There we go. I think we might start. We have got quite a few people who have already joined. Well, good afternoon everyone joining from Australia, and of course, good morning to everyone, all of our shareholders who are joining from South Africa. Thank you for joining West Wits Mining September quarterly webinar. My name is Jess Fertig, Investor Relations for the company. I am delighted to be joined today by Rudi Deysel, CEO and Managing Director of the company. Rudi, thank you for making the time and for being up so early this morning.
Thank you very much for having me. Thanks, Jess.
Rudi, it has been a very big few months with development rates almost tripling this quarter. Surface works now past the halfway mark and the second senior debt drawdown received. Ahead of today, we of course invited shareholders to submit some questions, and we have had some really great ones, so I will be putting those to you, Rudi, on your behalf or on the shareholders' behalf, should I say, and along with a few other of the quarter's highlights.
No problem.
Please, to all the shareholders and investors who are joining us on the webinar today, this is live. So i f you do have a question, please just type it into the Q&A box at any time and I'll try to get to it during the session. With that, let's get into it. So, Rudi, from your perspective, what were the defining achievements of the September quarter, and what do they mean for shareholders?
Yeah, I think the big thing for us was that since the start, obviously there's some startup issues around starting up a new mine. So the big thing for me was just to get the operations stabilized, especially the underground operations. So there was a big focus on underground access. The big thing as well is our surface infrastructure to make sure that all the critical services to the mine is on target as well as funding our drawdowns that we need to achieve, to make sure that we hit those targets and cash flow points.
I think the big thing for us is really that we need to understand that we are currently accessing the ore body and we need to create that infrastructure underground to make sure that it stands over life of mine and t he big thing as well is that ore buildup. We've hit that inter-level, that first level, so w e need to create those stopes and then get into that permanent underground infrastructure that deliver that ore.
Perfect. Thanks, Rudi. And now a shareholder that put in a question earlier notes that underground development reached 200 m in September, and the company is targeting 600 m a month in 2027. They'd like to understand the planned monthly advance rates from October through to hitting that 600-m target. Can you walk us through that build and ramp up?
Yeah. So I think the development for underground mine, and I think I've explained it previously, it's almost like tree branches. There's critical development ends, which is obviously like the main decline. You need to start opening up those levels, different levels. We're already on the first level but n ow it's important to get as quick as possible to the second level. That 600 m are mostly driven by face availability, so a s you go into underground and you start opening up, and the point is, if you've got less faces available, your development meters would be less.
So our big focus is to get into that ore body to the east and west strike drives, and then as well as getting that vertical downwards depth development, which is in the decline itself and t he advance per end is really linked to your cycle that you get in a shift, so t hat consistency and hitting those cycles and getting good quality blast with good advance rates per day is our big focus. So as the months progress now, we will get those faces availability more and more, and that will then grow from where we are now.
The face availability allows us to do about 200 m- 250 m. Our plan as it is really do consider any possible hiccups that we might get, so t hat's built into our plan because we need to be realistic about our production plan and our advance rates. As we go down and we open up more levels and we've got the opportunity to break away to both the east and west side on that decline, those advance meters will increase and w e expect that this will build up to the beginning of next year to that 600-m mark, which we see as pretty much a steady state.
One point to note is just that, at some point, we actually need to reduce those meters. There's a big drive to get as far ahead as possible, but development is a cost. It's diluted ore. Ultimately, we want to get in a position where we hit that ratio between your stoping ore and your development correct, which will drive your cost versus your revenue ratio and t hat's the big thing that the guys also need to understand going forward.
Absolutely, Rudi. I think in a webinar that we did just recently on a operations update that the company put out, you did mention that the development meters that we're seeing at the moment, and also in the next quarterly updates, are the leading indicator that shareholders—
Very true.
—can look at in terms of future production.
Yeah, absolutely. I mean, your development is what you expose for future production. So that's the big drive for us currently.
