Thanks for joining us for the Regis Resources September quarter FY 2027 results. Joining me on the call today are our CFO, Anthony Rechichi, our COO, Michael Holmes, and our Head of Investor Relations, Matt Collins. We will refer at times to figures and tables in the quarterly report released earlier this morning, so it may help to have that document at hand.
As always, front and center, I will start with safety. The 12-month moving average lost time injury frequency rate, or LTIFR, finished the September quarter at zero, an exceptional performance, down from 0.3 at the end of June. It is an excellent result and a credit to our people. There were not any environmental non-compliances or significant environmental incidents reported during the quarter. To that end, we maintain our focus on leadership, discipline, and continuous improvement to support our safe and reliable operations. Our objective remains a safe workplace for everyone.
Turning now to production performance. Group gold production for the quarter was 83,000 ounces. Accounting for the rain impacts, production was in line with our expectations, and noting our guidance for this year with production slightly higher in the second half. Michael will touch on this in a little more detail shortly. Our all-in sustaining costs was AUD 3,617 an ounce, and that included a non-cash stockpile drawdown charge of AUD 114 an ounce. This is above our full year guidance, as you would expect in the first quarter of a year weighted to the second half. On that point, I reaffirm we hold our FY 2027 guidance. On cash, Regis increased its cash and bullion by AUD 93 million during the quarter to AUD 1.28 billion at 30 September.
That is after a AUD 53 million in tax payment, and it also includes the receipt of the AUD 51 million break fee from Vault Minerals. Reflecting the strength of our financial performance in the second half of FY 2026, we declared a fully franked final FY 2026 dividend totaling AUD 0.20 per share. This included a AUD 0.05 special divvy, which returned the Vault fee to our shareholders immediately. I note we have now paid these dividends after the end of the September quarter, and that is a total of AUD 152 million that went out. Look, our messages and our actions remain consistent. Regis operates quality assets with strong leverage to the gold price. We are debt-free. We sell all our gold at spot, and we take a disciplined approach to investment and capital returns.
I will touch on McPhillamys in last week's Federal Court judgment, along with our Board changes and a couple of other items at the end of the call. At this point now, I will hand over to Michael and then subsequently to Anthony, who will provide more details on operations and financial performance, respectively. Michael?
Thanks, Jim, and good morning, everyone. As Jim mentioned, our 12-month moving average lost time injury frequency rate is now at zero. Teams have done a great job to go over one year without a lost time injury. We continue to work on improving safety, focusing on our critical hazard control, supervisor safety interactions, and our workforce-led safety programs. Gold production for the quarter was 83,000 ounces, with 56,100 ounces from Duketon and 27,000 ounces from our 30% share of Tropicana. Intermittent heavy rain through September disrupted mining at our open pits, as well as all haulage to the mills. During that period, we supplemented mill feed with low-grade stockpiles, which reduced the head grade for the quarter. Outside the impact of the weather, the operations performed as planned.
With the weather now improving, we are back into the better grade material, and we expect to recover the deferred production from the subsequent quarters, noting that the second half of the year is stronger than the first half for ounce production. Underground mining and ore processing were not affected. At Duketon, open pit mining continued at the King of Creation, Moolart Well laterites, Baneygo, Mitchell, and Ben Hur open pits, delivering 10,100 ounces at 0.89 g per ton. Our underground operations at Garden Well and Rosemont delivered 33,800 ounces at a grade of 1.64 g per ton, and this is as per the schedule and the mining sequence. Underground development was 4,344 m, up from 3,803 m, with 47% classified as capital development. The Duketon mills processed 1.96 million tons at 0.99 g per ton, with recovery at 89.6%.
Production was 56,100 ounces at an all-in sustaining cost of AUD 3,657 an ounce. The main driver of the higher all-in sustaining cost was the lower ounces produced in the quarter compared to the previous quarter. We will see unit costs improving as production increases, particularly in the second half of the year. Growth capital at Duketon was at AUD 76 million for the quarter. This covered the underground development of Rosemont Stage 3, the construction of the Garden Well paste fill plant, and the mining of the Ben Hur open pit cutback and BuckWell open pit. The paste plant will be commissioned in quarter two, improving the overall extraction of the ore body for Garden Well Main.
