I would now like to hand the conference over to Mr. Jim Beyer, Managing Director and Chief Executive Officer. Please go ahead.
Thanks, Rocco, and good morning, everyone, and thanks for joining us for the Regis Resources September Q1 FY 2025 results. I will be, or we will be making references to some of the figures and diagrams, so we will be referring to the release that we put out earlier this morning. In the room with me, I am joined by our CFO, Anthony Rechichi, and our COO, Michael Holmes, and our Head of Investor Relations and External Affairs, Jeff Sansom. All right, well, to describe our Q1 FY 2025, I think I'd have to defer to Dickens and say, "It was the best of times, and it was the worst of times," or maybe bittersweet. Our team delivered some sweet outcomes at Duketon and Tropicana, mixed with the bitterness of a very unexpected outcome at McPhillamys.
So to kick off our story today, on the safety performance, it saw us finish the quarter with one lost time injury that resulted in a LTIFR rate of 0.4 for the quarter, up from 0 in the past quarters. Our goal has always been, and continues to be, to provide a workplace that's free from serious injuries and life-changing injuries. Safety is a journey that hasn't an end, and we'll keep driving to make those continuous improvements happen. Now, before we get into the main part of our operational business, I'll talk on McPhillamys. All of what I will talk to now has been discussed in some detail over the last couple of months, so I won't go over it too much.
At the end of July, we released the results of the McPhillamys DFS, which confirmed McPhillamys has a long life, low operating cost, open-pit mine that had the capacity to deliver robust financial metrics with significant leverage to the gold price. If you don't think it's a valuable project, do the math on the current spot environment. The average production for the mine is 187,000 ounces a year. The average all-in sustaining cost is just under 1,600. At spot price, using those average numbers, McPhillamys would be generating over AUD 450 million a year at the moment. It is a clearly valuable project. Back to the DFS release.
We put that out, and about 25 days later, we were notified the Federal Minister declared a Section 10 over a proportion of the site. That's under the Aboriginal and Torres Strait Islander Heritage Protection Act of 1984. This area encompassed the approved locations of the tailings storage facility, meaning the project was no longer viable in its current form. Consequently, we were forced to withdraw the findings of the DFS, impair the holding value by AUD 192 million, and withdrew the 1.89 million ounces of reserves. More recently, two weeks ago, we received the Minister's statement of reasons outlining the condition, the considerations under which the Section 10 declaration was based.
It seems clear that a decision that goes against the views of the locally recognized Lands Council has not been considered reasonably by many people who have extensive experience in this space. The decision just doesn't seem to pass the pub test. Needless to say, this broader issue of what happens to be or what appears to be an unclear process and a decision-making process that lacks or appears to lack transparency relating to important investment projects is a topic of heated and much discussion at the moment. Taking my Regis hat off, industry cannot function efficiently with the uncertainty. And further to this, the uncertainty builds risk. Risk reduces attractiveness for investment. A reduction in attractiveness for investment is something this country cannot afford.
Despite our frustration with the process, we are looking forward, and we're following two paths of action: Hope for the best and plan for the worst, I guess. We hope by continuing to review and evaluate the Section 10 reasons and working to determine our next legal steps. But we plan and we plan, we pick up the team, we dust them off, and we get back to work, starting the planning works on identifying an alternative location for the TSF. I note here, as we stated previously, to appropriately evaluate and study these alternatives and develop one that's suitable to meet the extensive list of approval standards and requirements, we believe it could take five, even up to 10 years before a new TSF can be confirmed and approved.
McPhillamys is now sitting in the longer-term project horizon for us, for the moment, as we work on all these possible angles. And I have to emphasize the but here, Regis is so much more than the story of McPhillamys, and a decision by the Minister that rendered a permitted mine unviable. Operationally, it's been somewhat boring. Sorry, Michael. As the team has gone about delivering on the plan, and this is what I'd say is nice boring. Financially, the quarter has been about as action-packed as anyone would ever want. Actually, driven by the gold price, we'd like it to be even more action-packed in future, which we've got the potential to be. From a group perspective, we produced 94,5 00 ounces of gold at an all-in sustaining cost of AUD 2,495 an ounce.
