Andrew Cole - MD and CEO Luke Anderson - CFO Bob Fulker - COO

Michael Slifirski - Credit Suisse Peter O'Connor - Shaw and Partners Lyndon Fagan - JP Morgan Stefan Hansen - Morgan Stanley Peter Harris - AMP Capital Hayden Bairstow - Macquarie Group Paul Hissey - RBC Capital Markets

Good morning. My name is Andrew Cole.

I'm the Managing Director and CEO of OZ Minerals. Welcome here today to the 2016 Half Year Financial Results.

I'm joined here today by Luke Anderson, our Chief Financial Officer. Also joined here today by Bob Fulker, our Chief Operating Officer.

Today I'm going to take you through an overview of our half year performance. I'm then going to hand over to Luke to take you through some of the detail behind our financial accounts.

I will then close and then I'll open it up for questions of course for myself, Luke and/or Bob. I'm very pleased that we can be here with you again just a couple of weeks after our quarter two results.

I guess probably most importantly I'm pleased to confirm that our cash balance again increased this half despite some one-off payments on a number of fronts which we'll dig into a little bit later. I think the teams have managed exceptionally well through some challenging periods during this first half, both in the processing plant at Prominent Hill and an awful lot more wet weather than we had anticipated.

So please take note of the disclaimers that we make on the second slide here. Let me turn to the highlights, slide first.

Firstly just to draw your attention to our strategy. I think our persistence in focusing on our strategy is continuing to deliver results.

I'm very pleased to see another solid performance from the team over both the quarters that we've already reported against, ending in a very strong half. We have increased our cash holding as I said, up to A$564 million despite a number of non-operating payments being made through the period.

We also, however, did substantially increase our ore inventory levels as a result of solid open pit and underground mining performance, both concentrate and ROM stockpiles. The ROM inventories will continue to increase through 2018 after which they will unwind through the plant, of course generating substantial cash flow with at that time only the processing costs being incurred to process that stockpile of material.

The whole of the Prominent Hill operation continues to remain in the bottom C1 cost quartile compared to our greater global peers which of course is a great position to be in. We're making solid inroads into improving our underground operation with ore up 18% compared to the same period last year and our underground unit costs now in the bottom half of the global costs incurred, something that I couldn't say not all that long ago.

The Carrapateena schedule is going very well. Pre-feasibility studies are on track.

As we have already announced we gave the decline contract to PYBAR. They are mobilizing the site and have already started preparatory work for construction of the decline.

On a group front we've also been quite successful in securing longer dated value options with a number of earning deals. The latest deal we signed was with Cassini Resources.

This is our fifth partnership entered into over the past 12 months. I think incidentally West Musgrave project is Australia's largest undeveloped copper nickel deposit in Australia.

For those who don't know, it contains over 200 million tonnes of resource at greater than 1.3% copper equivalent. So this is a reasonably sized resource.

It sits quite shallowly and potentially open pitable. Our initial commitment on this project is to expend A$3 million over the next 12 months after which we will make a determination as to whether we proceed or not.

I'll come back and talk more about this a little later. So this and all the other exploration projects which we have announced, all sit within the already guided exploration spend of AUD10 million to AUD15 million this year.

If I turn to 2016 performance from a production perspective, I am pleased to say that we are on track to deliver the annual guidance that we set on all fronts. From a safety perspective we held our injury frequency rate steady but did see a reduction in the severity rate.

I am looking forward to seeing our LTIFR come down over the next quarter as we initiate a number of programs and a couple of specific projects with a couple of contract partners. We produced 58,000 tonnes of copper in concentrate in the half and 57,000 ounces of gold in the half.

We held our C1 costs down to A$0.738 per pound, which was at the lower end of our guidance and certainly in the lowest quartile of global operating costs. On the top right you will see a graph which shows our underground operation both tonnes produced and the grade of those tonnes produced.

The grade is hovering steadily around the 2% mark as we continue to ramp up our underground operation. The open pit cash mining costs versus our ore stockpiles which you can see on the bottom right hand slide, show quite compellingly that our total costs being spent on the open pit is decreasing in time.

We are seeing a significant build in our run of mine stockpile as a result of that acceleration of the open pit. Also from an underground perspective we completed a number of benchmarking activities earlier in this half.

