Thank you for standing by, and welcome to the Ramelius Resources December 2023 quarterly conference call. All participants are in a listen-only mode. There will be a presentation, followed by a Q&A 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 Mark Zeptner, Managing Director. Please go ahead.
Thank you, Travis. Good morning, everyone. Thank you for taking the time to dial into Ramelius's December 2023 quarterly conference call. I'm joined this morning for the first time, in a speaking role, that is, by Acting CFO Ben Ringrose, who will provide some detail on the quarterly financials after I've run through the highlights. As usual, there will be an opportunity for listeners to ask questions before we finish up the call. As you will have seen this morning, we reported quarterly gold production of 68,524 ounces at an all-in sustaining cost of AUD 1,837 per ounce, which is towards the upper end of our quarterly guidance of 60,000 to 70,000 ounces, and also in line with internal forecasts that has production increasing over the course of the financial year.
The increase in the December quarter was primarily attributable to a greater contribution from Penny Underground and also mining at the Symes open-pit operation ramping up. As I said, Ben will delve into the financials further, but I wanted to highlight upfront that the increase in production, we saw a similar trend with cash generation. Operating cash flow was AUD 68 million, with underlying free cash flow totaling AUD 45.7 million, our best performance on that front for several years. Further, we anticipate strong cash flows will continue over the rest of the financial year and beyond. With the December quarter contribution, first half production totaled 124,047 ounces, at an all-in sustaining cost of just under AUD 1,900 an ounce. Again, ahead of our internal budgets and at the upper end of guidance.
You may have noted we have upgraded second half guidance to 140,000 to 155,000 ounces, and consequently, full-year guidance for this financial year has also increased to 265,000 to 280,000 ounces. By way of a reminder, original guidance was 250,000 to 275,000 ounces. In terms of all-in sustaining costs, the guidance range in the second half is AUD 1,700 to AUD 1,800, which demonstrates a continuing downward trend and results in full-year all-in sustaining costs for FY 2024 of AUD 1,750 to AUD 1,850. This compares to our original all-in sustaining cost guidance of AUD 1,550 to AUD 1,750, with the higher costs attributable to CV01 conveyor repairs carried out at Mount Magnet in the quarter, which I'll expand on shortly.
Also an increased production contribution from Edna May, which is the higher-cost production hub of the two. The split in production from our two hubs was relatively even this quarter, with Mount Magnet producing just over 35,000 ounces at an all-in sustaining cost of AUD 1,668, and Edna May also producing just over 33,000 ounces at an all-in sustaining cost a tick over AUD 2,000 per ounce. That breakdown gives an insight into the real impact of Penny on cost at Mount Magnet. Although it should be noted that the Edna May all-in sustaining figure does include a reasonably significant non-cash component, which relates to the drawdown of existing stockpiles. I'll let Ben explain the actual unit cost detail later.
During the quarter, a total of 36,829 tons at 12.39 grams per ton for 14,286 recoverable ounces was hauled from Penny to Mount Magnet. At Penny, with multiple scoping areas becoming available, production is expected to increase significantly in the second half. Onto CV01. Mill throughput at Mount Magnet was impacted by repairs to the main conveyor structure, which goes from the crusher to the coarse ore stockpile, referred to as CV01. They put it out of action for approximately nine weeks. We were, however, able to maintain plant feed, albeit at a slightly, slightly lower rate, through the use of a mobile crushing solution.
Thankfully, the conveyor outage didn't prevent us from meeting production targets, as the site team and external contractors managed the situation very well, but we did incur some extra costs, both sustaining capital for the repairs, and operating costs associated with the mobile crushing and haulage operations, which added almost AUD 180 per ounce to Mt Magnet's quarterly all-in sustaining costs. The repairs were completed by mid-December, and we have reviewed our structural integrity regime and have taken steps to reduce the likelihood of similar unplanned repairs being required elsewhere in the plant in the future. The quarter saw completion of mining operations at Marda, with rehab activities now being carried out while remaining stockpiles are being hauled to Edna May.
At the end of the period, there was almost 450,000 tons, grading 1.71 grams per ton in stockpiles at Marda. A similar situation is playing out at Tampia, where mining operations ceased in the middle of last year. And there we have just over 635,000 tons at a grade near to 1.5 grams per ton of stockpiles at the end of the quarter. On to exploration. Highlights from the quarter include results from resource definition work undertaken at Eridanus, targeting higher grade mineralization, for potential underground mining below and outside the planned or the current open pit. Among the better intercepts from the 12-hole RC program were 13 meters at 10.4, 12 meters at 12.8, and 10 meters at 18.1.
