Thanks, Courtney, and the Diggers team. It's great to be here today to talk about Vault Minerals. Vault has a diversified portfolio of operations, providing relevant scale today and anchored by a cornerstone long-life operation in Leonora, which is in its infancy. As a business, we are driven by free cash flow generation, not aspirational production targets, and this has put the business in an excellent financial position with AUD 686 million in cash and no debt. This will allow the internal funding of the King of the Hills plant expansion, waste stripping at Mount Monger, and setup of Spanish Galleon at Deflector through FY 2026, allowing us to reach the next phase of free cash flow harvest in FY 2027 without the need for a period of deleveraging. We have titled the presentation today "Inflection Point," and that's exactly where we believe we are at.
The favorable operating dynamics into FY 2027 will coincide with the extinguishment of the hedge book and will be essentially unhedged as we exit FY 2026, which will see expanding margins and free cash flow growth. I'm going to talk a lot about exploration today. That is our growth, and that's our organic growth, particularly with the high-impact programs at our Leonora undergrounds and Sugar Zone, for which we released new results today. The results demonstrate the significant exploration pipeline to deliver more mine life through conversion of our existing resources, extension to resources, and in-mine discoveries, with multiple promising intersections returned in new target horizons outside of the main host structures.
Whilst we believe that we are the compelling value proposition in the sector today, I will spare you a market comps chart through the presentation, as what I want you to take out of the presentation is not that Vault is a cheap business; rather, it is a well-managed business, outcomes-based business with the people, the gold, and the capital to create sustainable value. Snapshot of the portfolio, which is very much concentrated within Western Australia, hosting 90% of our reserves and resources. In FY 2025, we sold just over 385,000 ounces at an all-in sustaining cost of AUD 2,422 per ounce, providing relevant scale today, and we will provide FY 2026 guidance during the quarter. I won't touch on them today; however, our Mount Monger and Deflector operations are a valuable part of our diversified portfolio.
In addition to their cash flow contribution, particularly at Mount Monger, with the reducing strip ratios set to deliver significant free cash flow in FY 2027 and 2028, these operations also provide us with the flexibility and option as we consider various operating models across the business to mitigate cost pressures. In addition, they provide pathways and the ability for us to progress our people throughout the business. Outside of Western Australia, the Sugar Zone in Northern Ontario provides a rare, fully infrastructure-supported growth project in one of the world's most sought-after mining jurisdictions. Whilst we are always alert to opportunistic situations, as I stated on this stage last year, the life, the opportunities, and the cash flow generation potential of the portfolio means we have no existential requirement to pursue M&A.
Before we look to the other side of the inflection point, which you can see on the right-hand side of the chart, I want to take a moment to look back at the year it's been. We assumed stewardship of our long-life Leonora operations a little over 12 months ago. At the time, we had three clear priorities based on our due diligence in order to establish what we believe would be a credible and deliverable platform to liberate value. Firstly, we refreshed the King of the Hills open pit geological model to honor the geology and reflect the grade variability within the ore body. This delivered a high confidence estimate, which will underpin the operation.
In addition, we implemented a step-changing grade control drilling with two rigs active for the full year, returning a 63% year-on-year increase in grade control meters, providing the appropriate data lead time for mine scheduling. Secondly, addressing the operational practices and inefficiencies we found. From a mining perspective, we had to alter the approach from simply moving tons to focus on quality to minimize ore loss and dilution. As part of this work, we have built the internal capacity on site, which has allowed us to internalize processes which have a direct impact on the operational performance, starting with the fundamentals of dig block design and drill and blast. Thirdly, we needed to identify investment opportunities to leverage the scalability and expandability of the Leonora operations, through identifying high-returning, low-capital intensity projects which leverage a significant mining, processing, and services infrastructure and match it with purposeful exploration.
While the market is yet to reward us for the hard work of the past 12 months, we now have three clear fundamental catalysts and value drivers in front of us. Starting at the left of the screen, we are well into the process of investing AUD 172 million to increase the throughput capacity of the King of the Hills plant by 40% to 7.5 million tons per annum. We expect to complete the project in a little over 15 months' time, which under our current mine configuration will set the region for a 20% increase in production on FY 2025. The ongoing part of the opportunity for us at Leonora is extending that peak production period.
We have a clear hierarchy of exploration priorities to do this, starting with the King of the Hills and Darlot Underground drilling into King of the Hills regional drilling and more broadly across our extensive Leonora holdings. The results from FY 2025 were incredibly productive, as evidenced by the results released today, and we will maintain the rage with more than doubling the resource definition meters in the Leonora region in the coming year, with over 100,000 m planned. Thirdly, we expect the Sugar Zone to come into increased focus, with regulatory approval for the new Life of Mine tailings facility, the sole remaining trigger for a restart of operations. As I will touch on later, the exploration results today at Sugar South, which extends 500 m from the Sugar Main lodes, continues to intersect shallow, high-grade mineralization, which is open in multiple directions.