As we progress through the production and filling stope cycle for Garden Well Main, we will review the opportunities for paste backfill in Garden Well South and Rosemont to improve the overall ore body extraction ratios in those areas. As we flagged with guidance, growth capital this year is weighted to the first half as we start several new open pits at Duketon. Turning now to Tropicana. Regis' attributable production at Tropicana was 27,000 ounces at an all-in sustaining cost of AUD 3,423 per ounce, compared with 39,100 ounces at AUD 2,532 an ounce in the June quarter. The lower production came from a lower mill grade of 1.35 g per ton, compared with the 1.96 g per ton in the June quarter, with less open pit ore mined and at a lower grade.
Tropicana all-in sustaining costs was higher in the quarter, predominantly due to the lower production in quarter one. Unit costs will reduce over the coming quarters on improving ounce production in the subsequent quarters based on the planned activities. Open pit operations delivered 7,400 ounces at 1.23 g, compared to 21900 ounces at 2.02 g per ton in June quarter, as Havana Stage 4 was completed and mining transitioned fully to Havana Stage 6.
The underground mines delivered 13,500 ounces at 2.85 g per ton, which is a little higher than the June quarter, with development of 1,276 m. The mill processed 694,000 tonnes at 1.35 g, with recovery at 89.7. The development of the Havana underground progressed during the quarter and remains on target for first ore in the first half of calendar 2027. In closing, as Jim mentioned, we reaffirm our FY 2027 guidance both for production and costs. With that, I'll now hand over to Anthony to take you through the financials.
Thank you, Michael. Good morning, everybody. Cash generation in the quarter remains strong. Our operating cash inflow was AUD 265 million, with AUD 175 million generated at Duketon and AUD 90 million coming from Tropicana. Gold sales for the quarter were approximately 75,000 ounces at an average realized price of AUD 6,088 an ounce, generating AUD 454 million in revenue. Referring to figure two in the ASX release now, the cookie jar topped up by another AUD 93 million during the quarter, taking the total balance to AUD 1.3 billion as at the 30th of September. Two items in that waterfall chart are worth separating out. The first is the Vault transaction break fee of AUD 51 million, which we received during the quarter and is captured within the corporate cash flows in this diagram. The second is tax, and we paid AUD 53 million of installments during the quarter.
You'll also notice that we sold about 8,500 ounces fewer than we produced, and that is reflected in our higher bullion balance. Bullion on hand at 30 September was around 18,000 ounces, valued at nearly AUD 6,000 an ounce, or totaling circa AUD 110 million, up from less than 8,000 ounces at the end of June. And note that bullion holdings are converted to cash in a matter of days. Onto capital. Growth capital for the quarter was AUD 80 million, and sustaining capital was AUD 50 million. At Duketon, AUD 43 million of the mine development spend related to pre-commercial production expenditure at the BuckWell and Ben Hur North open pits. A further AUD 3 million went into the Garden Well paste fill plant and its associated infrastructure.
We also spent AUD 7 million acquiring the long-term Banjawarn Station lease, which is a key pastoral lease at Duketon that overlays about 2/3 of our tenement package, making it an important strategic acquisition. At Tropicana, capital spending was mostly on mine development and waste removal, with AUD 2 million in pre-production costs spent at the Havana underground. Exploration expenditure was AUD 19 million for the quarter, and AUD 8 million was spent at McPhillamys, which includes AUD 2 million for a land acquisition.
Remember also, consistent with recent years, McPhillamys costs, excluding any land acquisitions, are expensed through the income statement. Looking at the rest of the year, FY 2027 production is weighted to the second half, as Jim has mentioned. The September quarter results at 83,000 ounces and AUD 3,617 an ounce reflect that, and the September weather at Duketon has slightly increased that expected second half production improvement.
