of the mining that is there?
Thanks, Andrew. It's Mark. Ground conditions were challenging at 1.5 km depth, as you would expect in a mine that was mining without paste fill, with geotech, I suppose limited geotech, systems that you would have in place, on a re-entry. We've had AMC look at that in detail. We also believe that conditions will remain pretty similar from 1.5 km- 2 km plus. They're not gonna get any worse. You know, but there are depth issues that have to be addressed. They obviously weren't able to do that much in 2007 at a $500 gold price and a mine that was heading towards closure really quickly. We expect to actually have a pretty good run down to the bottom in terms of rehab. Look, we don't underestimate that, we are mining at a reasonable depth there.
No worries. Also, again, just looking at the imaging provided, it looks like sort of roughly the top, I don't know, kilometer has a you know raise bore. Are you expecting to be going deeper than what's outlined, you know, past the exploration target inventory? Are you expecting to bring in another lump of capital to put another raise bore down there? Or are you happy with what you think the vent's gonna be like?
There's raise bores and obviously refrigeration and a whole heap of things in that capital number, which will get us to the bottom of the study, but also beyond that, we believe. There'll be an extension of the system. We're actually looking at putting in as part of the scoping study in raise bores, in addition to what we're already installing at Galaxy. Hill 50 does get a bit of a free kick from the Galaxy underground mine, which is the top sort of 400 meters vertical plus some ventilation infrastructure.
It won't need a whole revamp to go deeper, and that's one of the beauties of Hill 50 is once that capital is spent, assuming there's extensions to the ore body, which the vertical continuity geologically is wonderful. We also haven't included any of the remnants, which is always a trap to the remnants higher in the mine that you see on page. Which page is that one?
Page seven.
Page seven of the release. The remnants we refer to are right at the bottom of the mine that were developed but not extracted. There is some stuff that we'd be able to pick up on the way down, but we haven't based the study around that, which I think is important.
No, that's awesome. Thanks, guys.
Thanks, Andrew.
Thank you. Your next question comes from Alex Barkley at RBC. Please go ahead.
Thanks. Morning, Mark and Tim. Just a question on the all-in sustaining costs at Edna May. You've got the gold production falling off at 0.23-0.25. What should we be expecting around the unit costs? How much of that is fixed cost that might exit? Obviously, labor conditions aren't optimal right now. Is there sort of retention payments, that sort of thing? Yeah, just a comment on the cost there.
Alex, it's Tim here. Thanks for the question. Look, it's fear of stating the obvious, particularly in FY 2025. As we've assumed, no stage three, no extensions to the existing assets that we have. Stage three costs, all-in sustaining costs for Edna May by itself, you know, will be at the upper end of an expected range. Couple of things, there's a lot of drawdown, pull down of stockpiles. So a lot of those costs would likely be, or not a lot, but a fair chunk will be non-cash in nature. I think if that was to be the profile, if there was no stage three coming near that timeframe, the mill would likely be reconfigured on a campaign basis to minimize costs where possible.
I guess the bottom line is, though, that in that year, and obviously the two previous years, it's about generating positive cash flow, and Edna May and its surrounds does that. Even at a sort of a AUD 2450 gold price, which is generally what we use in our sort of higher level models. Any retention payments we have, or in the throes of looking to put additional schemes in place, which tend to be share-based, not cash-based. They wouldn't have an impact on those operations at that point. We're pretty confident that whilst production falls, the mill would likely be running at a suboptimal rate. It is still a cash generative operation and hence should be continued through FY 2023 through to FY 2025.
Okay. Just to follow up on that, gold hedging. Edna May as a standalone without the stage three cutback, you know, how would you think about that? Then the stage three cutback itself obviously has strategic importance. Is there any merit in heavily hedging that expansion?
I'll deal with the first bit first. The existing operations we don't feel require any necessary hedging outside of what our current program covers. We feel it can generate the cash flows that we see in front of us, offer a discount to current spot, and see no need to put on any more cover for that specifically. However, in assessing stage three, along with a number of factors, hedging could play a part in understanding whether or not the operation can get across the line, financially.
I suppose the only point we'd make is that, the hedging would be there to supplement and add value to stage three. If it's the hedge book, for example, that got stage three across the line, then I think we'd be doing it for the wrong reason. It has to be able to stand on its own two feet with cost assumptions and gold price assumptions that we typically use across the business. If we can add value by strengthening that with a project-specific hedge, then we'd certainly look at it.
Okay. That's all from me. Thanks very much, guys.
Thanks, Alex.
Thanks, Alex.
Thank you. Once again, if you do wish to ask a question, you can register by pressing star then one on your telephone. Your next question comes from Richard Hart at [Hartleys]. Please go ahead.
