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 1 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 taking the time to dial in this morning. With me, as usual, is Chief Financial Officer Tim Manners. Following the standard course of events, I'll run through the operational highlights from the quarter before passing over to Tim to go into the numbers in more detail. We'll then open the line to questions. As you will have seen, this morning we announced group production of 258,625 ounces for the financial year 2022. Within the result, revised guidance range of 255,000-260,000 ounces was provided just over a month ago and only marginally below our original guidance posted this time last year.
By way of a reminder, the revision to production guidance was necessary mainly due to some untimely rain events affecting haulage routes and ongoing staff shortages related to the labor market itself, COVID-19, and the flu season. All-in sustaining costs for the full year came in at AUD 1,523 an ounce, right at the top end of guidance, as the team did an admirable job in an obviously inflationary environment that has become more difficult each quarter. Focusing on the June quarterly performance, the company produced 67,418 ounces at an all-in sustaining cost of AUD 1,564 per ounce for the period. Actually representing the highest production quarter for the whole financial year.
The split between the two production hubs was 31,413 ounces from Mount Magnet at an all-in sustaining cost of AUD 1,374, and 36,005 ounces recovered from Edna May at an all-in sustaining cost of AUD 1,737. Now, the reopening of the Western Australian border in early March did result in improved road train driver availability and consequently saw a 20% quarter-on-quarter increase in all haulage rates from Marda and Tampia to the Edna May plant. As we know, the border reopening also brought with it a surge of COVID-19 infections, and this became a factor in us falling slightly short of our haulage forecast for the June quarter. We have assumed a gradual ramp-up in haulage rates from these levels in FY 2023.
To provide some perspective on how COVID-19 has affected staffing during the June quarter, we recorded almost 300 positive cases and a further 88 close contacts that were required to isolate for 7 days. This is out of a total workforce of around 1,000. Therefore, we still have around 60-odd% workforce yet to be affected. Given the recent news of short turnaround reinfections, this is gonna take some time to work its way through. On the project development front, today we unveiled the first Ramelius-generated mineral resource for the Rebecca Project east of Kalgoorlie, which was acquired in the takeover of Apollo Consolidated, which was completed earlier this year.
Based on just 9,070 meters of infill drilling completed since February, Rebecca and its satellite deposits, Duke and Duchess, are now estimated to contain 31 million tons at 1.2 grams per ton, or 1.2 million ounces. Noting we're only partway through the drill program, with the focus so far being more on infill holes rather than extensional, we look forward to completion of the wider program to test the full potential of the Rebecca tenement package. The new resource does represent a modest 9% increase in overall ounces, but importantly, 85% of those ounces are now in the indicated category, which I note has increased some 22%. There is a high level of confidence in the integrity of the resource.
We continue to view the broader Rebecca project as underexplored and look forward to additional discoveries as our geological understanding grows. Over at Penny, we're making good progress with capital development after firing the portal in April. We're now fast approaching the first Penny lode ore level, with first production anticipated this quarter. You may have noted we received a pleasant surprise progressing development of the uppermost access drive, encountering a 1- to 1.5-meter wide quartz vein interpreted to be the southern extension of the Penny North lode. One occurrence of coarse visible gold was observed in the vein. Further work is required to assess if this is economic, but it is some 90 meters south of the current resource boundary.
A nice, if unexpected, problem to have and one we'll assess at a later date once we have our underground drill rig in place. With regards to our mining studies, work is progressing on the Hill 50 underground scoping study at Mount Magnet, with encouraging geotechnical outcomes thus far. On Edna May Stage 3, a review of inputs used for the PFS during 2021 was undertaken this March, with the increase in fuel price a notable additional cost burden, not surprisingly. A new mine design has been generated with the intent to seek pricing on this open pit from contracting and equipment leasing groups. This process is expected to be completed later this year, and a decision on the development status of the project will be taken thereafter.
Development work must begin on Stage 3 in 2023 to meet the mine plan schedule delivered last year, whereby meaningful production needs to hit the mill by FY 2026. On to exploration. RC and diamond drill at the Bartus East Prospect at Mount Magnet continues to deliver strong results, pointing to its underground potential. Noting we are still waiting for assay results from the deepest drill hole, which contained visible gold. At our Galaxy project, specifically below the Saturn mine plan, recent drilling suggests the types of extensions we're expecting in the BIFs. The BIF units with the 6 meters at 6.8 grams, with the base of the hole also continuing to intersect a wider BIF breccia zone of 72 meters at 1.84, containing 25 meters at 3.8, which may well be the top of our new bulk mining zone.
Finally, before I hand over to Tim, guidance for FY 2023 has been set at 240,000-280,000 ounces at an all-in sustaining cost of AUD 790-AUD 990. The midpoint of that range, Mount Magnet will contribute 150,000 ounces, and Edna May 110,000 ounces. In this current environment, we want to give a wider range than previously on costs, while we've used a similar range for production as last year, to allow for what no doubt will be another somewhat unpredictable period ahead. I wanna stress we are working hard to maintain our margins in the face of inflationary pressures. For several years, we've led our peers in this area and we don't intend to give up our cost control ethos easily. Tim will no doubt add more on this.