Perfect. Now, we get asked a lot about gold production and the move to stoping. Gold recovered this quarter was 112 ounces compared with 227 ounces in the June quarter. So shareholders are asking, "Why did that come down, and when do shareholders start to see production pick up?" So this is sort of tied to the last question, but a little bit more specific.
Yeah. Look, I've always said that the main focus here is to create the infrastructure for a 17-year life of mine. And most of our ore in the beginning of the production profile, always, from the feasibility study as well, would've come out of that diluted development meters. Which is designed on reef, so that we do get that upfront revenue. Now, once again, the quality of the development is utmost important so that it can support that 17. So I think just by design of the schedule itself, where we are developing currently, the ounces are really a bit less than what we had previously, but t he big focus is actually to get that stopes open as quick as possible, because that will be the main source of our ore.
It's also ore less diluted or undiluted to have higher grade material and t hat is the source that we actually will bring out the ore tons. So, the focus this month, much more to really get that development rates up. I mean, we moved from 73 m in July up to 200 m in September, and that's going to increase even more, and t hen, the big focus is to hit that first production stope in February next year. So, I don't think the real focus was on ounces production at this stage. We are really in a development phase, and everybody needs to understand that.
As we open up that stopes, that production profile and ore delivery will increase. We've mentioned to the media as well, next year it's 10,000-15,000 ounces. The year after that, we are above that 40,000 ounces. Then 2029, we hit that 70,000 ounces steady state and t hat's the ultimate goal for us to get to that point. The fact that we can deliver ore and gold while we are developing, that's not really in a normal setup of mine. That's what you do not see, and that's advantage that we have in our project, which reduced the funding requirements. So it's really a great position to be in where we are currently.
Yeah. Fantastic. Thank you, Rudi, for clarifying that. And I think just as a summation for shareholders, I think they were or have been a little bit confused given we did produce a gold bar in March and started—
Yeah.
—processing ore in March this year.
We produce gold bars every month.
There you go.
It is an ongoing thing.
Yes.
That gold production will just increase over time as per the production profile that we set out in the media.
But very important for shareholders to note that the real step change is the stoping and—
Yeah.
—the development meters. That is the metrics
Yeah.
—that shareholders really need to look at, and that any gold that is produced at the moment is really just a byproduct of establishing the mine and not the main source of production yet.
No, absolutely. Look, I think our production profile is very clear. The big thing for us and milestone for us, like we said, is February. We need to hit that first stope and get that available. And then, at the current gold price, we will actually hit commercial production next year, which is far ahead of our feasibility study, which was done at the conservative gold price. That is a great position, and that is exactly what we are targeting. The project is going really well, and it is really in a great state at the moment.
Brilliant. Thanks, Rudi. I know you are probably going to repeat yourself a little bit over here.
Yeah.
But just how would you view the development progress at Qala Shallows? I know you have just mentioned that we are ahead of schedule and everything from both a timeline and a cost perspective, just to give shareholders an idea.
Yeah. So look, we have got a very clear schedule in terms of our cash flow, our drawdowns, and how it works. The fact that we actually passed our cost to complete test for the second drawdown is very positive because that shows the confidence of the banks. We had also this quarter, that was around that AUD 21 million that we just had. Our big targets and milestones, and that is the targets that we want to achieve, is that we ensure that we get that first stope in place. The surface infrastructure, we have developed it now. It is now 61% complete. By quarter three next year, that is fully completed, which will support a 70,000 ounces gold mine.
Quarter four, as the gold price are at this stage, we do see that commercial production, which is very positive. It means then that we actually start showing some profit out of this area. This is not far off from where we are. Then ultimately, 2029 is our big target, t hat's where we hit steady state. Like I mentioned previously as well, if we take today's gold prices, and we are very bullish on where the gold price is going in future. We are going to turn over a margin of AUD 200 million per year. That's really great for a project like this and t` hen obviously, we have got all these other development projects going forward as well.
Absolutely, Rudi. I think from a cost perspective, one of the strongest independent signals for shareholders to understand is that we passed the lender's cost to complete test—
Yeah.
—before the second drawdown that happened this quarter.
Yeah.
That is an important indicator.