Oh, thanks. Thanks Mark and Tim for putting this on. I'm not sure if you've ever done a three-year projection before, but anyway, it's of interest, obviously. I just wanna get back to Hill 50. I just like all the grades naturally, and they're on-site. It's hypothetical, but if Hill 50 goes ahead and becomes mined and ore hits the mill, have you got any idea, sort of timeline?
Thanks, Richard. Yeah, we haven't done a three-year outlook previously, but remembering it is a snapshot or a piece of an overall mine plan. Obviously building on our one-year guidance put out in July. Mt Magnet and Hill 50. Hill 50 wouldn't need to come into the mill until sort of years FY 2026, 2027. It gives us time to assess how things are going at Galaxy, which is effectively the top part of the mine, and we're establishing that and getting that into production.
We're not in a hurry, and that's one of the beauties of Mt Magnet. We've got a number of ore sources. Haven't mentioned really much about Bartas East, which looks like quite a promising underground, much closer to surface. We'll slot that into, you know, a more fulsome mine plan, at the right time. We probably won't talk about mine plans or guidance probably until the middle of next year, at this point in time.
Oh, great. Look, considering all the trucking that goes on and wet weather and roads, it's quite refreshing that there's such good promise on-site. From an investor's point of view, it's quite nice to think we don't have to cart everything for 200 km just to get it to the mill.
Yeah.
One other thing I could ask. I did mention about oil. Oil is very topical. Energy is very topical. You said that you were considering whether to hedge against an oil price with a strategy to use. Did you go any further with that?
To be honest, Richard, still debating that, among a number of different ways we can execute that type of strategy, and we're just very much at the pointy end of determining which one we're gonna use. I would expect that we may well look to put some cover in place. We would typically just use sort of a steady as she goes approach. It won't be a boots and all type situation, but I wouldn't be surprised to see an element of diesel hedging cropping up in the not too distant future.
Okay. Well, look, again, thank you, guys, for all the work you do for us people who just sit at home trying to make money. I appreciate it. The golden horse been very kind to me, and I appreciate the work you guys and all your staff put in, so thanks.
Thanks, Richard.
Thank you. Your next question comes from William Thurlow at Ord Minnett. Please go ahead.
Yeah, good morning, Mark and Tim. Thanks for taking the question. Just a quick one from myself. I was just hoping to get some clarity on the underlying components driving the growth profile or growth capital profile on FY 2024 and 2025 and Mt Magnet production in FY 2025.
Tim, that sounds like it's got a bit of detail, so I'll let you take that one.
Well, just to confirm, you're planning to get into a little bit more detail on the production increase across the timeframe at Mt Magnet?
Yeah. Just, I guess what's constituting Mt Magnet's type of production in FY 2025. Then-
Yeah.
I guess at a group level, the growth capital profile in 2024
Yeah. Okay.
-and 2025.
I'll deal with the production first. Quite simply, it's sort of, as I mentioned, there is solid baseload set of ore sources at Mt Magnet with Eridanus, and obviously Galaxy also provides a fair amount of consistent production, or will do in the coming years. I guess it's simply put, we have a growing increase of penny material in the blend. It gets higher grade typically as we go deeper just because there's more stoping activities undertaken and less development. In essence, the feed, I mean the mill throughput at Mt Magnet is pretty consistent, but the grade does tick up from 2023 to 2024 to 2025, and that's really driving the ounce profile.
On the capital side, it's really just we've gone in and obviously we've refined to not a great degree, but we have refined the production profiles very slightly and things have moved forward or backward in schedules and that has moved the capital a little bit from one year to another. Capital is, you know, is a cost. It's not immune to the inflationary pressures either. I think over the three years, our capital number is higher than where it was published to be in FY 2021. I think about AUD 20 million across the three years. That is largely a cost impact with a little bit of timing and sort of rescheduling thrown in there too.
Okay, wonderful. Thank you very much, Tim.
No problem. Thanks.
Thanks, William. Thank you. We are showing no further questions at this time, so I'd like to hand back for closing remarks. Thank you.
Okay. Thanks, Cameron. To wrap up, Ramelius has today delivered a robust three-year outlook, which displays consistent production and a reducing all-in sustaining cost, which I'd argue is a rare feature in the Aussie gold space. We have delivered two mining study updates ahead of schedule, evidence that the team continues to work hard on delivering resource to reserve conversion for shareholders. Thank you for listening in, especially those who asked questions and enjoy the rest of your day. Thank you.
Thank you, everybody. That concludes our conference for today. You may now disconnect your lines. Thank you.