With that, over to you, Tim.
Thanks, Mark. In the midst of some very tough operating conditions, as Mark mentioned, that we are as an industry all feeling right now, it's pleasing to see that the Q4 delivered an excellent result for Ramelius. 67,480 ounces in the quarter gave us a full-year production figure of 258,625, which put us within 0.5% of our original annual guidance, as Mark noted. Given the significant impact that COVID and other consequential events had on the business, this is an achievement we're all still very pleased with. Furthermore, we managed to keep inside the top end of our annual cost guidance with the all-in sustaining cost for the year finishing at AUD 1,523 per ounce.
Again, credit to all our teams at every site and here in the Perth office for what again is a great result in this environment. What is clear and evident from reading the quarterly reports published by our peers so far is that the cost environment has well and truly moved. That's not new news to anyone, but I guess the real question is how long are these elevated costs gonna be here, and what can we actually do about it. There's certainly anecdotal evidence that these costs have peaked, but only time will tell. We've had a solid track record of being one of the lowest cost gold-only producers in Australia, and I think when this reporting season is over, our all-in sustaining cost will still sit near the bottom of that curve.
The challenge is to keep that record up over the next few years as inflationary pressures make the short to medium-term cost outlook very unpredictable, but clearly with that underlying upward trend. In the past few years, Ramelius has worked hard on focusing on those costs that we can control. I'm talking about the real underlying costs here, not the costs per ounce, as they will always be influenced more by grade than by any other input costs. A lot of good work has been done on cost management, and that needs to continue. Grade is and always will be king, and its impact on every financial metric is obviously significant.
This has been evidenced well at Mount Magnet, where on top of active cost management, there has always been a high grade source of ore in the blend that has given us those extra ounces and kept those unit costs at the low end of industry numbers. Vivian has been a constant source of low-cost ore at Mount Magnet for a number of years now, as has the Shannon underground in more recent times. The early stages of Eridanus outperforming expectations also gave us some excellent cost outcomes. The Edna May Stage Two open pit also proved to be a great asset that outperformed as it came to its completion a year or two ago. This gave that processing hub the ability to remain cost competitive for a period of time that in turn enabled us to bring Marda and Tampia into the mix and extend the asset life.
In the context of these high underlying input costs, it is grade that will still come to the fore and offer the ability to drive unit cost down, margins up, and differentiate one asset from the next. For us, that is Penny. Although we are guiding to higher all-in sustaining costs in FY 2023, these costs are likely to be higher in the first half than the second, with higher cost development ore from Penny in H1 being replaced in H2 by steady state development and stoping production cycles, delivering very high-grade ore to the Mount Magnet mill. However, the real benefit will be seen in FY 2024 and 2025, where production from Penny is expected to almost double from what is forecast for FY 2023.
Given it will be one of the highest grade, lowest cost mines in Australia, we are confident that the all-in sustaining cost profile at Mount Magnet will reduce and return to levels we are more accustomed to. Moving on to the revenue side of things. Sales in the quarter were 67,632 ounces at an average price of AUD 2,508 per ounce. The average price received is just over AUD 100 an ounce, higher than last quarter, which continues to reflect both the runoff of lower priced forward contracts and a continued strong spot price environment. From a cash flow point of view, the operations added just under AUD 40 million in operating cash flow and an underlying cash generation of AUD 12 million after CapEx, exploration, and resource definition drilling.
As a result, the closing cash and gold balance increased 5% to AUD 173 million. Quick update on the hedge book. During the quarter, we reduced the total commitments to around 196,000 ounces, which have an average forward price of AUD 2,512 per ounce. RMS remains well-funded with a healthy cash balance, over 120,000 ounces of gold contained in ROM stocks and GIC, and an undrawn corporate debt facility of AUD 100 million. We remain very active reviewing a number of business development alternatives to expand and improve the asset portfolio, with the focus at the moment well and truly on the potential to acquire a third production center. On that note, I will now hand you back to Mark.
Thanks, Tim. Before we open the line to questions, let me quickly recap on a few points. Ramelius has posted a solid FY22 performance with competitive all-in sustaining costs in a tough environment, both in terms of cost inflation and labor shortages. FY23 production levels are expected to be similar, albeit at a higher all-in sustaining cost due to some high grade feed sources dropping off and there being a slight lag before the new low-cost Penny mine ramps up. FY24 and 25 will have the full positive impact of Penny production, where we expect to see all-in sustaining costs back to around FY22 levels. We continue to have exploration success at Mt Magnet, specifically Bartus and the Galaxy project, while the new Rebecca project has had a 9% lift in resources on the back of relatively few new infill drill holes.
Darcy, can we please open the line for questions?
Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're using a speakerphone, please pick up the handset to ask your question. Your first question comes from Andrew Bowler from Macquarie. Please go ahead.