We will commence resource modeling of the Sugar South zone with a view to turning the exploration success into resource and potentially into reserves and getting it into the mine plan. Outside of the fundamental catalysts, we are rapidly approaching the inflection point on the legacy hedge book. 92% of the hedge book will be delivered through FY 2026, and we will exit FY 2026 essentially unhedged. This will deliver strong year-on-year free cash flow growth in FY 2027 and asymmetric exposure to gold prices beyond FY 2027. As we work through FY 2026, spot deliveries will increase, with 61% of FY 2026 deliveries scheduled for first half.
For some context, at current prices, we expect to see around a 17% increase in the realized price for the first half and a 25% increase for the second half relative to the FY 2025 realized price of AUD 4,360 per ounce, with the hedge book extinguished in Q1 FY 2027. The hedge book has a short tenor, which is getting shorter and represents 4% of reserves and 1% of resources. Turning to the operations, to orientate everyone, our King of the Hills operation is located 34 km north of Leonora, with Darlot 100 km north from King of the Hills. With the region having a prolific history and enjoying somewhat of a renaissance, it is easy to forget that our operations in their current configuration are in their infancy, with first production from the transformational low-cost processing facility commencing in June 2022.
Our operations consist of a range of wholly owned ore sources, which you can see on the left. These include our active mines in the King of the Hills open pit and undergrounds, Darlot, with 36 consecutive years of operations, however, never having been the primary focus for its global major owners, nor feeding a low-cost processing facility. In addition, we have 127,000 ounces sitting on the deck in stockpiles, which have been predominantly generated from recent open pit mining at King of the Hills, and multiple regional satellite prospects. These prospects stretch along a 12-kilometer trend and are defined by shallow historical drilling. On the right-hand side, we have set out the capacity and expansion profile of the processing facility, which is a core strategic piece of regional infrastructure.
We released an updated open pit ore reserve in May, containing 110 million tons at 0.62 g a ton for 2.2 million ounces. The gold industry does not produce widgets, and not all ore reserves are created equal. The King of the Hills open pit reflects the pit limits at an Australian dollar gold price of AUD 3,750 per ounce, providing a bulk baseload open pit immediately adjacent to a low-cost processing facility. The ore reserve has a low strip ratio of 3.4 to 1 over the life of the pit. Importantly, stages 2 to 4, which contain 75% of the metal, have an even lower strip ratio of 2.7 to 1, providing the flexibility to respond to changes in the gold price outlook. The investment in the highest strip, stage 5, is not scheduled to begin until FY 2032.
The mining costs utilized in the cut-off grade calculation are based on our current mining rates. With no allowance for the potential benefits a larger, more productive mining fleet may achieve as we approach the expiry of the existing mining contract in December 2026. Turning to the plant, one of the advantages we enjoy in Leonora is a modern, large, low-cost processing facility, which is set to get larger and lower costs. The stage 1 upgrade introduces a larger and more efficient primary crushing circuit, which will enable direct tipping from both mine trucks, road trains, and deliver improved plant availability, with a fit-for-purpose design, including an apron feeder, to make the plant suitable for underground ore sources.
The stage 2 upgrade will increase throughput capacity 40% above current levels to 7.5 million tons and is centered around the installation of a 9 MW ball mill, which will be in series with a 15 MW SAG mill. This will increase the grinding capacity of the plant and ultimately increase plant flexibility to treat a broader range of ores. More specifically, on costs and putting the facility into perspective, the upgrades will result in the facility becoming increasingly competitive in the region, with already low operating costs of AUD 15 per ton to reduce as plant capacity is increased. Maintenance becomes more preventative rather than reactive, and ore handling is reduced. As you can see, the crusher installation is well underway, and we expect the integration of the new crusher into the existing conveyor network in the fourth quarter of FY 2026.
The major wet plant upgrades are also progressing well, with two of the four tanks now at full height. In terms of stage 2, long lead time items have been ordered, and we are looking forward to completion and integration of the project in the second quarter of FY 2027, or a little over 15 months away. Turning to exploration in the undergrounds, we are well placed going to FY 2026, with grade control drilling largely complete for the coming year, within the two main mining fronts, the West and the Regal zones. This allows us to get a good start on resource definition drilling through the first half, which allows us to both set up FY 2027 production fronts and test the areas beyond the FY 2027 mine shapes, as you can see in the purple drill traces.