Yeah, that's a huge indicator. So at this point, we are actually better than our budget. We cannot look at all-in sustaining. We can, but all-in sustaining costs at this point is we really need to get closer to that steady state to really follow that, but having that AUD 1,300 per ounce all-in sustaining cost, that's based on executed contracts that we had. We are now basically a year down the road. We are achieving that cost and we are managing that cost. The whole project is designed to that point where we manage each little project as a little independent project.
Ultimately, our peak funding is actually a point where you get to where you expend the most capital that you require in a month. That's the funding required because the rest is all driven by either revenue or the lender's money. That's exactly what we need to ensure that we are within those targets, and we are hitting those targets as we are progressing up to now and w e are actually very positive going forward as well. There's some upside as well.
Yeah. Fantastic, Rudi. Actually, a shareholder asked a question just on that, on peak funding and drawdowns.
Okay.
So in the DFS, the peak funding period is stated as three years—
Yes.
—which they calculate at around October 2028.
Yeah.
Can you clarify for the shareholders what peak funding means? Is it the point of the final loan drawdown, or when the project reaches its maximum funding requirement before becoming cash flow positive? What is it?
So that's exactly what it is. It's actually the maximum capital required or funding requirement at that point. From that point onwards, we start to become cash flow- positive and then you actually start paying back on that. Our payback was always eight months after that. Like I mentioned, commercial production at these gold prices, if it stays where it is, we're actually going to beat that time where we actually start paying back, which means that maximum capital requirement will actually come down. So once again, if we do what we need to do and we follow the program as we are doing currently, then we actually got upside on the results of this project as well.
Fantastic, Rudi. Now moving towards the surface infrastructure and power at the project over the quarter. So the surface infrastructure went from 45% to 61% completed just this quarter. Can you tell us what has been built and what will grid power in early 2027 mean for the operation?
Yeah. So the big focus was to really— and once again, the whole project was scheduled and designed with these different procurement packages so that we can manage our cash flow and make sure that we've got good cost controls in place. Now, the big focus was actually to get first the environmental requirements in place, which is the pollution control dam and a ll the ROM pad, for instance, as well, just to make sure that we don't have any leaching into the environment or effluent runoffs and that so t hat is going very well.
The ROM pad is really close to a point of completion, which we target by the end of this year. In the same period, that's the pollution control dam as well. Then the big focus then is to get our grid power and our water supply in place a nd that's a big focus. We intend to get the grid power in place by the first quarter of next year, which is also not far away from now. Now, the big thing for that is that will really bring down that all-in sustaining cost. Our exposure currently to diesel is about 8% of our cost, and as I mentioned previously, that's very low in comparison to other operations because we use hydropower, but that will then really reduce pretty much from 8% to 3% in that all-in sustaining cost and t hat's one of the big things that we need to get in place.
And then, water supply, that's straightforward. The surface infrastructure is really running to schedule below budget. That's not my main concern that keeps me up at night. The mining is much more important. But everything is running very well as we mentioned, and as you could follow. And o nce again, the proof that we passed that second drawdown is exactly the proof that there's somebody that looking after what we are doing, auditing us, doing due diligence on our results. The banks are happy, so everything is on track.
No, fantastic, Rudi. Of course, we remain on track to complete all the critical surface infrastructure in Q3 of 2027. That's the target. But moving forward from Qala Shallows, Rudi, many shareholders were really looking forward to Project 200 scoping study results. Where has that landed and what happens next?
Okay. Yeah. So we have completed the Project 200 scoping study. In consultation with the ASX, there were some issues regarding the information that we got, if we could actually bring it out to public, so f or that reason, we did not publish it. But the reality is that the project came out extremely positive. We have increased our life of mine to 35 years at a production rate of 200,000 ounces, which is exactly what we wanted to do. So the issue around why we could not really release it was the detail on that was purely regarding the ratio between the inferred versus the indicated and measured.