On costs, diesel remains the input to watch, and prices increased during the quarter. Our guidance used AUD 1.35 per liter, and in the September quarter, we paid an average of AUD 1.45 per liter. As a guide, a $0.10 per liter movement changes group all-in sustaining costs by about AUD 25 an ounce for gold produced at that diesel price. Now to tax, which is the largest one-off treasury cash item ahead of us in this coming quarter.
As I said at the full year results presentation in August, monthly installments are running at approximately AUD 15 million- AUD 20 million for the first half of FY 2027. The upcoming true-up payment for FY 2026 is covering the period before installments recommenced in April 2026. It is expected to be in the order of AUD 220 million- AUD 240 million and will be paid in the December quarter.
The one-off final settlement of our historical tax obligations represents a significant deployment in cash, consistent with the provisions we've been making in our financial statements. Importantly, the strong cash surpluses we have generated over recent quarters has positioned us well to comfortably accommodate these payments, reflecting the strength of our financial position and our disciplined approach to capital management. Okay, so there are the headline numbers from me. Thank you, everybody, and I'll now pass back to Jim.
Thanks, Anthony. I'd like to cover a few more points outside the operational results now. Firstly, on McPhillamys, a few days ago, on the 14th of October, the Federal Court delivered its judgment in our judicial review of the Section 10 declaration that affected part of the approved McPhillamys project site. We saw Justice Stellios determine that the declaration is legally invalid, and we welcome that finding. It confirms the position that we have held since August 2024, and it was the correct one. That view being that procedural fairness was not followed in the assessment process. We expect that the current Federal Environment Minister will be required to redetermine the application for a Section 10 declaration, and in that process, will take into account the findings in that judgment. We intend to participate actively and constructively in the process.
Now, there's no certainty on time or outcome of this redetermination, so we will continue to progress the alternative development approach. This will ensure that McPhillamys has a development pathway, whatever the redetermination timing or outcome may be. As we've noted earlier, this alternative uses the integrated waste landform for co-disposal of filtered processed ore and waste rock, and it avoids the area affected by the declaration. Despite that, and to be clear, for a number of practical and operational reasons, we absolutely prefer a clear, positive declaration in relation to the original Section 10 application. B eing responsible managers, we have to hope for the best and plan for the worst. That's what we're doing. I won't belabor the point any further, but a lot of work obviously continues on the project, as you can see from the quarterly expenditure.
Now moving on to the Regis board. Last week, we announced that our Chairman, James Mactier, and Non-Executive Director, Fiona Morgan, will retire at the conclusion of our AGM on the 19th of November. This is part of the renewal process first announced at last year's AGM. On behalf of the company, I take this opportunity to thank James and Fiona for their significant contribution over almost a decade on the Board. That period included the acquisition of our 30% interest in Tropicana and also Duketon transitioning to become a significant underground-based operation. Both have made a material impact on the way we've gone about our work and provided myself support by way of guidance and encouragement over the years, and I thank them for that.
In with the new, I now welcome Ian Macliver, who joined the Board on the 14th of October as an independent non-executive director and chairman elect. Ian brings extensive mining sector experience as a director and chair, and I look forward to working with him. Our next item I wanted to touch on was capital management. Our 2026 financial year saw a record net profit after tax of AUD 715 million. Off the back of that, a strong cash build of AUD 667 million. We paid a AUD 0.35 fully franked dividend for the year or a total of AUD 265 million, which is a 39% of our group cash increase. Our intentions on capital management are clear and are being actioned. We're a reliable but responsible dividend payer.