Important to note, all significantly better grades than what we were seeing at depths previously at Eridanus. At Galaxy underground diamond drilling, targeting the Mars ore body produced results, including 2 meters at 28.9 and 4 meters at 17.8. While diamond drilling at the Bombora deposit, part of the Roe Project, acquired from Breaker Resources, produced first results, which included 4.5 meters at 18.7 and 4.2 meters at 11.1, which were from the Tura underground lode. Lastly, in terms of the highlights, we wrapped up the acquisition of Musgrave Minerals in October, having reached the compulsory acquisition threshold of 90% acceptances. Infill and extensional diamond and RC drilling is underway at the Key Project, targeting the high-grade Break of Day resource, but also the nearby Waratah prospect.
We've only received limited results at this stage. Further information on the exploration program, there's plenty of detail in the quarterly itself. Now, that covers the highlights from me, so I'll now hand over to Ben.
Thank you, Mark, and it's a pleasure to be here with you all today. December quarter was indeed a very strong one financially for Ramelius, with sales revenue of AUD 194.5 million and an associated underlying free cash flow of AUD 47.5 million, which is after growth and exploration investment. On both metrics, the December quarter was the best since June 2020. During the quarter, we sold just over 68,000 ounces at an average realized gold price of AUD 2,855 an ounce, which included a mix of spot and committed forward sales. As Mark mentioned, the all-in sustaining cost for the December quarter was AUD 1,837 per ounce. Pleasingly, both production centers reported a lower all-in sustaining cost than the prior quarter.
At Mount Magnet, the 8% reduction in the all-in sustaining cost was achieved despite the increased costs associated with the one-off CV01 repairs, which, as a reminder, added AUD 179 per ounce to the Mount Magnet all-in sustaining cost for the quarter. The impact of Penny is evident here, along with the increased tons and grades from Mount Magnet's own open pit operations. Moving on to Edna May, the improved all-in sustaining costs was the result of increased throughput and grades, most notably the introduction of the high-grade ore from Symes. While Edna May is reporting a higher all-in sustaining cost than Mount Magnet, it is important to note that this includes a AUD 227 per ounce non-cash charge for the drawdown of existing Tampia stockpiles.
This non-cash component of the Edna May all-in sustaining costs will increase over the second half of FY 2024, as the existing Tampia, Marda, and Symes stockpiles continue to be drawn down and monetized. The resulting operating cash flow from the business was AUD 68 million, from which AUD 20.9 million was invested in growth, capital, exploration, and resource definition. The quarter also saw Ramelius return AUD 17.3 million in cash to shareholders via our FY 2023 dividend, paid in October 2023, as well as complete the Musgrave Minerals acquisition with a final consideration payment of AUD 2.1 million.
The AUD 10.5 million investment in growth capital for the quarter mainly related to the Galaxy Underground Mine, and the AUD 10.4 million spent on exploration and resource definition in the quarter focused on the Rebecca and Roe Gold Project and the recently acquired Cue Gold Project. Both capital and exploration spend is in line with our forecast, and we have maintained our full year guidance on capital and project development expenditure of AUD 50 million to 60 million, and exploration and resource definition expenditure of AUD 30 million. The closing cash and gold position of AUD 281.8 million was our best on record, leaving Ramelius in a very healthy financial position. Further to this, a total of AUD 9.2 million was received from the ATO in December.
However, the late payment of this by the ATO meant these funds were only received by Ramelius in the first week of January. Notionally, including this, the reported cash and gold at 31 December would have been AUD $291 million. In addition to this, strong cash and gold position is our $100 million debt facility, which remains in place and undrawn. The Aussie dollar spot price increased 5% over the December quarter, finishing at just under AUD $3,030 an ounce. In fact, the Aussie dollar gold price has had a daily closing price above AUD $3,000 every day since 12 October 2023, a trend that is continuing into the March 2024 quarter.
What is even more encouraging about this is that this $3,000+ gold price was maintained despite a strengthening Aussie dollar, pointing to a fundamental increase in the US dollar gold value. During the quarter, we continued to gradually run down our fixed price contracts, delivering 30,000 ounces into maturing contracts and replacing 24,000 of these at an average price of $3,259 an ounce..At the end of the quarter, forward gold sales consisted of 192,000 ounces at an average price of $2,918 an ounce over the period January 2024 to June 2026. As you will note, our committed ounces have decreased over the financial year, and we expect this trend to continue for the remainder of FY 2024.