NowoOur big focus now is there is still a lot of work that we can do in terms of the resource models, in terms of bringing a bit more of that measured and indicated early upfront in the Project 200, which will then satisfy the requirements of the ASX. And then obviously, we always knew that there will be some optimization that we can do in terms of the scheduling. Now all of that work is currently happening. The one thing about scoping study, the scoping study is really there to advise the company on the way forward in terms of additional drilling to up that. We need to understand this is not a financial forecast.
The scoping study is really a study to take us to the next level, which will then be a pre-feasibility study, or if we have got enough information, we will then start with the DFS, which will then ultimately lead into actual production. So first signs very good that the scoping study is great. It is a great business case. The fact that there is a lot of optimization opportunities in that much better. There is a lot of that inferred, of that indicated measure that we can bring into the schedule to improve on that. We are working on that. We will bring that information out as quick as possible. We want to bring it out as quick as possible because it is a great story, so y eah, that is happening as we speak.
Yeah, that is fantastic, Rudi. Ultimately, a very, very positive outcome. It is just unfortunate that we could not release it because of that inferred indicated category—
Yes.
—issue which we are working to resolve. Now, Rudi, beyond Qala Shallows, Bird Reef Central, can you update us on that uranium-gold project and what is happening there?
Yeah. So we are planning to— well, it is already November. As we mentioned, we are going to mobilize now, early November. It is actually in the next couple of weeks. The team is working hard to get the rigs on the ground to start with the drilling program that we set out. It is just a bit of below 6,000 m of drilling that we plan, 17 holes that we plan, so previously we have done four holes. But the ultimate idea is that there is about 4 km of strike distance that we would like to define. Currently, in our resource itself, the actual contribution from the Bird Reef Central in terms of gold is not a lot. I think it is about 120,000 ounces that is in there from the 7.2 million ounces that we have got.
We do believe that there is a lot of additional gold that we can add to the resource itself and then t he big thing for us with that whole package, we do have the Monarch Reef that includes the uranium which is currently an exploration target, which we would like to really just convert it into a JORC compliant resource. All of that, it is going to start in November this month, early November. So we expect to by end of November, the first drilling to start happening. And then as the results come out, we will make that available. I think another exciting thing for us is when we look at this project from a gold point of view, we used a really conservative gold prices.
So I am actually quite excited to start looking at this at current gold prices and where we are going in terms of future, w hich means, this can actually also create a fantastic opportunity with exposure to two different commodities, at a higher gold price. This is really also a greenfields project within these old mined-out areas, which it is shallow mining, low all-in sustaining costs. So I think there is a lot of opportunities that we can get out of this little project, so very excited about it.
Yeah. Fantastic, Rudi. I think it's very exciting to have that sort of dual commodity exposure while we continue to work on the development and the ramp-up at Qala Shallows, having Bird Reef and that uranium-gold upside, and consistent news flow coming out for shareholders to see—
Yeah.
—the progress and advancement of that project as well is going to be very exciting. News flow coming out in the next few months as well.
Right. Yeah. That's exactly the exciting part.
So, Rudi, now there was a question that's just come through from the chat group, and I know this is going to be an easy one for you. But for those who are new to the story, they want to know where is that 200,000 ounce of gold going to be produced once Qala Shallows hits that ramp-up stage? And do we, sorry not they, does the company need to sign an ore purchase agreement?
No. At scoping study, we look at different scenarios in terms of business cases. Now, there is a lot of spare capacity around us and t hat' s how we could have actually started Qala Shallows with very low CapEx input. There is a lot of capacity. So the option is, either toll treat still at different plants around us with that spare capacity, which will require some agreement with them. Currently our agreement that we have with Ezulwini is really straightforward. It is a cost-plus agreement. We pay for the processing cost with the margin, and then ultimately, we get the spot price at that given time, mid-month and end of month.