Now, in that is AUD 132 an ounce of non-cash stockpile costs. As previously noted, this is related to stockpile drawdown and is not a cash cost. Now, with our production at 94,500 and an average gold price received at AUD 3,717 an ounce, which was a record, we were well set to deliver, and we did. At a high level for the business, what does it mean? We made cash, and lots of it. At the end of the Q1 FY 2025 quarter, we built our cash and bullion position by AUD 85 million, finishing the quarter with a balance of AUD 380 million. And this is off the back of the previous quarter, where we added AUD 109 million to the balance sheet.
In fact, just the last six months, we have more than doubled our balance from AUD 186 million to AUD 380 million. Have a look at Figure 4 in the release, and you can clearly see the cash-generating trend of our business. This shows a significant cash-generating performance of our assets. Impressive? Sure is unexpected. Not for us. We've seen this coming for a while. We've long been talking of the cash-generating capacity of Regis, and this, our third quarter of that, could provide comfort and insight into what we can be delivering, assuming the guidance ranges we've provided and the current gold price.
Now, look, I want to talk a little bit more about our organic growth plans at McPhillamys, but first, I'll get Michael to provide more insight into the operational performance and Anthony to provide some more details on the financial performance. Over to you, Michael.
Yeah, thanks, Jim, and good morning, everyone. Operationally, we were pleased with our performance in the quarter as we delivered in line with our expectations. At Duketon, our open pits and undergrounds produced 57,000 ounces at an all-in sustaining cost of AUD 2,650 per ounce. Our open pits were responsible for 52% of the production or 30,100 o unces, with mining occurring at Garden Well, Ben Hur, Tooheys Well, and Russell's Find pits. Operationally, our open pits are stable and performed well. At Duketon Underground, Garden Well South and Rosemont Undergrounds performed well and delivered 24,200 ounces. As Jim mentioned, we did draw on stockpiles during the quarter, and this is reflected in the non-cash charge of AUD 163 per ounce. We expect the stockpile draw will continue through FY 2025.
We progressed the development of Garden Well Main and Rosemont Stage 3. In our release, you will see that in the last few days, we opened up the Rosemont Stage 3 ventilation portal. Duketon mills, both Garden Well and Rosemont, performed to expectations with no unplanned downtime. Low-grade stockpile material supplemented the Duketon mills throughout the quarter, as mentioned, and will continue for the remainder of the FY 2025. Through the quarter, Regis identified the opportunity of low-grade material processing through the Moolart Well mill. This is currently being tested as a project to determine its viability as a short-term opportunity. As for Tropicana, their production was 37,000 ounces at an all-in sustaining cost of AUD 2,173 per ounce. Open pits performed well, following two quarters that were significantly impacted by ongoing rain events and disruptions associated with roads and other infrastructure.
The open pits delivered 20,100 ounces at 1.22 grams per ton and in line with expectations. However, equipment availability do still continue to remain a challenge. The undergrounds delivered 16 ,000 , which was again in line with expectations. And as announced on the September 9th, the Havana Underground development was approved, and this was commenced and progressing during the quarter. The Tropicana Mill performed to expectations with no unplanned downtime, and the low-grade stockpile material supplemented their throughput as well, which will continue into in FY 2025. I'll now hand over to Anthony, who will discuss the quarterly financials.
Thank you, Michael, and good morning, everyone. As Jim mentioned, this has been another quarter of terrific operational performance, with our gold being sold into, quite frankly, an outstanding spot price market. We sold nearly 80,000 ounces of gold during the quarter at an average price of AUD 3,717 an ounce, receiving AUD 296 million of gold sales revenue. These revenues resulted in operating cash flows of AUD 150 million, with AUD 79 million from Duketon and AUD 71 million from Tropicana. Now, on to figure three in the ASX announcement and the changes in cash and bullion for the period. The cash figure was released earlier in the month, and as many of you are aware, we're very pleased to be net cash and bullion positive.
We received an average gold price of over AUD 3,700 an ounce, like I said, which is fantastic. And looking at some of our more recent sales receipts in this new quarter, for example, some of our sales at, more than AUD 4,000 an ounce, well, if this keeps up, then we're definitely gonna have more great cash generation. On the capital expenditure front, we spent AUD 50 million all up in the quarter. Included in that, AUD 12 million was spent on our developing underground mines, Garden Well Main and Rosemont Stage 3, and AUD 10 million in other underground development at the operating mines of Garden Well South, Rosemont and Tropicana. Plant and equipment expenditure was AUD 6 million, mostly at Tropicana in the quarter. Exploration expenditure, that was AUD 13 million for the quarter.