I am pleased to see that the teams there made some significant headway into improving underground performance. They also have a list of opportunities to pursue to continually improve the performance of the underground operation moving forward.

With regard to finances, I'm only going to focus on the headlines here but I'm going to hand to Luke to take you through more of the detail. The revenues for the first half sat just under A$400 million.

Our underlying EBITDA of A$178 million, underlying NPAT at A$55 million and earnings per share at A$0.18. We've done all of this despite the Australian dollar market copper price reducing some 15% as compared to the same period last year.

This is a result of our ambitious cost reduction programs and the streamlining of activities which yielded the savings across the board while [indiscernible] the price impacts. Head office costs have reduced by 20% while our procurement overhaul has already delivered A$25 million annualized savings.

Our hedging of the gold stockpile is now in effect and will commence in the third quarter of 2018. Up until then however we are fully exposed to [indiscernible] price of which our revenue account is accounted for by about 25% as a result of gold.

I'm also very pleased to confirm that the Board approved an interim dividend of A$0.06 per share, at this stage unfranked, which we'll talk more about later on. This does demonstrate our confidence in this and our future years' cash flow to build not only Carrapateena but to reward shareholders as we progress.

From a growth perspective, Carrapateena continues to gain momentum. The Australian company PYBAR was awarded the contract to construct the decline for us.

As I mentioned before site works are already underway to get that progressing. The commercial negotiations on securing berth access at the Whyalla [indiscernible] continue constructively.

We aim to conclude this negotiation in the coming months. We remain on schedule to finalize the pre-feasibility study for Carrapateena and we'll bring you the results of that before year end.

On our longer dated exploration earnings we secured five such earnings over the past 12 months. Most recently we partnered with Cassini Resources in which we get up to 70% of the West Musgrave project.

I'm going to talk more about that a little later. Before I do I just want to make clear that all the activities under the exploration pillar that you see on the chart at the bottom right including Cassini are going to be funded by the already guided A$10 million to A$15 million in 2016.

It's my pleasure now to hand over to Luke to take you through more of the detailed financial analysis. Thanks Luke.

Thanks Andrew. Welcome everyone on the call today.

Following our consistent focus on cost control and improvement in operating performance I'm pleased to present yet another set of strong financial results despite what's been a challenging copper price environment. Starting with the income statement, I might just run through some of the major line items.

Revenue for the half year was 398 million, 2% higher than the first half of 2015, despite a 4% reduction in copper tonnes sold and a 9% decrease in the average realized Australian dollar copper price. In the comparative 2015 period we also capitalized revenue of 55 million generated from the Malu underground [Indiscernible] ore.

Cost of goods sold of 186 million was 6% higher than the 2015 half year. In the comparative 2015 year all costs associated with the Malu underground area were capitalized prior to its commissioning on July 1, 2015.

This was somewhat offset by lower open pit mining costs and within this mining costs were lower due to a planned reduction in mining activity and higher equipment utilization offset by lower deferred waste and higher depreciation capitalized into inventory. Total exploration costs, including Carrapateena expenditure of A$20 million, was similar to the comparative period.

This reflected a disciplined approach to exploration expenditure in growth projects and study costs related to the Carrapateena project. Direct exploration costs of A$7 million were incurred on exploration in Australia and Jamaica with the balance of A$13 million spent on Carrapateena development.

The benefit of moving the head office to Adelaide and reducing corporate costs has reduced head office costs by approximately 20% for the half year to A$12 million. Other net expenses included the net government contribution of A$4 million towards the development of Hydromet technology.

This leaves A$6 million to be received of the total grant amount of A$10 million. Overall EBITDA has increased by 2% to 178 million at a strong margin of 45%.

This strong margin is particularly important in weathering the low pricing environment in which we currently operate. The net depreciation charge of A$102 million was 2% up on the comparative period.

Gross depreciation over PP&E increased to 185 million with more ore mines offset by higher depreciation capitalized into inventory worth 85 million. Tax expense was near in line with the corporate tax rate.

The resultant underlying net profit after tax increased slightly by 3 million to 55 million compared to the underlying net profit after tax as of June 30, 2015 of 52 million. This result maintains our strong ongoing financial performance.