Looking to this year and this half, I do note that we will be carrying a reasonably significant tax catch-up payment, which Anthony described earlier. As I said back in August, once we're through that catch-up, we remain in a very strong position to continue to build cash, and we expect that to be reflected in our dividends going forward. On exploration in September, we reported step-out drilling at the Rosemont underground down plunge of Rosemont Stage 3. This work was intended to give understanding and greater confidence in the potential for down plunge continuance. Four diamond holes confirmed an additional 600 m along 20-m to 30-m thick segment of the host unit south of the current resource envelope. You can see this illustrated in figure three. We are very pleased with what we saw with the best result, a healthy 1.6 m at 8.8 g per ton.
Now, of course, one swallow does not a summer make. But as you can see in figure three, there are quite a few swallows around now, and it reaffirms the strong indicators that the mineralization remains open along strike and down dip. Despite what some might say about mine life at Duketon, we keep adding life year- on- year. Our exploration team have a pipeline of targets, and we intend to continue chasing them. Other drilling in the period also continued across the rest of Duketon, Tropicana and McPhillamys, and those results will be in our next biannual exploration update later on in this quarter. Finally, back to guidance. As mentioned earlier, we reaffirm the FY 2027 guidance is unchanged. Group production, 360,000- 400,000 ounces. All-in sustaining costs, AUD 2,990- AUD 3,390.
On costs, and I'm sure you're all seeing this across the industry, as we all do, diesel remains a key external input to be monitoring, as Anthony outlined earlier on. To summarize, group production, 83,000 ounces, was in line with our expectations, taking into account the September rainfall. Cash and bullion rose AUD 93 million to AUD 1.28 billion, after AUD 53 million in tax paid. We declared a record NPAT for FY 2026 and paid AUD 152 million in fully franked final dividends for the second half, giving a total dividend of AUD 265 million fully franked, which is a current yield of 7.2%. We reaffirm the FY 2027 guidance is unchanged for both our operations, noting a slight increase in the weighting to the second half.
At McPhillamys, pleasingly, the Federal Court has found the Section 10 declaration made by the minister in August 2024 was legally invalid and will now head back for redetermination. At the same time, we continue to progress the IWL pathway in parallel. Drilling at Rosemont Underground has confirmed another 600 m of host unit south of the current resource modeling, and our Board renewal is well underway, with Ian Macliver joining us as chairman-elect. Regis remains unhedged, debt-free, and well-placed to keep delivering long-term value to our shareholders. Thanks all for your time this morning. Darcy will now open it up, please, 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. Your first question comes from Jonathan Sharp with JP Morgan. Please go ahead.
Yeah. Hi, Jim and team. First question is just on Duketon Underground. The grade was down a bit, tonnes were up. You've said that it was as per schedule and mining sequence, which is good, but just wondering about how the next three quarters look there. Should we assume grade's going to continue to be down with volume up, or does grade start coming back up as well? Thanks.
Yeah. Thanks, Jonathan. Look, I think, I wouldn't read too much from one quarter's movement to another. As Michael sort of touched on, these are just movements that we see in our schedules. I wouldn't be surprised if in a quarter's time there might be tonnes down, grades up, or tonnes up, grades up. It's just a variation. I wouldn't overread it, as we say. As we've said in our guidance, we expect to come in on plan and that variation that we're seeing is part of that plan.
Okay. No worries. Just second question. McPhillamys, congratulations on the court ruling. Good news for Regis, good news for the industry. But just, you've said you hope for the best, plan for the worst, which I assume is continuing with the IWL pathway. Just interested in at what point does it become a point of no return and you basically go ahead with that option?
Yeah. Look, at what point is the point of no return? Once we've made FID, really. As we've indicated, we expect that this process of redetermination, assuming that's where we go, is probably going to take a little while. One of the things that I'm sure the department that considers this part of the act will be wanting to do is ensure that it follows the right fair process this time. So I'd imagine that'll take a bit of time. So we don't know how long that'll take. If we look at the program, the timeline, because this thing has been delayed, other things have happened in the area, and we've had to redirect a little bit of about 10 or 15 km of our pipeline. That requires reapproval. It's all quite frustrating.