Now, at McPhillamys, we spent a little under AUD 4 million, which included the project work, work prior to the Section 10 declaration. We're reviewing the next steps on the McPhillamys projects and its expenditure requirements for the year, as Jim mentioned, and we'll adjust the spend accordingly. Current indications are in the order of AUD 10 million-AUD 15 million for the year, down from our original guidance range of AUD 15 million-AUD 20 million. At this stage, we're expensing those costs through the profit and loss account, so expect to see that treatment in this year's results unless something certain changes before the year's out. Talking profit and loss, I'll make a point of one item you might have noticed back on table one of the ASX announcement.
The depreciation and amortization rate of AUD 1,015 an ounce is higher than the prior quarter's AUD 842 an ounce, and the prior year average of AUD 758 an ounce. In addition to the current quarter's lower production number as the denominator, the reason the D&A per ounce rate is up, is that we're now seeing higher capital cost mining areas. For example, Ben Hur and Russell's Find open pits being amortized into the numbers. Note as well that for a lot of last year, the likes of Ben Hur and Russell's Find were in pre-production and were not being amortized, so they weren't in that number. A lot of capital development work, like pre-strip waste removal, had to be done to mine these higher strip ratio areas. Nonetheless, they're still very profitable.
The D&A is not straight line. It's not a straight line number over FY 2025, so be mindful of that when you're projecting estimates. We expect the D&A expense per ounce to reduce over the balance of the year versus Q1, but we're still forecasting the annual depreciation and amortization expense per ounce to be in the mid to high -800s . Now, turning to our debt. Well, with AUD 380 million of cash and bullion and AUD 300 million of debt, we are net cash and bullion positive. And if this first quarter is a signal of what is to come for the year, we're expecting to be building cash at a rate of knots from here on in. So that begs the question, with our cash and our debt, and we're looking at those options now. We can make earlier repayments.
We're looking at alternative facilities, capital management, you name it, we're considering it at the moment. So they are the main messages on the financials, and back to you, Jim.
Yeah, thanks, Anthony. Great set of numbers there. Looking now at growth from within Regis. From a growth perspective, the quarter, as I said before, was a mix, mixed bag. We saw progress in our growth strategy at Duketon and Trop, but we lost ground in a highly publicized way at McPhillamys, but I've already covered that. So what is the growth strategy of Regis ex McPhillamys? And I'm hoping this is not a surprise to anyone, but on the West Coast, we progressed the development of our three underground projects, Garden Well Main, Rosemont Stage 3, and more recently commenced work at the Havana Underground at Tropicana. On Havana, what a great starter project for the fourth mining area underground at the operation, is it?
We already have Boston Shaker areas, sort of these discrete mining areas at Trop, in Boston Shaker 3, Boston Shaker 4, and the actual Tropicana underground mine as well. So there's three really quite separate mine areas operating there, and Havana Underground will be the fourth. It is a modest initial plan, as they usually all are with these startups. We see a current production of a total of 55,000 ounces. That's our share, and that starts about two years out. Like our other underground mines, we think this is only the beginning, as it's open at depth and has clear potential for more life. But even this modest initial size still packs a good return.
If we look at the spot price of AUD 4,100, just a little bit off that at the moment, I think, this thing has an NPV at a 5.5% discount rate of AUD 100 million. It has an all-in sustaining cost of just under AUD 1,000 an ounce and a pre-tax internal rate of return of 92%. What is not to like about those numbers? At Duketon, we see stable production out until FY 2028, sitting in this 200,000-250,000 ounce range, and we currently see that coming from three undergrounds and from a number of satellite pits and stockpiles. So the next question is: How long can we produce at that level, and how long, how can we sustain that beyond that, FY 2028?