Now moving to the NPAT waterfall chart which provides the key variances in underlying NPAT between the first half of 2015 and the first half of 2016. I would point out this is a variance chart and not absolute dollars.

I've already touched on some of the major variances, but just to highlight a few of these. On the market side, revenue was impacted with average realized [indiscernible] Aussie dollar copper price decreasing by 9% compared to the comparative half year, while the average realized Aussie dollar gold price increased by 14%, partially offsetting the impact of this lower copper price.

The FX movement is related to the prior period when we held cash balances in both U.S. dollars and Aussie dollars while our policy is now to hold cash balances predominantly in Australian dollars and hence have less exposure to FX movements.

Sales volumes were impacted by operational challenges and unfavorable weather events in the second quarter which led to delays in shipments of concentrates. Higher concentrate stockpiles held at the half have been shipped in July during August.

As mentioned previously, during the comparative half year, A$55 million of revenue for the processing of pre-commissioning Malu underground ore was capitalized. Cash operating costs were higher by A$25 million as a result of higher underground operating costs with more ore mined.

In addition, the Malu underground costs were capitalized in 2015, which more than offset the reduction in open pit operating costs. The reduction in exploration and development costs and the increase in income tax expense have been already covered by my earlier comments.

Now turning to the cash flow waterfall chart which shows the major movements in cash flows for the half year. Cash generation has continued to be the focus during the first half and will continue as we extract value out of the low cost operation at Prominent Hill to fund the growth and capital management strategy.

Overall, our net cash increased by A$11 million since December 31, 2015 to end with a healthy cash balance of A$564 million while maintaining our undrawn debt facility. During the half year, net operating cash flow of A$138 million was generated, excluding the investment in Carrapateena and exploration projects.

The strong cash flow generation reflects lower cost predominantly from decreasing open pit mining activity and a successful cost reduction program. I would note that in addition to the strong operating cash flow, we also increased our working capital, particularly our inventory, which I will talk to shortly.

With the decrease in strip ratio, the open pit waste deferral has reduced significantly to A$22 million during the half year. Sustaining capital of A$35 million was predominantly related to Prominent Hill site sustaining capital and the development of Malu underground area which is expected to decline over the next few years as the underground mine matures.

Overall, major cash flow items including the dividends of A$43 million paid in March 2016 and the ongoing share buyback program cost A$7 million so far. So turning to our relatively simple but strong balance sheet, our cash balance of A$564 million and undrawn debt facility provides liquidity and flexibility to advance our growth strategy.

The increase in receivables to A$112 million mainly reflects the contributions of A$8.5 million received from other parties towards the settlement of the class action, with the A$28 million increase in creditors to A$93 million largely reflecting an accrual for the total settlement amount payable of A$32.5 million. The net class action settlement costs of A$24 million was subsequently paid in July.

Inventory increased by A$136 million during the half year to A$466 million. That was at the lower of cost net realisable value.

Ore stockpiles represented A$120 million of the increase with the accelerated mining of the open pit. We expect this investment to deliver significant cash flows well in excess of its carrying value based on current pricing and locked in gold hedge contracts.

We will continue to build more inventory until mid-2018 when the open pit ceases. Our cash balance was also impacted by an increase in concentrate stocks of 29 million to 45 million.

Investments at June 30 were 279 million, down 9 million due mainly to the mark to market revaluation of our investment in Toro. PP&E decreased by 135 million to 1.16 billion due to depreciation driven mainly by the depletion of the open pit.

Our current tax provision of 29 million was recognised at June 30, which will be payable in 2017, giving us the ability to pay franked dividends in 2017. Overall, our net assets decreased by 47 million to 2.3 billion after the payment of dividends and share buyback discussed earlier.

So with our strong cash balance of 564 million, an undrawn debt facility, the low-cost Prominent Hill operation and significant stockpile ore inventory, we are well positioned with a strong balance sheet and cash generation over the next few years to support the development of our growth strategy and particularly the development of our Carrapateena project. With that, I'll hand back to Andrew.

Thanks very much, Luke. The strong cash flow that Prominent Hill is and has continued to generate for us enabled the Board to declare a dividend of A$0.06 per share or a total of just over 18 million.