Our disciplined hedgebook maintenance over the past 12 months leaves the book in a very healthy position. Lastly, to note on gold sales is that with the increased production forecasted for H2, our exposure to the spot price will increase within the second half of FY 2024. With that, I'll now hand back to Mark.
Thanks, Ben. Travis, if we could please open the line up 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 a speakerphone, please pick up the handset to ask your question. The first question today comes from Hayden Bairstow from Argonaut. Please go ahead.
Hey, morning, guys. Pretty impressive result at Mt. Magnet mining-wise. I mean, just get a feel of you to the second half, and obviously you pushed guidance a bit higher about Edna May. But, I mean, despite that mill shutdown, I mean, how are we looking second half on ounces into Mt. Magnet? It looks like that's gonna be a pretty sizable increase.
Yeah. Morning, Hayden. It's Mark. I don't have the numbers off the top of my head, but it's driven obviously by increases at Penny, combined with, you know, the gradual ramp up at Galaxy. But probably more importantly at Magnet is the reducing strip ratio at Eridanus and improving grades at depth. We're seeing that back into it. There was a bit of a lower grade section that we mined through for 12 months, but we're back into much better grades at Eridanus. So the combination of those three things leads to a very strong second half at Magnet. I'm not sure if you've got the numbers, Ben, but I won't put you on the spot with that. But, yeah, we can provide some numbers, Hayden.
Yeah. And just on, I guess sort of more beyond 25, just given you're locking in hedging at almost $3,300 an ounce, I mean, does that start to make the stage three cutback at Edna May look like a more attractive option for you guys to sort of build a production decline there?
Potentially we're, y ou know, you're a little bit ahead of where we're focused on right at the moment. We will be putting out, this quarter, a new Mount Magnet mine plan. And then probably turning our attention to see sort of 12 months on from when we made the decision to defer stage three, where we stand. We're obviously seeing some things in the market, labor-wise, that are starting to ease. Unfortunately, that's brought about by some closures of operations. But we think in a couple of months' time, we'll dust that off and see where we're at, Hayden.
Okay. And the Mt Magnet mine plan, does that obviously incorporate all the Cue stuff, I presume. Is that gonna come with an upgrade to the or an update to the three-year guidance?
Yeah. The idea with the Mt. Magnet mine plan is obviously including any Penny extensions, which we've already flagged, the Cue project in its entirety, and then obviously the portfolio of projects at Mt. Magnet itself, including Bartus, et cetera. There's a whole list of names there.
All right.
So, yeah, no, everything that goes into Mount Magnet out for the foreseeable future.
All right, perfect. I'll leave it there. Thanks, guys.
Thanks, Hayden.
Thank you. The next question comes from Alex Barclay, from RBC. Please go ahead.
Thanks. Good morning, Mark and Ben. A question on that strong Edna May production this year. Is that mostly around accelerated mining and haulage? So does that mean, you know, it might get pulled forward from FY 2025, or is there other, some other component to the strong result this year? Thanks.
It's Mark again, Alex. Good morning. Stronger performance out of the underground, definitely. Since we've addressed the water issues, which were prominent mid to late last year, the team out there has really hit some decent production numbers. It's a small underground, but, you know, they are pushing towards 30,000 tons a month there. So that may bring forward some production there into 2024. The haulage, I think, has been pretty consistently ramping up, and the inclusion of Symes sort of has added to that. And I think some of the Symes grades are probably a little better than we might have expected in certain areas of the pit as well. So I don't think we're robbing Peter to pay Paul at Edna May.
I think it's better performance in the underground, a bit better grades, and sort of consistent haulage, if I could summarize.
Yeah, okay. That's very helpful. Thanks very much, guys.
Thanks, Alex.
Thank you. Once again, to ask a question, please press star one on your phone. The next question comes from Dr. Richard Hart from Tupelo Capital . Please go ahead.
Hello, Mark and Ben, and Happy New Year to you. Thanks for another great performance. It was, I thought a brilliant performance, particularly with the conveyor belt problems. Obviously, I had a question about Edna May. Everybody does, about what happens next, but I'll leave that one alone. One thing I remember talking about, I think last time, was your hedging of oil, and I see you have hedged 5 million liters. I just wondered, how does that 0.91 price hedge stack compare? And be aware, I won't judge you because I'm all for hedging for insurance sake. But how does it compare with current price?