Two things that we're driving: it's life extension of those undergrounds and the number of underground mines that we have. If we look at the life extension piece first, we look and ask, look at the typical west of Australia: the underground gold mine in the Greenstone Belt. Generally speaking, the more you drill, the more you find, and at Duketon, this isn't any different. We've got a track record of demonstrating year-on-year reserve replacement and growth. Since 2018, when we commenced, or 2019, when we commenced Rosemont Underground with an initial reserve of 123,000 ounces in the early stages. Since then, we've increased our reserves underground to 330, and we've mined nearly 250,000 ounces. Demonstration that the initial reserves are not usually a fair indication of what the future holds.
Exploration drilling has not identified any structures that would cut mineralization off, so we continue to drill and prove up more years in advance, straight out of the WA Underground Gold Mine playbook, as I said before. Now, the other way is to look at the number of underground mines that we've got, and we look at each of our underground mines generally and think, "Look, if they can produce on an annual basis in the order of 40 ,000- 70,000 ounces of gold each year," it does tend to move up and down with wherever they are in their operational cycle, I guess. So realistically, we'd like to have at least one more underground mine to maintain this profile beyond FY 2028. So we do have options there.
The current new underground mine options that we're investigating is underneath the historic open pits that we've got. Tooheys Well , which is we're just doing a little bit of remnant mining there, and Ben Hur, both of which have demonstrated significant potential, and you can see those in the recent presentations that we've released. Merlin also is another interesting, more greenfields opportunity with both open pit and underground potential, but a little bit further out timeline. So you can see our target of operating at least four underground mines is not unrealistic. In fact, it's quite achievable, and we've got the time to do it. In fact, more than four, quite big, could be seen as being quite doable. Our teams are focused on this, and we're working towards delivering on this objective.
As for the extra upside, any open pit material discovery represents further value and will be nice to put that on top of those undergrounds. We have plenty of encouraging results across the Duketon belt, but these things can take time. So we make sure we have the right people on the job, which we do, and we make sure that the money is available when clear objectives and opportunities are met, which they are, and the same can now be said also for Tropicana. The underground potential of that asset is fantastic, and this is reflected in the recently announced commencement of the Havana Underground Mine at Trop, which I just went through before. Exploration for open pits is looking at near mine targets, but underground drilling has also identified some really interesting intercepts in areas that have not been previously drilled.
Our growth at both Duketon and Tropicana is really exciting, and we look forward to progressing on this strategy. So looking at FY 2025 and the rest of it, our cost and production guidance remains unchanged. We've shown what our assets are capable of delivering from a cash perspective. So the question is, Anthony Rechichi, what do we intend to do with our cash? Well, we've got a range of options, and broadly speaking, there are five that we're looking at that we and the board will work on. Dividends, potential share buybacks, M&A, of course, internal growth projects, and of course, repayment of our debt facility. Safe to say at this stage, we are looking at all opportunities within all of these options, and none of them are mutually exclusive.
The key point is we will be disciplined in our approach, and we will do what is in the best interest of our shareholders as we continue to build the long-term value of the company. So to summarize the September quarter, while struggling with the surprising and disappointing Section 10 on the McPhillamys, our mines delivered and underpinned by a record gold price, we achieved another quarter of very strong cash build of AUD 85 million. We're now net positive AUD 80 million on the balance sheet. We continue to deliver into our growth strategy by growing the underground footprint with the development of the third underground mining areas, Garden Well Main, Rosemont Stage 3, and Havana Underground.
As we look to the future, the immediate actions and focus for the team are: pursue our legal options on the Section 10, start the long process of developing alternative tailings storage solutions, continue to deliver into our underground growth strategy, and identify the next approvable underground mining area at Duketon, continue to grow the balance sheet strength with on-plan operational delivery, and using that strength of the balance sheet to develop options for our next stages of growth. The team here at Regis should be very proud of what they've undertaken over the last number of years and the resulting strong financial outcomes that are now being delivered. It's also pleasing to see the market starting to recognize the value of this performance. Okay, so what I'll do is throw it back to you, Rocco, and open it 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 are on a speakerphone, please pick up the handset to ask your question. Today's first question comes from Alex Barkley at RBC. Please go ahead.
Thanks. Morning, Jim and team. A question on the increase that quarter of your bullion on hand. Do you expect next quarter you can sell most of that down? It does seem like you started the quarter maybe at a slightly lower than normal level. You know, does that whole sales process reverse next quarter?