We're sort of experiencing things on the project now that are the result of this sort of ongoing delay because things change, so we have to roll with the punches on it. I expect that, when we look at our schedules, either way, if we look at the IWL scenario, we're anticipating that we'll be in a position to finalize that and approve that by later, probably in the second quarter of calendar 2028. Whatever that is, a year and a half away, something like that. If we haven't got a declaration then on the Section 10, a new declaration, then we'll be having to make a decision at that point as to whether we wait or whether we push on.
It need to be clear, though, the declaration that was made over the mine site, our desire is to get that cleared because it's made life very difficult for us to be able to operate. It's basically put a line right through the center of our mining, of our lease and our farms. We really need that flexibility. I don't want to suggest that we don't want a positive outcome on the Section 10, but in the event that it takes too long or there is an adverse finding, there is a pathway for us, and we'll be ready to make that call, as I said, in the second quarter of calendar 2028.
Okay, great. Thanks for the detail, Jim. Appreciate it. I'll pass it on. I'm sure it is frustrating with that. Thanks.
Yeah, thanks, Jonathan.
Thank you. Your next question comes from Adam Baker with Macquarie. Please go ahead.
Thanks for the time, Jim. Maybe just following on the—
Yeah.
—McPhillamys. Just looking at your slide deck you released to the market today. You have highlighted some of the district scale opportunities there at McPhillamys, with the historic intersections. You have Discovery Ridge and Kings Plains. Just wondering if you have given any thought to increasing the exploration expenditure there for the next couple of years following the positive Federal Court decision.
Yes. Look, this is prime country, right? That Lachlan Fold Belt area is extremely attractive, as you can see by just Cadia just up the road and some other. We have quite a bit of ground there. What we are trying to do is get the balance right behind proving that there is more than just the open pit, versus actually expending money on something that is quite a few years away. One thing is for sure, we can see the mineralization continuing at depth. It is not cut off. So I think there is a very high potential for underground alone. Although a mill of the scale of McPhillamys of, whatever, about 6 or 7 million tonnes. We will not be able to get all of that from underground post the pit completion. So there is certainly a reason to be looking elsewhere.
We have Discovery Ridge already down the road, 400,000 ounces of resource sitting there. We've already got a reasonable amount of assets there that we can look to exploit. We'll certainly be looking to do a bit more on exploration than we have done over the last five years or so. It's just a question of how much and how fast we want to run with that, and we're still assessing that against our other exploration priorities.
Yeah, that's clear. Thank you. I guess the second question just pertains to your dividend policy of the 25%-50% half-on-half cash build. I guess, how should we be thinking about the treatment of the catch-up tax payment of AUD 220 million- AUD 240 million during this quarter? You've got some time to think about this, and so do we, given we're not going to find out what your dividend will be until February next year. But should we be treating this as an abnormal item and expecting you still to pay a dividend for this half, just given your strong cash balance? Or just pertaining to if you include that catch-up tax payment, your cash build is negative. So yeah, just how should we think about that? Thank you.
Yeah. Obviously, it's a little bit tricky to say too much that might be taken as an indication of what it could be, because that's up to the Board to decide in late January and February when we see what we've actually done. Probably a good way to look at it is just have a look at our policy and how it looks to treat some of these tax provisions. We've already taken that one into account when we made dividend payments about a year ago, I think, or probably about eight or nine months ago. So we can take that into account, and by that I mean exclude its impacts on our overall position. So it certainly will give the Board some flexibility as to how to think about the dividend. Of course, these are one-off, right?
That's our point, is that the cash and bullion at the end of this quarter will probably be, unless the gold price really surges, which of course it could do, but it'll probably be a little bit more challenged relative to where it ended in September. But it's not due to the fundamental structure of the business. It's a one-off tax catch-up that we'll be well clear of and we'll be then sort of into January, February, we should be clear of all of that noise and in fact, heading straight into the stronger second half. So all of those factors will play into how the Board will think about applying that policy and where it lands on the final number.
Yeah, that all makes sense. All right. Thanks, Jim.