This has got no adverse effects to our balance sheet. The dividend will have a record date of September 9, and payment date of September 23.

We do have a consistent policy which we've launched about a year and a half ago now with our new strategy of paying a minimum of 20% of net cash generated that is not required for investing or balance sheet activity. The net cash generation over the full year is considered in interim dividend determinations and our growth can be delivered through balance sheet liquidity and strong expected cash flows.

So consistently generating value for shareholders is central to our overall strategy and our significant current and future cash generation will enable return on capital as well as future growth. We do have a couple of policy changes and updates that Luke has probably more credentials to talk about but I'll flag them here with you.

For expenditure on Carrapateena, we will be capitalizing this from July 1, 2016 onwards. Cash tax payments will commence in the first half of 2017, so franking credits will be available to us from 2017 onwards as a tool to more efficiently reward shareholders.

As Luke mentioned quickly, our strategy to lock in copper price at the time of sale has already commenced. The one off class action settlement of A$24 million was expensed in the first half of 2016 and paid in July.

The associated defense costs of this class action of 12 million incurred in 2016 has been part paid with A$8 million through the first half. Our share buyback program we launched early in the year will recommence as soon as our blackout restrictions are lifted.

Let me turn to Cassini for a minute. Given we haven't had a chance to talk about the recent deal we made with Cassini, I thought we'd just use this opportunity on the webcast to cover it off in a little more detail, give you a little bit more background and depth on the project.

For us, this is a strategic deal. It gives us not only access to some established projects but also a mineral district with good pedigree with a company that we think is very credible, has a good track record and we can work with in partnership.

The Nebo Babel resource as an example has some 203 million tonnes at 1.38% copper equivalent. The Succoth resource is 156 million tonnes at 0.6% copper and we know it's a significant exploration district [Indiscernible] with many intersections in drill holes across the West Musgrave Project.

So this deal for us leverages significant historical investment with minimal associated risks for the Company. Our initial commitment is A$3 million over the next 12 months and with that A$3 million, we plan to work on optimizing the scale of the project and a pathway to commercialization.

The initial reviewing initial options infrastructure such as power and water and to deal with and come up with solutions for some of the complex metallurgy which may require drilling some of these resources. If we elect to proceed after the 12 month period, we then have a couple of other stage gates.

So over 18 months, we would complete a PFS at the cost of A$15 million and spend a further A$4 million of regional exploration to earn ourselves 51%. If we elect to proceed beyond that, we would take another 12 months to complete a feasibility study with a A$10 million spend and another A$4 million spend on regional exploration to earn us 70% of the West Musgrave Project in general.

I'd like to point out that the timeline here sits exceptionally well with Carrapateena. So, if we go beyond the next 12 months and decide to continue with the PFS and FS, a build decision at Cassini would not be taken until well after Carrapateena is actually in production.

So this I think is a very healthy option to build out our pipeline for the Company. So, if you go to the next slide, just have a look at some of the geology of why we're doing this, the project in itself is actually quite compelling.

You can certainly see from the highlights here, the size of the resource is substantial. It is Australia's largest undeveloped copper nickel deposit, so it needs to be taken seriously as a real opportunity.

It's flat line, it's closed surface, less than 50 meters and it's very amenable to open pit mining with a low strip ratio of less than three to one. The grade is high for an open pit operation.

So when you put all of these things together, it's actually quite compelling. Infrastructure is remote.

This is a remote part of Australia, so infrastructure is one of the challenges we need to work through to understand whether the project economics can withstand the infrastructure cost to go with the project, but I think we do need to remember that many of the mines operating today in Australia were at one time considered remote when they were first discovered. So it is going to take some innovative thinking.

It's going to take getting the scope of the project right, but if we get all of these things right, it could lead to a very valuable asset, in fact very similar to what we've done with Carrapateena. When we looked at West Musgrave Project, one of the other attractive things about this district is just the amount of metal in the general region.

There is an extensive regional database that exists in these jurisdictions and there are many prospects and targets that have been identified through history, some with very good intersections of copper and some with copper, nickel and PGE mineralization. So it still exhibits optionality for us.