Mate, they're already gone. They go within days. It really, I wouldn't read anything at all into those elevated gold balances. It's just the timing. We don't tend to pay too much focus on that at the end of the odd-numbered quarters, but we do try to drive the bullion sales hard at the end of Q2 and Q4 to make sure, you know, that, because that drives the profit. But the reality is, those gold bars that we had sitting in the, wherever they were, be they, they're in the safes or where they sit, they would have been sold within days.
Yep, sure. That's quite clear, and a question on the debt facility. I appreciate your comments on that already, but is there a reason why you wouldn't imminently pay that down just as liquidity allows and then sort of, you know, cross whatever funding bridge you need, your capital management later on? Should we expect that to start getting paid down pretty soon?
That debt's probably costing us about AUD 20 million a year.
Mm.
So yes, there's pretty good motivation for us now to be considering what to do with it, which is what we're doing.
Yeah. Okay, sure. All right. Thanks very much.
Our next question today comes from Andrew Bowler at Macquarie. Please go ahead.
Good day , Jim and team. First question from me is just on gold price sensitivity at Duketon. Have you got a rough number where restarted the Duketon North mill and processing those stockpiles, a number in terms of gold price, that would be required to get that up and running and get those stockpiles through the mill?
Well, l ook, yes, there is, and it's where we are at the moment. We're actually running some preliminary trials up there on some stockpiles that we've got to see how they perform. They've been around for a long time, so there's a little bit of uncertainty in the confidence of the grades that they've been assigned. So we've got a project underway now, just running some of that material through the Duketon North to see, you know, basically, is what we think is there, there? And if it is, then, yep, we'll exercise ongoing agility and keep processing it. But at the moment, we're just assessing it to make sure that what we think might be there is there. If, you know-
And also-
Evaluation-wise, I mean.
Yeah, cheers, and also in terms of gold price, I mean, gold price being where it is, would it induce any further cutbacks of the sort of historic pits at Duketon, or are you firmly focused on an underground strategy still? I mean, obviously, Merlin is a fresh start, but the old pits, would you consider cutbacks?
Oh, no, we're definitely looking at cutbacks. Yeah, i f we've got spare mill capacity, then we look at whatever we've got around to fill it. The thing with the cutbacks, particularly, is that, well, they're, by definition, they're cutbacks. If they're cutbacks in pits that are currently not producing, it usually means that they've got, you know, could be upwards of a year or two years of waste movement before we get to the next blocks of ore, right? So, number one, we need to understand what that profile might look like, how long that takes, how much does that cost in terms of, you know, money out of the balance sheet and the risks involved with that. And we're working on those at the moment. So yeah, we're pursuing those options, but we haven't made any decisions on those yet.
No worries. And last quick one, maybe for Anthony, just, if you could give us some timing on when we might hear about those sort of, you know, trade-off thoughts on capital returns versus early debt repayment. Can we expect that with maybe the first year result or maybe a bit after that? On the first half year result, I should say.
Yeah, look, I think we're definitely, it's in the thick of all of our discussions at the moment, so certainly for the half year results, there'll be a pretty solid update on that one.
No worries. That's all from me. Thanks, guys.
Thank you. And our next question comes from Matthew Frydman with MST Financial. Please go ahead.
Sure. Thanks. Morning, Jim and team. Can I ask the really uninspired question on M&A? Obviously, both you and Anthony made some pretty extensive comments on the cash-generating capacity of the business, and I guess the capital allocation, you know, decisions that flow from that. Clearly, external growth will come into the mix over time. But I'm sure on the flip side, you're probably questioning internally whether, you know, AUD 4,000 an ounce Aussie gold is the right time to be a buyer of assets. So I guess, can you maybe give us a bit more detail on how you're thinking currently about the timing of any external growth? Where would you want to see the balance sheet get to before maybe you start wanting to pull the trigger on that? And I guess, secondly, the scope.
You know, what's in the mix for consideration? What's not in the mix? Yeah, how do you limit your options? Thanks.
Yeah, that's a good question, Matthew. Maybe you should come and sit in on our strategy meetings to get clarity on that. Look, they're pretty detailed questions.
Just, just put it in my diary, Jim.