Thank you. Your next question comes from Levi Spry with UBS. Please go ahead.
Hey, Levi.
G'day, Jim. G'day, team. Two questions, please. One on McPhillamys again and one on Trops. Just in terms of the news on the ruling being invalid, obviously great news. Can you just talk a little more through what milestones you expect from here? Will they give you any indication on how long the redetermination will take? Or are we just sort of still thinking about June quarter 2028 as sort of the next marker in the sand?
Yeah, look, it is a good question, Levi. The short answer is no, there is no timeline. It is not like some other processes where there is a set time schedule that has to be followed.
Pardon me, this is the operator. It looks like we have just lost connection with Jim's line. Please stand by while we get that reconnected. Pardon me, you are now reconnected. Please go ahead.
Hi, can you hear me?
I have got you, Jim, if you can hear me.
Yeah. Sorry, Levi. Obviously, something happened with the call. I am not sure where I got cut off, but whatever you missed was some of the best prose that you would ever hear in your life. I think the question was timing. No, look, there is no set time, and that is why we have to follow the second line on the IWL. The one point that I would make, I think that is most important, is that however the department goes about doing it, and however long they take, we need to make sure, for the sake of all parties, that it is done in a manner that does not involve a repeat of what happened the first time, which was it just did not follow a fair process from our perspective.
While we might want it to be rushed, it is probably more important that whatever the updated decision is done in a manner that means that it is clean and it is tight and it cannot be challenged, or it is not open to this unfair process claim. We are very pleased to have got the outcome. It is justified our view that we were treated unfairly, but we need to make sure that the process going forward treats everybody fairly, so that we can all be comfortable that whatever the new decision is the right one. But in the meantime, we will just work on the basis that if it happens early, that is great.
I f it does not, we will continue with our IWL scenario. As I said, even if we do proceed down the IWL scenario, we really want a positive outcome because we need access to that ground. We cannot go on to any of that area because of the restrictions, the original restrictions that the manager put on it. It basically runs right through the center of our lease. So, it makes life very difficult for us, and it is important that it gets resolved.
Yep. Okay.
If that's all right.
Thanks. Yep. Thanks, Jim. So maybe just this one on Tropicana. Can you just remind me of, I guess, the outlook through the course of the remainder of the year or maybe even the next 12 to 18 months in terms of where you're getting the ore from and how I think about the grade profile?
Certainly, the open pit continues for the next 18 months at least. We've got open pit and underground feed going into the mill, so we're not expecting to see any material change. As we're seeing now, there'll be fluctuations from quarter- to- quarter like there are across any mining operation. But we don't see the reduction in open pit feed for probably another couple of years.
Okay. Thank you. Thanks.
No worries, Levi. Sorry about the intermission.
Thank you. Your next question comes from Daniel Morgan with Barrenjoey. Please go ahead.
Hi, Jim and team. Quite clearly, weather impacted you during the September quarter. Just wanted to understand what has impacted your plans from that. If I look at the physicals you did in the quarter, you did quite a bit of material movement at Duketon. Was that on plan? Was that materially impacted, or was it haulage around the site of ore? Could you just provide a bit more color on where you sit versus plans maybe two to three months ago?
Yeah. Daniel, I think the answer to that is pretty well as Michael sort of covered off. With the rain, we were able to carry on in some areas, and we did see some lift in TMMs. But the rain also impacted our access in ore in the bottom of some pits and also made it hard for us to transport ore around our site on the long-haul roads. As the weather clears, we're back in. So what it means is that lower grade feed we were planning to put in later in the year or we just had to shuffle it around in the schedule to keep the mills going. It's a short-term issue, and no long-term implications.
Yep. Very clear. Just on McPhillamys, I echo everyone here, great for you, great for industry, the decision. Just wondering, is there anything you can do on the project? You've lost two years through no fault of your own. Is there anything you can do to compress timelines? Is there any early works or anything, or is that too risky to undertake given you don't yet have a permittable project as you see it, given the various roadblocks?