It could be a pure play copper district with Succoth, it could be a mixed copper, nickel with Nebo Babel or it could be both. It's open along strike and it's open at depth and in many different targets, don't have too many more than a hole or two into them.

So let me just recap for the half year results. I think our focus on our strategy is continuing to deliver results in a reliable and predictable way.

I am pleased to see another solid performance from the team over this last half. We have increased our cash holding, now up to A$564 million, despite non-operating payments having to be made.

We also substantially increased our ore inventories, both concentrate and run of mine as a result of solid open pit and underground mining performance. These inventories will continue to increase through 2018, at least the run of mine inventories will, after which they will unwind through the plant, creating substantial cash flow beyond 2018.

The whole of the Prominent Hill operation remains in the bottom C1 cost quartile which is a good position to be in and I'm pleased we've seen our underground operations continue to ramp up with this last half now producing 18% more underground ore than the same period last year and the underground operations now in the bottom half of the global cost curve. Carrapateena is progressing well.

We are on schedule with the PFS due to complete pre -- prior to the end of this year and the site works for the exploratory decline have now commenced. We've also been very successful in securing long dated options, like the one I've just talked about.

So with that I'd just like to wrap up our half-year formal part of the presentation and I'd like to open it up to questions. So as a reminder I've got myself here, I've got Luke here and I've got Bob here.

Very happy to talk about anything that you'd like to ask. Operator, can you please remind people how to ask questions.

Got a couple of very small financial questions, if I may. First of all, around the time of your quarterly you gave guidance for revenues of about A$400 million, which we couldn't get to.

Is the gap there, that A$14.9 million QP adjustment, is that something that we should have thought about at the time implicit in that A$400 million revenue guidance? Then secondly, can you help me reconcile the inventory adjustment, the A$53 million inventory adjustment with what you reported in the quarterly?

Can you lead me through how we would have derived that number please?

Look they're probably pretty detailed questions. I'm wondering whether we could take it offline and run you through.

I guess in terms of the revenue adjustment, I guess we gave the guidance of A$400 million, we'd have to sort of work through the detail of that to see how you can reconcile that. There was obviously a lower copper price at the end of the year, which, when you realize the ultimate QP, we probably realized higher revenue.

That may explain some of it. But off the top of my head, I can't think of anything else that, you know, we'll have to work you through the detail I think.

Okay, thank you.

Thanks Andrew, congratulations on a good result. Two questions.

Firstly on Whyalla, I just wanted to confirm the comments you made about the timing of the negotiations regarding access there. Secondly, on Cassini, just interested in how you're thinking about this approach you're taking.

Are the approaches coming to you or are you approaching parties like Cassini? That's my first thought.

Secondly, having not been in the West Musgrave region for some time, just can you give me a little bit more granularity about what infrastructure is there, how far away and what sort of details are we looking at with power, water, et cetera?

Yes, good day Peter, look thanks for your question. In terms of Whyalla, we're right in the middle of a commercial conversation with KordaMentha and Arian, so I don't want to go into too much detail as to where that is up to.

But, look it's going well, it's very constructive and I think all the parties involved, so that's KordaMentha, it's Arian, OZ Minerals, the state government, are all trying to achieve the same thing. And I think we should be able to wrap this up in the coming month or two, give or take.

So that's pretty important of course before we take any next steps. That's roughly the timing for Whyalla.

Once we've got something secured, Peter, we'll come back and let you know. Did that answer your questions first?

Yes it did, thanks.

Yes, okay. In terms of Cassini, look we've got multiple approaches in terms of looking at opportunities externally.

We have, of course, lots of people coming to us with all sorts of interesting ideas, some very interesting, more than others. And we also proactively go and talk to people.

So we have a database we continually review and monitor, and we have triggers around various things which cause us to go and proactively seek things. This particular partnership, I don't recall whether we approached them or they approached us.

But I think we've had a running relationship with them for some time, so it's not something that's just happened overnight, if you like. For OZ Minerals, the West Musgrave district, as I've said before, Peter, I think is one of the districts in Australia that we know has got pedigree.

But it's considered remote and people sort of say to you, that's too hard. But I think that depends on how you look at the district.

Some, you know, infrastructure is really just about a matter of scale and it depends on the economics of the project. So I think if you look at a couple of hundred million tons of over 1.3% equivalent that's open pitable, that's pretty compelling.