Yeah, yeah . They're pretty detailed questions. Look, they and they're good questions, and they're the right questions, ones that we ask ourselves, right? Look, at the end of the day, what you, it is you do need to consider the current price environment. You know, does it make sense to acquire something when the price appears is at record levels? Whether this is, you know, today's record level could be, you know, last six months ago, we thought we were at record levels and look where we are. So there's some pretty interesting environment for us to consider. But you know, that's certainly one thing to play. Do you want to buy when things might be at their or perceived to be at their peak? But then the alternative is, what size scale?
You know, when you ask what position might we like the balance sheet to be in, really, that's probably going to depend on, on the scale of the opportunity that we might be considering. So there's many, many things at play in that. You know, the, incremental, you know, with, with McPhillamys now as a project for us, pushed well out into, the future, we expect, does that mean we might take on, an earlier stage project for us to apply, apply ourselves to? And, sorry, I just lost my train of thought there. You know, we, that might be something that we consider, you know, early-stage projects and operating assets. So , everything is in the mix at the moment. It's pretty difficult to sort of try and say it's one area over another.
Of course, as our value continues to rise and starts to more closely reflect our true value, that in itself is something that we take into account. So I'm afraid that's probably the best answer you're gonna get from me, yeah?
Yeah, no, I appreciate it, Jim. You know, it's obviously a very broad question. Maybe another kind of lens to think about it is, you know, if things had gone differently, potentially you would have been ready to start construction on McPhillamys with a, you know, sort of circa AUD 1 billion dollar price tag. Obviously, the business is arguably in an even better position than maybe what you thought 6 or 12 months ago, given the sort of cash generation and the spot gold price. So should the market be thinking about, you know, something of a similar, you know, potentially something of a similar size or a similar ticket size in terms of, you know, the business is able to support a billion-dollar kind of project? Is that feasible?
Well, first off, the project, even before the Section 10 decision, FID was at least a year away, still. There was still actually quite a bit of work that we needed to do in the field, which we couldn't do because of the Section 10 application. You know, we needed to do some final geotech work and the likes to be satisfied we understood, and that, you know, we could arguably tighten up our variance provisions, so and complete some of the other permitting requirements and designs that we were still wanting to finalize in more detail. So we weren't in a position, you know, that wasn't something that we were immediately going to kick off. As I said, you can see. Go back and review some of our past statements.
It was, FID was late next year or early 2026. Would we consider something of a similar scale? Look, that's a, that's an interesting question. We've already got something, you know, McPhillamys hasn't disappeared completely. It's still on our investment. It's still in our investment portfolio. It's a little bit further down the track. If we were going to do that, then ideally, and it was on the timeframe that we, we think it is, then ideally, we might have something that's got more production earlier to allow us to more comfortably undertake a billion-dollar project. It's a great project, but it was also, it's a significant one, and, you know, we would need to go out and make sure we were well and truly organized well and funded to execute that project.
We've now got the time to undertake other activities in preparation. I mean, McPhillamys, you know, is not dead. It's just pushed back a long way in time while we look to reestablish engineering solutions there. So that remains a significant project for us. I'm not sure whether we would sort of run too quickly towards another project of that scale. At this point in time-
Yeah.
We'd be sort of more likely looking at other things.
Yeah, no, that makes sense, and yeah, appreciate the call there, and also the specifics on the timing in terms of when you're actually gonna FID McPhillamys. Thanks, Jim.
Our next question today comes from Hugo Nicolaci with Goldman Sachs. Please go ahead.
Oh, hi, Jim and team. Thanks for the update this morning. I was just hoping to dig into the mining costs across both assets a little bit more. Just, you know, looking at Duketon South first, open pit and underground material movements were both down quarter-on-quarter. Their absolute mining costs are up a bit over 10%, so I was just hoping you could give a little bit more color there. And then similarly, at Tropicana, I guess, how much of the mining cost increase came from the step up in volume?
Well, I mean, the step up in—there's two things that are obviously driving our costs at the moment. The, you know, inflation is still out there. It's not as aggressive as it was, so we're seeing that happen. In terms of the Tropicana, you know, the volumes, the pits, 'cause all our pits, both Trop and at Duketon, they're getting deeper. So even if the volumes were the same, the costs would be escalating through both inflation and, you know, longer hauls coming out. So that's just sort of naturally occurring in mature. They're all cost increases that we expect to occur across in a maturing business, maturing open pits, I would, I should say.