Some of the results we have been able to share with you today. Within the west zone, on the left-hand chart, we designed a seven-hole program to target new high-grade structures, which were intersected in recent underground development into the imperial lode hanging wall. Pleasingly, the drilling returned multiple high-grade hits, including 0.5 of a meter at 138 g a ton, 0.3 of a meter at 149 g a ton, demonstrating continuity within the target zone. The hanging wall zone now provides a target for repeats of the high-grade east-west tension veins associated with the granite diorite contact, which you can see modeled on the footwall side of the graphic. Turning to the regal zone on the right-hand chart, the 16-hole program was designed to test for extensions along strike and down dip of the current life of mine designs and mineral resource boundaries.
The program delivered the targeted extensions, and with further encouragement, mineralization was extended beyond the granite diorite contact into the ultramafic package, with results including an outstanding 0.5 of a meter at 404 g a ton and 0.3 of a meter at 125 g a ton. The results are particularly encouraging in both areas of the mine, particularly with multiple intersections into underexplored areas outside of the main host package and structures, which provide new opportunities for potential mineral resource growth in areas proximal to existing underground infrastructure. Stepping back beyond the near to medium term and really looking at the bigger picture to understand the extent of the prospective geological horizon, we are going to step out 400 m- 800 m to test the northern plunge of the granite diorite, which is a major control on mineralization and poorly defined and tested to the north.
The investment in these holes is about setting up for success and stacking the odds in our favor, as it will provide an enhanced and well-defined lithological model to set up subsequent underground drilling down the nose of the granite diorite contact. Stepping back from the immediate mine footprints, we will progressively turn our attention to the regional satellite opportunities. The prospects stretch along a prospective 12 km trend and are defined by shallow historical drilling with very limited recent work. We have recently commenced drilling at Century, and we will complete programs across the four prospects throughout FY 2026. Turning to the result at Darlot today, and just to orientate you, on the left-hand side, you can see how close the Chapel and Pipeline areas are in relation to existing underground development.
Today's results, which you can see on the right-hand side of the chart, or the slide, follow up on the results reported in April, with a 21-hole program in the Pipeline and Chapel areas, returning intersections of broad high-grade mineralization at plunge and along strike of previous drilling and beyond the mineral resource boundaries. Results include 2.2 m at 36.8 g a ton and 1.3 m at 52.6 g a ton, with mineralization continuing to remain open in multiple directions. There is demonstrable potential to grow the scale of this area. There is a bit of a theme in the results today, as we also intersected 2.1 m at 69.2 g a ton in an unmodeled hanging wall structure of the Chapel zone, now providing a new exploration opportunity. Turning to the Sugar Zone, keep going there.
It's a bit busy, but certainly on the right-hand side, you can see a timeline of what we believe for a restart of operations. We are well advanced in the regulatory process for the new southern tailings facility, which will provide a lower cost life of mine tailings facility relative to the existing northern facility and dry stack mix. We anticipate approval of this facility in the fourth quarter of FY 2026, and as I said earlier, this is the sole remaining trigger for a restart of operations, as we have completed an extensive 93,000 m drill program, which underpins the 1.28 million ounce resource and 325,000 ounce ore reserve. In addition to the step change in drill data, we have upgraded the surface and underground infrastructure and have a new mining fleet on site. We are not hoping for; rather, we have invested for success at the operation.
Once we have the approval in hand, a number of key work streams will get underway. We will commence mining on a development-only basis in July 2026. Crushing and screening for dam material will commence in January 2027, with dam construction completed in October and processing to commence in November 2027. We expect to commence processing with around 13,000 ounces on the deck, generated from ore development and ready for immediate processing. Exploration is a key value driver for the project, and it is also a very efficient one for us, with surface diamond drilling costs some 60% lower than what we see in Western Australia today.
If we look beyond the current 1.28 million ounce mineral resource and the ore reserve, we have today released further high-grade results from the Sugar South zone, including 1.29 m at 282 g a ton, 1.46 m at 45 g a ton, and 0.65 of a meter at 99.2 g a ton. We will commence resource modeling of the Sugar South zone, with a view to turning the exploration success quickly into resource and potentially into reserves and potentially into the mine plan in due course. This will allow redundancy between the two main lodes and introduce a new mining front with the potential to increase the ounces per vertical meter in the mine. The emergence of this zone is particularly exciting for the project.
The zone now extends 500 m south of the Sugar main lodes, with drilling concentrated to a depth of 300 m below surface, with the Sugar main and middle zone lodes traced to around 1,000 m below surface, and with two of the highest grade intersections on the property, including the 1.29 m at 282 g a ton and the 2.44 m at 119 g a ton released in February, located on the southern margins of Sugar South drilling, we are excited about the opportunity to grow the scale of the Sugar South. The mineralized mine corridor has a strike of around five km, and we have commenced stripping and sampling of the outcropping veins from Sugar South to Links.
Summing it all up, the message I want you to take away today is Vault Minerals is a well-managed outcomes-based business with the experience, the gold, and the capital to focus on creating shareholder value, with a number of identifiable and clear value catalysts on the horizon.
Thank you.
Thanks, Len.