That is a very good open pit operation, if you can overcome any metallurgical challenges that may exist and you get infrastructure for the right price. They're a couple of big questions for us, so that's what we need to work through over the next 12 months.

And the scope at which, or the size at which, you build this project will probably in part determine that. So there's a number of factors at play here that we need to pull together and work with the Cassini team on, to optimize the project scope.

In terms of location, it's in the middle of nowhere and that's a long way from anywhere. So people who go camping drive as far away as they can to get there so they can get away from people.

It is remote, there's no doubt about it. So I can't remember the distances here, but it's hundreds of kilometers from major infrastructure like power, gas et cetera.

So that is one of the challenges for this. But I think there are many ways of resolving issues like this, which is what we're, what the key to the first 12 months is about.

Look, that's why we've taken a A$3 million approach to the first phase. It's effectively for us an option, whilst we do very detailed due diligence.

Understanding the scope, understanding what can be done and can't be done will determine whether this project has merit.

Thanks very much. Look first question is just on the dividend and shareholder returns.

If I take the 60 million buyback, 18 million dividend and assume the same in the second half, that's sort of virtually 100 million of shareholder returns or capital management initiatives. Is that about the level that we should expect next year, assuming the same sort of cash flow?

Or will it start to sort of shrink a bit as you get further into the Carrapateena spend? Then the next question is just on exploration.

Still a fairly modest budget of up to 15 million this year. Will that look at ramping up, given some of these early initiatives that have been coming through with the projects you've just outlined?

Thanks.

In terms of return to shareholders, there's multiple ways we can return funds to shareholders. We do have a dividend policy which we want to use as a consistent way to return shorter term rewards to shareholders.

The buyback is a very specific tool at a specific time, given market conditions etcetera. The other thing I'd remind you of is that, going forward we'll have franking credits, so that is a more efficient way of returning money to shareholders via dividends.

So I think from a consistency point of view, I think giving dividends to shareholders in the sort of ranges we're talking about is important. Whether or not we employ tools like buybacks or not is a complete independent and a separate discussion and that needs to be looked at the time, compared to other things.

So I wouldn't necessarily take that and ramp it out going forward, that's not the model I would use. But dividends I think is.

In terms of exploration, a couple of things on this. The first thing is I do not believe in having very large buckets of money in unallocated exploration spends.

It brings undisciplined approach to work, an undisciplined approach to spend. So we keep our exploration budgets quite tight.

We haven't gone through the process of setting exploration budgets for next year, but I can't imagine they're going to be substantially different to what they are now. Unless we have a good intersection or a discovery that you can wrap a scope of work around and defend openly and transparently, because the merit of the project warrants that money being invested in that.

But it wouldn't be sitting in an open exploration bucket. So, if we took Cassini, for example, beyond the 12 months, we should be able to defend a spend allocated to Cassini because it's got merit, and we'd spend wide as merit warrants in the next step.

But it won't be sitting in an open exploration spend bucket.

Thanks, so just to quickly follow up on the dividend, I guess with the policy there is a fairly big caveat around the net cash generation that's not required for investing, but then you'll pay a minimum of 20% of that. So, there's a fairly big range of outcomes there that we can think about.

Now that Carrapateena has a firm budget around it, is it possible to get any more clarity around how to forecast the dividend?

Probably as much as I've given; look we have said before that we can build Carrapateena with the current scope published and pay dividends without leveraging our balance sheet. We have said that before and I'll say it again today.

So hopefully that's about as clear as I can be. The policy that exists is there for very good reason.

You know creating value for shareholders can come in many ways. So if we can do a value accretive deal and if that makes more sense than paying dividends and we can spend that in the marketplace, then that's what we should do for all shareholders.

But absent a value accretive deal, Carrapateena will get built from cash flow, assuming it passes all the strategic hurdles and maintains the rate of return NPV, and we'll continue to reward shareholders at about the current rate we are now with dividends.

Actually this is following on from Lyndon's question, just on the dividend. Could you just talk through, I guess, the thinking of how you got to the interim dividend amount?

I know it should be considered over an annualized period, I mean can we sort of infer what the Board is thinking and what cash flow of the second half is going to be like?