Got it. Thanks.
One of the things I'll add to that as well, just one of the things you see at Tropicana there a year ago is the mining costs that you're looking at. They're also net of the capitalized cost, which is, you know, the likes of your deferrals for, you know, your undergrounds, your open pit deferrals, that sort of stuff. So you can get timing differences there as well, just depending on where you are in the ore bodies, and that's an important one for driving that. I mean, at Duketon, in aggregate, we've actually largely gone down, and the main reason for that is because of the lesser costs being incurred at Duketon North.
Got it. That's clear. Thanks. So I guess if I think about it from an underground versus open pit on a dollar-per-ton basis going forward, do you have to give a sense on where you expect those to be heading over the rest of the year across both assets?
I wouldn't see too much variation from where it is.
Got it. Thanks for passing on.
Thanks, Hugo.
Thank you, and our next question today comes from Hayden Bairstow with Argonaut. Please go ahead.
Good morning, Jim. Just a couple on Tropicana. Is there scope, do you think, from what Anglo's thinking about there, or are they sort of heavily focused on sentiment at the moment, and it's just gonna be business as usual, sort of, regardless of what the gold price does? Or can we start looking at, you know, Havana South and a potential underground? I presume the open pits have less potential there.
Well, I don't think there's any. I mean, we had one of our numerous meetings with the team, with the Anglo team yesterday, and I don't think there's any taking the foot off, chasing the options and the opportunities there. You know, we're all pretty pleased with the way that Havana has kicked off. I mean, you know, the portal's been cut now, and they're off and running. They continue to look at other options, and they, in fact, continue to look at alternatives within the existing area. You know, one of the things we were talking about was the potential to use fill in some of the high-grade areas to improve mining recoveries.
So, you know, they, what's happening corporately is not, for that group, is not having any kind of impact on the way they're approaching, driving Tropicana, and certainly not that we see.
Yeah, okay. And just a bit of a follow-up on Andy's question around, I mean, Duketon North, one thing that even Duketon South, is going into Garden Well Main and these sort of two big undergrounds below the pit, does that sort of remove the potential to do an, you know, another cutback and get some of those open pit resources into the Garden Well pit?
No. Sorry, yes, it has removed the potential. They're right up. They're right on it. We couldn't do another cutback.
We could well, yeah.
Okay, well, there's some areas there, probably maybe in the center, where we're not mining underneath.
Yeah, there's a-
There's opportunities there.
We're looking at a trade-off of another cutback or getting some of the material from underground. Of course, the underground is a lot narrower, so you're not getting the total amount of ounces as an open cut cutback would give you. But it's certainly a trade-off that we're having a look at the moment. But it's a high strip ratio cutback, so we're just looking at our trade-off options at Garden Well.
Okay. So, and then the rest of the resources at Duketon South, are they, is there other pit options around? There's sort of like 500,000-600,000 ounces, I think, in resources outside your current reserve plan.
There's lots of options in the open. There's lots of resources still sitting in the open pits. Those who said, you know, the, but more generally now, the resources that sit around that are sitting around are high-cost ounces, so we need to, you know, make the decision as to whether they're investments that we wanna make that take a while to start to pay back.
Okay, perfect. And then just finally, Jim, just on the sort of the next mining front at Duketon, and when do you think we'll be able to plug something in with a name on it, so to know which one it's gonna be and start putting some sort of scenario through?
Well, we'd like to have a view on that by the, you know, this year, for sure.
Yeah. Okay, great. Thanks, guys.
I mean, these things just take a bit of time, Hayden. You gotta drill them, you gotta assess them, and sometimes you gotta go back and drill some holes in to fill them in. But, you know, we'd like to have a view on that by the end of this year.
None of us have any patience, mate, you know that.
Yeah. The virtue, mate.
Thank you. And once again, ladies and gentlemen, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Our next question comes from David Coates with Bell Potter Securities. Please go ahead.
Questioning is indeed a virtue, Jim. We got there, getting there in the end. A couple questions from me, so I talked about the stockpile options up at Duketon North. Any indications on timing of a decision on those?