Very straightforward. It is actually a toll treatment agreement type of setup. There are other scenarios where we are also looking at building our own plant. It will justify, 200,000 ounces will justify something like this, so t hat' s also built into this. We also have the scenario where we might have a JV with somebody else to actually set up a plant. All these scenarios have been looked at. It is in our model, and obviously we keep it in that model as that commercial discussions go forward.
dWe are constantly busy with that type of discussions, and we do have that relationship with producers around us. At this stage, we are not sure what route we can do because this will be driven either by commercial or environmental permitting aspects. We are also very close involved in discussions with the stakeholders in terms of legislation and permitting on that side. What can we do with a new plant? Those options are still open and there are a few scenarios that we can follow to have the best business case out of Project 200.
Yeah. Thanks, Rudi. I think what is really critical for shareholders to understand is that it is a really low CapEx scenario for West Wits at the moment given we have—
Yes.
—that ore processing agreement with Sibanye-Stillwater near the project. Having that optionality is key as the project ramps up and the company starts to produce lots and lots of ounces. So, Rudi, we have another question online from a shareholder who is asking more on the structure side of the company, so c orporate structure. And they are asking whether West Wits would consider buying back a further portion of its BEE partner's equity stake in the future. Will it be possible, while remaining compliant with South Africa's BEE requirements?
Yeah. One thing that I just want to make clear, we are already BEE- compliant. Once empowered, always empowered. That was made clear previously as well, so if we buy back, we are still compliant. There's always that discussions there and intentions there. We would like to do that because we do believe this is a brilliant project. For us, there's a lot of upside and value in actually increase our shareholding in this. That's the discussions are ongoing and, yeah, we will release any information regarding that going forward.
Perfect. Thanks, Rudi. Now, I guess just to finish, we didn't have any more questions coming through. Just to finish, how is the team tracking as the site grows, and what should shareholders be watching over the next 6-12 months?
Yeah. The project is really tracking excellent. The bank's confirmed it. They've approved the drawdown. They track if we are doing what we promised we are going to do, and that's going excellent. What to look out for in the next 12 months? We are really getting now our growth projects in place. They are funding for that, so the Bird Reef Central is kicking off. Project 200, that work is also happening as we speak. The moment that we can actually release, and we've got the alignment with the ASX, we will release that information as well. The big thing for me is that we follow that milestones and get that milestones in terms of Qala Shallows.
Big things to look out is that first stopes in February, third quarter next year, the surface infrastructure is complete. Fourth quarter, we hit that commercial production, in terms of the project itself. Then that ounce profile increase from next year, the 10-15, the 40-45, 50 in 2028, and in 2029, we hit that steady state. The big focus is on that. All of this needs to happen with the biggest safety in mind. We are striving to Zero Harm, so there is a lot of work happening on that. That is also a big focus point for us that in the next year, that nobody gets hurt, everybody go home safely, and that we really have good safety while we deliver all these milestones.
Absolutely, Rudi. And of course, you and the Executive Chairman, Michael Quinert, will be doing a bit of travel in the back end of this year, in the next month?
Yeah, that is correct. From the 13th up to the 27th, we will firstly go to Europe, and to Switzerland. There is a good following in terms of Europe, Germany, and Switzerland in terms of our project and t hen we will go to the London 121 as well to present there, speak to shareholders on that side and once again to institutional shareholders, which is really important in the phase where we are currently in the development of the mine. Yeah, that is coming up now. While the mine is in construction, the team is doing their part of the project.
Oh, fantastic, Rudi. Well, the project again, just to summarize, is fully funded. The schedule is set. We are ahead of schedule and sticking to budget and t he momentum is obviously building by entering those stopes and getting those development meters up as well. Now it is really just about delivery, which yourself and the team continue to do.
Right.
So thank you everyone. That brings the end of today's session. So Rudi, thank you so much for your time, and for such open answers. I think we've received a lot of really great feedback about the transparency of communication from the company, so please, we are always available to answer your questions. Just get in touch with us. We do have InvestorHub, so you're welcome to reach us through there or please email me, it's ir@westwitsmining.com. Also, there'll be a recording of this webinar, so if you would like to go back and listen to some questions, please do or share with any other shareholders or investors, b ut thank you, Rudi. Thank you for your time. Thank you for being up so early this morning.
No problem. Appreciate it. Thanks, Jess. Thanks, everybody.