It's about consistency. So I guess if I put myself in a shareholder's shoes, if I'm a shareholder of OZ as well as other companies, having unpredictability in a portfolio is hard, so one-off dividends are hard to value in a way.

Having some consistency in return to shareholders is important. So that's one of the things that we are trying to build into our shareholders' understanding, so consistent performing.

It's just like internal, the way we expect Prominent Hill to perform, we expect it to be consistent and reliable, and we expect to be able to do the same thing for shareholders. So provide consistency in return or value for shareholders and dividend policy around that.

So I think if you assume consistency, that's probably a reasonable principal to apply.

Thank you for the presentation and double thumbs up on the Greenfield exploration bucket comments. Just on Whyalla, do you need any extra approvals, in particular Commonwealth approvals, for the uranium content in the ore?

Or is that all sort of already approved?

Peter, a good detailed question. There is certainly approval processes we need to go through Whyalla.

I'm not aware, looking at Bob here, of any specific federal approvals. But I'd probably have to go and check that and then come back to you.

Do you have any -- okay, I'll come back to you on that, Peter, because I'm not aware of any federal approval specific processes. I think the thing to remember here, look when we say uranium, you're talking PTn levels of uranium here.

So it's actually very small quantities, it's not about commercial grade uranium numbers at all. But let me come back to you.

Yes, as I -- yes, I wasn't suggesting it was large grades. I was just trying to think of things that might be small hiccups but sounds like it's not a big issue.

Yes, no problems, I'll come back to you on that.

Yes thanks guys. I just wanted a quick question on the underground at Malu just in terms of future studies given you're probably going to proceed with the Hydromet plant, whether they're just the larger resources going to be looked at in terms of stepping up the reserve into the longer term playing there?

Assuming that you can send some of that high uranium ore from the underground down to the Hydromet plant as well. What sort of the timing on those studies would be?

Yep maybe I'll answer the first [indiscernible] and then I'll ask Bob to talk philosophically and conceptually about some of the other things we're looking at Prominent Hill. The one thing having the Hydromet facility sitting at Whyalla, it does provide us optionality and flexibility for Prominent Hill and that's one of the things that we're assessing as part of the current PFS as to what that looks like, how you value it et cetera.

What we're seeing at Prominent Hill with some of the newer resource or exploratory holes that we're drilling is we are getting some good grades in some places around Malu which so I expect to see resource through reserve B continue. Some of that information is now going into our resource reserve calculations and statement which we'll issue later this year.

It's not quite there yet so we can't really say yet but we expect to bring it to you in a couple of months' time. That work is going to continue.

I think probably we've still got 150 million tones of resource sitting there most of which is not in our mining inventory. So maybe I'll just ask Bob to talk conceptually about sublevel [indiscernible] for example.

We've thought about it, it's an idea, it's just not in our base case but [indiscernible].

Thanks Hayden. I guess to start off with there is a large resource there that is not actually in the current mining plan and up until recently hasn't been thought of bringing into the mining plan.

We are going through the resource reserve annual work currently. Some of the work that the guys on site have been doing is looking at other options and other potential options of what they could change to change the base case.

Some of those things as Andrew said they have been considering different mining methods and different approaches to extraction basically to be able to bring more of that previously non-mined or non-mining inventory resourcing to mining inventory. The other things that we've been working on are cut-off analysis and trying to figure out what the best cut off grade and what best profile is going forward for the life of the mine.

Their basic assumption is to try, or sorry the base philosophy is to try and, a get stability of production, b get a stable increase in production over the life and then to extend the actual end of the life of mine. So that's what they're working through at the moment in the resource reserve.

We should be bringing that out towards the back end of this year as we did I mean it's about the same time as we did last year. So our annual statements on the draw will be about the same time.

So they're working on all those things at the moment to try and get access to the majority or some of that resource and to try and bring it into the mining plan.

Hi, thanks. Bob, you've sort of, I guess you've half answered this question but Andrew you said there's 150 million tones of resource not in the inventory at the moment or not in reserve.

Can you just sort of crudely break down whether that's because of economic reasons, either it costs too much to extract or the grade is too low or it's for confidence reasons so…

Yes okay it's more the latter but I'll hand to Bob to talk us through the resource.