Well, we're assessing it at the moment, so, we'll have a clearer picture on that probably over the coming months.
Okay. So, maybe with the December quarterly or something like that?
Yeah.
Cool. And on those cash, I mean, obviously, we'll incur like sort of, you know, non-cash stockpile costs and like one thing, but actual cash costs, is it just sort of like a, what's involved just to rehandle and what kind of a dollar per ton number would we be looking at for those?
What, for the stockpile treatments?
Yep. Yep.
Yeah, well, I suppose it's a couple of dollars a ton to pick it up and truck it to the mill, and then milling costs are running, yeah, what? AUD 25 a ton, AUD 30 a ton.
Yeah, circa that. Easiest way to pick that up, Dave, is just take a look at the milling costs in the last couple of quarters there and, for the tons milled, and that will give you the basic numbers on the throughput cost there.
That'd be reasonably close, yeah.
Yep, great, and I appreciate you've talked a lot about uses of cash and M&A and all that kind of stuff, but in terms of the use of cash, what do you think is sort of the top couple of factors in your mind at the moment in relation to all those various options? What are sort of the key kind of considerations at the moment?
Yeah, it's a question. I guess the first one, you just wanna make sure you're getting what you're paying for, and that there's potential there for more value. You know, that there's, and that relates to the price environment. You know, you just need to make sure that you'd like to think that you're not buying something that's, you've fully valued already. So yeah, which is code for saying, depends how much it is, you know, what's the cost?
Yeah.
And then after that, it's, well, what are the, are there any other risks around it? Is there a construction risk? Is there an ease of bringing it into the business? Does it, you know, give a bit of a short-term hit, but then there's, you know, medium-term problems within a period of time that you've got to start dealing with? You know, which means that, you know, you've got to be a little bit picky. The flip side of that is that you also might be looking for something where others can't see the value, and that's what you really hope that you see.
But that way you can get something of value and realize that value without paying for it. But, you know, we're not the only ones looking to do that, so-
Mm.
It's just, be patient, it takes time.
Just kind of flipping that around a little bit, you know, you guys could possibly be in a position like that yourselves with, you know, the option value of McPhillamys is, you know, probably quite subjective. But as you point out, you know, stacking up pretty, making a lot of cash at current spot prices. How do you guys, you know, does the use of cash, like maybe a share buyback or something, factor into, you know, maybe trying to defend from someone who does sort of put a lot of weight on the option value of McPhillamys and the cash generation that you guys are demonstrating at the moment, but is maybe not being recognized in the share price?
I guess, yeah, I'm just trying to peel away the question there, but-
Also, if you guys, if someone sort of sees you as a target, you know, McPhillamys, but McPhillamys, you know, they sort of see a lot of potential value in McPhillamys. Does a share buyback perhaps come into consideration, to sort of, I guess, sort of try and defend your share price value, from someone who, you know, sees you as-
Yeah, look, I mean. Okay, all right. So I think there's a couple of things. I think, you know, certainly with the movement in our share price recently, I mean, part of our job is to make sure that people understand what the value of the business is and communicate that. And, and hopefully, the theory is that that starts to reflect in people buying shares because they see the value that's there. We actually think that that's certainly something that's occurring now, and the market is clearly starting to recognize the value. We're out from under the cloud or the haziness of that the hedge book provided, but probably at least, you know, we've got some clarity on our cash-making position there.
At the end of the day, our job is not so much to, you know, and the idea of what we do with our capital. I know it was just sort of semantics, but our job is not to defend the company. Our job is to, in the sense that it was being described, our job is to make sure we're maximizing the value for our shareholders. And so-
Good point.
Right now and as whenever, if a time ever came, we're just making sure our focus is on making sure that we continue to do what is ever in the best, you know, long-term interest of our shareholders.
Excellent. Great mindset. Thanks, Jim.
Thanks, Dave.
There are no further questions at this time. I'll now hand back to Mr. Beyer for closing remarks.
All right. Well, that's it. Thanks very much. Thanks all for your questions. We appreciate it as always. If there's any follow-ups or anything that you'd like to do, we'll do our best to answer them, but please get in touch with Jeff. Otherwise, thanks for joining us, and have a good day.
That does conclude our conference for today. Thank you for participating. You may now disconnect.