Yeah. Thanks, gents. I think you answered my question about early indications that inflation seems to be peaking. Moving on to the next one, obviously, you talked about how COVID impacted trucking from satellite pits over the year. You also indicated that, reinfections could cause a bit of a long recovery to this skilled labor shortage. How much of an impact, or how much recovery in trucking rates are you assuming over FY23, or are you assuming it's pretty, you know, flat with the Q4 exit rate from this year and assuming it's not gonna get much better? Cheers.
Thanks, Andrew. It's Mark. What we've assumed is our quarter four actuals as the baseline with a gradual ramp up through FY23, which is baked into our FY23 production numbers. We expect it to get better, but slowly.
No, I see. Obviously, Penny, you know, as you've outlined pretty clearly, I think, you know, should have a pretty strong impact on group costs. Is there any scope to bring any of that forward, or is the development, you know, running flat out there at the moment?
We'll be running flat out. I think we'll do something like 50,000 ounces this year. It's almost double that next year. It's just the nature of mining and the mining method that we have to follow, that we put the development in first and then stoping comes thereafter. The guys are focused. They know how important they are to the business, and they'll be mining as quickly, efficiently, and safely as they can.
No, that's all for me. Thanks, Zeptner.
Thanks, Andrew.
Thank you. Once again, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. Your next question comes from Alex Barkley from RBC. Please go ahead.
Thanks. Good morning, Mark Zeptner and Tim Manners. Just a question around the cost guidance for next year. You obviously did very well this financial year and finished the Q4 well, which was certainly a good achievement versus some of your peers. We've seen that lift in FY 2023 guidance, I guess, up sort of 30% higher than where you set it from 12 months ago. Just wondering why the move in that year's guidance despite, you know, doing quite well over the past 12 months.
Alex, it's Tim here. Thanks for the question. I t's obviously a very pertinent one and one that's very close to our hearts. Look, as you know, there are a few moving parts in our business. I guess the main drivers are obviously a continuation, and we've assumed a continuation of this sort of higher cost environment. Notwithstanding, I think, you know, there is that anecdotal evidence that maybe it has peaked. Who knows? We've assumed that it does continue. We do, however, We lose the benefit that we've had before of having the ore sources, as I mentioned, like Vivian. We don't have, you know, the real high-grade Vivian ore in the mix at Magnet anymore. The remainder of the underground is sort of at a modest sort of 3-4 g/t.
We don't have Shannon underground, which we had last year and particularly the year before, which really was a huge driver of our unit costs. As you know, look, the leverage that grade has is quite significant. You take those out of the business, notwithstanding, you replace it with development ore from Penny, and you see those costs really sort of kick in. Penny will, as we said, we will bring those unit costs down in the second half versus the first, as Penny really sort of starts to hit its straps. It won't be till FY 2024 and 2025, as we said, where Penny really will kick in, and those costs will come back down to what we're more, I suppose, used to. It's a combination of a continuous.
Cost pressure and the loss, if you like, of one or two low cost, high grade sources.
Okay. Well, when you set that FY 2023 number last year, I mean, I presume you would have sort of leaning on the reserve life at Shannon and Vivian.
Which can extend. I presume you sort of cut it at the reserve. Were you predicting a little bit more gold in FY 2023 than is the case? I mean, I just sort of would have assumed that you already knew about the gold dropping off in FY23. Indeed, your gold forecast number next year is pretty much unchanged in guidance and flat year on year. Just wondering how, you know, is that a change?
Look, it's more about, I suppose, product mixes. It's also a case, you know, with some of the operations, particularly around Edna May, we really start to draw down on some of those stockpiles. There is, if you like, a non-cash component that sits in those all-in sustaining costs as we draw down those stocks. It's hard to sort of, you know, really elaborate and disclose those in these sorts of documents, but we do have to weigh those costs that we got the benefit for in the, in the past. Look, there's, it's minor changes on a number of different fronts, really.
Okay. Just a last one. Around when you might put out an updated life of mine plan , we can have some refreshed numbers over the next few years. Would that likely sort of be timed with the Edna May PFS release, just so you sort of have a better picture about what's happening at Edna May?
Alex, after your last comment, we're probably wary about putting out any new mine plans because you'll come back a year later and point out where we've gone wrong. Now look, we're working on that. Can't really give you a timing. Obviously, not many people have gone out beyond. Some have even gone out for 6 months. Some people haven't even gone out with forecasts. We're probably a bit wary in the current volatile environment putting something out that people are gonna say, "Well, how do you know that's gonna be right? What have you used?" We're working on that all the time in the background and then we'll let you know and the market know , once we're ready to put something out. Hopefully sometime, this calendar year.
Okay, great. Thanks very much, guys.
Thanks, Alex.
Thank you. Once again, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. We'll now pause a moment to allow for any final questions to come through. There are no further questions at this time. That does conclude our conference for today. Thank you for participating. You may now disconnect.