Thanks Andrew. Paul, up until the last 12 months we've been developing the mine and Malu was in early stages.

We knew that there was a large portion of the resource below where we had done the mining plan or completed the mining plan to get the project up and running. This year has really been about investigating what is below there and what we can actually drag into the mining inventory.

You remember I think from I haven't got it in front of me sorry but I think the mining inventory for the underground last year was about 27 million, 28 million tonnes. We're working on increasing that and trying to work out the economics of what is below the arbitrary level that is put into the original mine plan for Malu.

If you remember there was a picture that we used for that with a flat line of the resources. That was purely around as deep as we went from we did use to get Maul up and going.

Now we're working on the ore bodies below that or the ore bodies around the utilization around it. So it's a bit of everything that you said but hopefully towards the end of this year we'll be able to give you a lot more clarity on exactly what we've been able to achieve in that area.

The guys have done a lot of work on cut off analysis and trying to understand exactly the profile that we need for now and going forward. They've gone all the way back to first principles to re establish well to reaffirm to see if there's anything that we can approve and you'll actually understand because the costs have been reducing significantly in the last 12 months we've actually been able to go and put all those new data plugs into the analysis.

I think I've covered everything there, Andrew.

Yes, maybe just to summarize look there's lots of reasons why there are pieces of this resource not in mining inventory as you know Paul. I'll say on balance the majority is just lack of understanding.

We've got single holes with very wide spacing sitting in under and around the Malu resource that we're developing underground now but we just don't have confidence levels to convert to mining inventory. That's the reality and the question for us is how much money do you spend and when do you spend it to get that certainty.

So we've got a 10 year mining profile in front of us now. We're doing enough work now to maintain a 10 year mining profile.

That's a nice number to have at least and get more information but every year we're going to have to do enough work to continually progress. If you don't if you take a more aggressive approach you end up drilling suboptimal holes from higher levels of the underground operation that costs an awful lot more money and just spending a lot more money for questionable value.

So, there's still a lot of resource left, I think that's the key message. I think we will be able to convert quite a bit of this to reserve, into the mining inventory but it's going to take time and staged drilling programs to [Indiscernible] do that.

Sure yes, yes okay. I guess I'm really excited or interested perhaps in the potential for the inferred material to be better understood because the measured and indicated perhaps that's already there but is not a reserve by definition it's probably not a reserve because it's already marginal.

So lower costs or higher prices are by definition at the margin. I think from my perspective it's probably the potential to go and better understand perhaps some higher grade stuff at the periphery which is only an inferred which is really where the upside might be.

So you broadly outlined that so, yes thanks.

Yes look completely agree Paul and there are. We announced a couple of results earlier on in the year for example.

We've had some really good grades but these are single hole intersections without anywhere near enough coherency for looking around. So we're probably going to park this until a couple of months' time after we've done the resource to reserve work because we will come out and talk more about not just the resources and reserve of the mining inventory but some of the other things that the teams are working on here to create more value out of the pit and the underground operation and how it's going to work.

So if you can watch this space we'll come back in a couple of months.

Continuing on the same line I'm interested -- I understand the lack of knowledge, the fact that you need to do drilling to convert but is there a definitive line or arbitrary line in that resource or even outside the resource where without the concentrate treatment plant at Whyalla there's sort of like an exclusion zone? I'm just interested in how much material almost immediately would convert if the concentrate treatment plant was there and overcame one of your challenges.

Short answer for that based on what we know right now is probably no, Michael. So the CTP does not -- if we had that CTP today it's not as though it's going to suddenly unlock a portion of the resource.

That's not the case. It will change commercial arrangements for customers.

It will change our customer base but it's not going to suddenly unlock resource. It will probably help us change our sequencing in our mining.

So it will help us reduce some costs and change some things but it's not as though we're sterilizing resource because we can't sell the product. That's not the case.

Okay. Okay look we've reached the end of the questions and the end of the time.

Thank you very much. There are a couple of things here that we've committed to come back to people after the call which we'll do straight after this call.

If you've got other questions after you think about and reflect on this please come back to us. Thanks very much for your time this morning.

Have a good weekend.