Yeah. Look, it's a tricky one. It's a substantial project. We want to make sure that we're going to get everything through. This is part of the concern that you have, is that you can have approvals and then you can not have approvals, which is basically what we experienced, whatever it was now, two years ago when we had all the approvals, both state and federal. Then the Section 10 decision was made, which sort of made life impossible for us. We always look to see whether there's something we can do to accelerate the timeline. But the reality is the IWL, for example, is a new concept, and it does require work to get that approved through the planning process. As much as I'd love to be able to say we could accelerate that, we have to run the process that the state is reviewing.
I would point out that the New South Wales state is doing a lot to try and help expedite that as much as it can. But of course, as you'd expect and hope, that doesn't mean taking shortcuts on important assessments. But it's certainly safe to say that both the state is really trying to help us find ways to progress responsibly through this. It just takes time. We said it at the time when we were told that there was an easy solution to find a new tailings location. It clearly wasn't, and it still isn't. I think we said it would take five-plus years, and that's probably the timeline that we're going to run to. So we're looking for everything that we can to expedite it, but really, it's the tailings disposal that's a key thing for us.
That and also some of the modifications that we've had to make to the pipeline because of what we had approvals to do three years ago. Different parties have changed, and we've had to redirect about 10-Ks, which all requires re-permitting. It's quite frustrating. There's the obvious costs and there's the hidden costs of delays, and that's another one.
Yeah. Thank you. Just last question. At the margin, the decision obviously means that McPhillamys is more permittable incrementally than it was before or more of a permittable project. I am interested just hearing how you think about growth, because it was potentially a stalled project for a while and maybe you had to look at inorganic opportunities as a growth avenue. Now it looks more and more likely it might be a project that is executable. Does that change your thinking about growth in other areas at all?
Yeah. It is a good strategy question there, Daniel. Look, McPhillamys is definitely on our one way or another, this will be a producer of the 20 30s, which may sound a long way away, but it is only three years. And we have got the capacity already, with our cash and bullion on hand and our capacity to add to that over the coming years, to basically build that from a standing start. I think if we were in a position where we could start building it today, we could do that without any debt. So we are in a strong financial position to be able to take advantage of the McPhillamys project, and we are charging full steam ahead at it for FID in first half of 2028. That does not preclude us considering other growth opportunities.
It is just whatever we look at, and that is inorganic ones, whatever we look at, we want to make sure that it is value accretive for our shareholders and does not compromise our ability to execute McPhillamys, because that is a great value add as well. So pursuing the McPhillamys project and being in this position to be able to do it does not preclude us from looking at other growth opportunities as well.
Okay, Jim and team, thank you for your perspectives.
Thanks, Daniel.
Thank you. Your next question comes from Thiago Ojea with Citi. Please go ahead.
Hi. Thanks, everyone. Quick question on my side, still on McPhillamys. Going back to the previous design, I know that it's quite early, but do you have any rough estimate on how much could you save on CapEx and OpEx compared to the one that you were pursuing after having this revoked?
Thiago, are you asking what's the capital difference between the two scenarios?
Exactly. Just rough general ideas. I know that you're still going to detail this—
Yeah.
—way better, but just to have a broad sense.
Yeah. Our capital estimates were updated for the IWL scenario. What we saw was something of the order of about AUD 50 million-AUD 80 million more in CapEx for the IWL scenario. Obviously, there's some pretty significant savings from not having to build a tailings storage facility, and all the earthworks associated with that. But that's offset, plus a little bit more by the filtering equipment that you've got to put in to dry out the processed ore. So it's a marginal increase in the CapEx, but still a reasonable chunk of money.