Hi, Richard, and thanks for the question. It's Ben here. We put that diesel hedging program in place, probably 12 months ago, and we've, it's served us quite well, I guess, over the last 12 months and continues to do so. And we have had some cash returned on those hedges, which is good. That AUD 0.91, the price we're paying today is AUD 0.98, so it's marginally in the money. It has been more in the money over the past 12 months, but yeah, it's getting closer.
It's the rebated figure that you have to
That's, that's right. Yeah.
Diesel rebate, not just the
Right.
Not the price you see at the service station.
Yeah.
No, I understand that. Oh, well, again, congratulations. An interesting area for you to go into, but, well done, being winners again. Anyway, thanks for all, all you've done.
Thanks, Richard.
Thank you once again. To ask a question, please press star one on your phone. The next question comes from Ashley Chan from Shareholder. Please go ahead.
Hi, Mark. Hi, Ben. Thanks again for a nice quarter and all your hard work for it. I just have a question on the also on the hedging strategy. Can you give some more details on your thinking now for the next two, three, four years in regards to hedging? I can see production, if production were to be 550,000 over two years, your current hedge book is about 33% hedged. Are you expecting to reduce that to 25%, 20%? That's just my first question. And second question on something completely different.
As you probably know, the government has put a positive duty on employers to prevent harassment, sexual harassment at work, and the Australian Human Rights Commission probably has got the iron ore industry, Rio Tinto, BHP, in its sights at the moment, but eventually it'll come around to the gold industry. What programs or what anti-harassment programs is Ramelius planning to implementing or planning to implement over the next couple of years?
Thanks, Ashley. I'll take those ones, Ben. In terms of hedging policy, I think Tim Manners late last year reported that the board is in the process of reviewing our policy, and if there are any changes, obviously there's not a lot of board meetings through December, January. But if there is any change, then we'll obviously inform the market on that one. In the meantime, we are gradually running off our book, as we have been for some time. In terms of our duty to prevent harassment, it's not something that we've waited to be told that we should look at it or we're planning to. We've been reasonably proactive in that area. When people start with the company, they run through workplace behavior training. We have a whistleblower line.
I think a lot of the goldies have a lot of these things in place. We've assessed our sites for safety and security, and we're basically taking a no-tolerance approach to those who cross the line. Unfortunately, there have been a few cases, and those people are no longer working for us or the contractors associated with us. So, we've done a lot in that area, and we continue to try to improve.
Thank you.
Thanks, Ashley.
Thank you. Once again, to ask a question, please press star one on your phone. We'll pause for a moment to allow parties to enter the queue. The next question comes from Stephen Gorenstein, from Ari Funds Management. Please go ahead.
Hi, guys. Just a quick question around Musgrave. What have you seen to date, since the acquisition, and when do you expect to, for us to start thinking about when we should be seeing, Musgrave ore coming through the mill?
Thanks for the question, Steve. I'll answer that. It's Mark. Look, what we're seeing is that the team at Musgrave did an excellent job in terms of drilling the ore body out and preparing resources and mine plans that are pretty close to production-ready. You know, our optimizations and reruns of pits are very similar and very close, which is always comforting. It's not what you always find, I have to add. In terms of production, we hope to be developing in the second half of this calendar year, with I'd say, ore first or sort of September, August, September, obviously ramping up through that period. So perhaps I sense that's earlier than some expect. We've already submitted our mining proposal, and we're on, like, the third back and forth with the department on that.
Assuming we get approvals, prior to June, then we should be ready to go from July onwards.
That's, that's very exciting. Thanks very much for that, Mark.
Thanks, Steve.
Thank you. The next question comes from Andrew Bowler, from Macquarie. Please go ahead.
G'day, gents. Quick one from me. Obviously, handy, tax refund post-quarter end. Just wondering if you're expecting, any more over the remainder of the financial year, or is that, what you're expecting to see? Cheers.
Hi, Andrew. It's Ben here. I'll take that one. No, that tax refund related to the 2023 tax term, it's a one-off, I guess, and we don't expect that to be recurring throughout the financial year.
No worries. Thanks.
Thanks, Andrew.
Thank you. At this time, we're showing no further questions. I'll hand the conference back to Mark for closing remarks.
Thank you, Travis. I'd just like to make two points to wrap up. Ramelius is one of the few Aussie gold producers actually upgrading guidance, and therefore, we are expecting to deliver very strong cash flows in the second half of FY 2024. And as already mentioned, we are on track to deliver our new Mount Magnet mine plan this current quarter, which promises to include Penny, Cue, as well as all the portfolio of projects at Mount Magnet itself. Thank you for listening in this morning. Enjoy the rest of your day.