What we also saw was an increase in the operating costs, and that was to the order of something like AUD 150-AUD 180 an ounce, which accounted for the power, the maintenance, and running of that filter press facility, plus the trucking and the extra handling required to appropriately commingle the dried-out processed ore with the waste rock. So there's certainly a difference there. Not a huge difference in the capital, but enough to be noticeable. Also a change in the operating costs. Nonetheless, whichever way you look at it, the returns on McPhillamys, even with the IWL scenario, are still quite impressive. I think at a AUD 4,000 gold price, the internal rate of return is still nearly 22% after tax and an NPV of over AUD 1 billion. That's at AUD 4,000 Aussie an ounce. So either way, that project's a cracker.
No, that's great. Jim, just another question. Garden Well mineralization now is confirmed, right? Also, I think Rosemont stage three extends 600 m south of the current design. I know that you have a December reserve update, but should we read this that maybe this would push the tonnes to underground life, maybe extend this five-year reserve life of the group?
Look, our confidence in these ore bodies and how they progress is quite high. What we want to be able to do, and the reason for doing this down-plunge extension drilling, is to show the physical evidence that the mineralization continues. Therefore by extension, are we justified in being confident that that mineralization and therefore that mine ability will continue? Obviously, to get reserves quality extensions, we've got to do a lot more drilling. But in much the same way as we do extend, we've done some deep down plunge drilling at Tropicana to show that it extends down. Same lithology, same thicknesses, same grade.
We've done that now at Rosemont and at Garden Well South and at Garden Well Main. So we are drilling. You certainly could source off it because it's only a handful of holes. But I tell you what, I'd much rather have five or six holes that have all intersected thicknesses and grade to build my confidence that that continuity is there. Time will tell, but I would be certainly saying there's a reason why we're doing it, and there's a reason why we're presenting it for people to look at and draw their conclusions from. Hard to argue with the facts.
That's clear. Thank you so much.
Thank you. Your next question comes from Paul Wiggers de Vries of Bank of America. Please go ahead.
Good day, Jim and team. Just looking into half two, you've got a number of open pit opportunities at Duketon that are starting up. Is the general move to increase material volumes ahead of, and build stockpiles at the operation?
No, not a conscious decision to build stockpiles ahead of processing. What we do is like most operations, we'll grade stream. We'll run a pit and we'll feed the higher grade in while we've got the capacity in the mill. If we're running that mill at full capacity, then we'll stockpile, we'll maintain the pit for efficiency. You don't want to turn pits on and off just based on feed. We'll build up low-grade stockpiles while we're feeding the better-grade feed. Then over time, when the pits finish and we run out of high grade, we'll start to run that low-grade material through. Really, we see that in patches all over the site. We've got low-grade stockpiles from old pits. We do a real balancing between high-grade feed from a pit versus the lower-grade feed from stockpiles.
Quite frankly, sometimes you can make pretty good cash off those stockpiles like we showed at Duketon North last year. We're processing very low-grade stockpiles there that have been built up over many years and made some very good money out of it. Now we're back at Duketon North getting ready to start significant production from BuckWell. That's where a lot of the TMMs are being moved. We'll see a combination of lower-grade stockpiles being built while we're also feeding higher grades into the mill. So it's all part of the strategy. You wouldn't run a pit just to build stockpiles. We wouldn't do that. We'll run the pit to produce feed, and stockpiles are built in that process while you've got excess production from the pit over and above what your mills can take.
No, of course, I understand that. On the stripping ratio for Tropicana, obviously up significantly quarter-on-quarter. Was that a function of the access given the rainfall, or was that a planned higher stripping quarter?
I think it's a bit of a combination of both. You just see that, swings and roundabouts from quarter-on-quarter. I wouldn't read anything sinister in it. It's just sometimes the guys are moving a lot more material. I do know that the rain did have some impacts, but the swings and roundabouts will come out over time.
Thank you.
Thank you. There are no further phone questions at this time. I'll now hand back to Jim Beyer for closing remarks.
All right. Thanks, Darcy. Thanks everybody for your questions. Apologies for the technology dropping out there on that Q&A. As always, if you have any follow-ups, please get in touch and we will do our best to answer them. Thanks very much and have a good day.
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