Regis Resources Limited

Thanks, Ben. Good morning everyone and thanks to joining us for the Regis Resources December quarter update, certainly in some prime times.

I note the quarterly report was released earlier today and may make occasional reference to some of the diagrams. Look kicking off, firstly, yes; really we can’t start without giving you an update on the COVID-19 status.

Back in February, we initiated our crisis management team in early February when this started to arise, we actually had a very early potential incident in the first week of Feb, which alerted us to just the rigors of this. And we pulled together the crisis management team and coordinated our response to the pandemic.

And we've had that team continuing to run regularly ever since. Over the last couple of months, we’ve put in place a number of risk management actions, not to dissimilar to rest of industry I would say really.

We’ve put in systems and procedures for health monitoring. We do the health checks, temperature checks and the life prior to travel to site, social distancing protocols across our business have been in action including aircraft with additional charter flights, the one that's really impacting on folks on site things like closing gyms and the wet mats et cetera.

We have implemented protocols for managing potential COVID cases on site and we have had a number of potentials, but none of them have been actual cases. We have relocated people that have been willing and able to from interstate and a couple from international that have relocated to WA.

We have extended our rosters. We now are working the four and two roster broadly across the site.

We have implemented work from home arrangements for Subiaco and Blayney and obviously increased the mental health awareness and other support not just for our employees but their families. Importantly, we have implemented protocols for managing the potential impacts in the local communities within which we operate, a very key one particularly from all the claim, one of the TO communities in the immediate vicinity.

And also with action, we’ve undertaken action in direct engagement with our contractors and suppliers, both big and small, making sure that they’re in a position to continue to provide us with the capital of the – sorry the critical pieces, critical parts and spare and supplies. There is no doubt these are challenging time and shifting sands.

It’s good to see the results that have been achieved over the last few weeks and also across the country and of course it’s also pleasing that we haven’t had any confirmed cases in our business. So what we have done appears to be effective for now and of course we just have to keep a watching a brief there.

We have been working very closely with the CME and other groups, but the CME has done a great job in the pricing on a daily basis with government and we appreciate their support on this. Moving more towards the internal operating businesses, firstly the safety.

Over the last year or so, I have been working with the thought leaders and along with the people who have recently joined our business to get on top of our safety. Despite this, we haven’t seen much of a movement at all in our 12 month moving lost time injury frequency rate and in fact it hasn’t moved much really over the past four years and it’s lifted in the last quarter back to the normal levels from just over four, back to just over four.

Now, when we look at these LTIs, they’ve been relatively low risk soft tissue/muscular type injuries, but nonetheless this rises well above in industry average, not sustainable and not satisfactory at all. To get on top of this concern, we have recruited additional experienced health and safety specialists to improve this performance and we have initiated a full review of our health and safety standards, processes and importantly culture across our Regis and our contracting partners.

Safety is in the minds of people and that’s where we are digging into. We have now commenced the plan to turn this performance around.

And look I am looking forward to updating you on the positive progress of this Regis safety journey over the coming quarters, because of now – right now we have got the right people working on this important area. Production wise the quarter was a solid performance by the Regis team.

Gold production of 86,300 ounces, which is down a bit just down 5% on the prior quarter and I will cover the reasons for this shortly. Our cash cost before royalties were $880 an ounce, up marginally by just over 1.5%.

Pleasingly our all-in sustaining cost continued its downward trend and was $1,174 an ounce for the quarter, which is down nearly 4% on the prior quarter circa some $45 an ounce. During the quarter, we sold our gold for an average of $2,297 an ounce and while among the pricing I will just touch on hedging.

We continue to follow our strategy of delivering into the lowest priced hedges at a rate of around about 10,000 ounces a quarter. Now, the average price that we sold our gold for Regis did was $2,297 compared to the average spot price for the March quarter of $2,410 an ounce.

And what this does is quantifies the impact quite clearly on our revenue of delivering into these hedges under this current strategy and that impact is less than 5% of our gross revenue. So while I think this view is on some quarters around our hedge book, I think, it’s clear that why we’re running at is the balance, what we see is being the right balance at the moment between impact on revenue and long-term quantum of that hedge book.

I am happy to answer more questions on that at the end. Looking at our cash build over the period, the operational performance of our mines contributed a very solid $107.4 million to our cash.

Taken off this with some large items, $30 million in capitalized mining. We had about 12 million on deferred waste and free strip; we had over $30 million on the Rosemont Underground and about 3.5 or so million dollars on pre-production.

We spent $7.7 million on exploration feasibility projects, feasibility taking in McPhillamys and we spent 12 – just on $12 million in other CapEx including the TSF Duketon lifters and liners and that accounted for probably about 8 million or so, 7 or 8 million. The reminder was on a whole series of items that was sub 0.5 – sub $0.5 million each, but critical to the sustaining of our business nonetheless.

We also paid tax of $15.6 million and of course in the March quarter we paid out $40.7 odd million for dividends. That’s left us with a cash and equivalent balance at the end of the quarter of $169 million.

Looking at a little bit more detail at our sites, due to North and Moolart Well – sorry due to North, the Moolart Well plant and mines had a softer production relative to the prior quarter with 23,820 ounces of gold produced and a higher increase in the all-in sustaining to $1,350 an ounce. Production and unit costs were primarily impacted by short-term performance issues with our surface haulage contractor that impacted on available grades over the months, which obviously impacted on gold production.

Now this along with the increase in strip ratio during the quarter, impacted on the all-in sustaining costs for the reporting period. Duketon South, where we've got Garden Well mills and Rosemont mills, production was 62,480 ounces.

Now this was significantly impacted by an unplanned 12-day outage at the Garden Well mill. Now this outage was caused by a failure of the mill motor, which had recently been replaced in this – you may recall, in the December quarter.

Despite this reducing mill throughput, the gold production – and gold production, the all-in sustaining costs per DSO dropped by nearly – just over 9%. And this was driven by lower strip ratios relative to the prior quarter year-to-date.

Now given our year-to-date production of 264,000 ounces and with the caveat of notwithstanding any further impacts from COVID-19, we remain confident of our production guidance which remains unchanged for the year at between 340,000 and 370,000 ounces of gold. Looking at our year-to-date all-in sustaining costs, which is sitting at $1,209 an ounce, look relative to guidance, we're still seeing clearly the impact of the higher gold price on royalties, which I think is now around $27 an ounce, that's higher than the amount that we were incorporating in our original guidance.

I did flagged this last quarter and just wanted to ensure the message was clear and understood. Having said that, again, notwithstanding any impacts of COVID – any further impacts of COVID, we remain unchanged in our guidance for the full year all-in sustained.

And we're seeing that after adjustment to gold price coming in at the upper end of our guidance range, which was $1,125 to $1,195. So we clearly can see it continuing to ease.

Now looking at the remaining area of capital growth, we have had an increase here for the full year to full year forecast of approximately $83 million. Now half of this increase, or about $9.5 million was at the tailing storage facility at Duketon South.

The increase was driven across three key areas: there was a higher cost of clay and volume of clay placement that was additional expenditure required during the March quarter; the scope for associated plant – well, an associated plant being the pumps and piping requirements, we joined scopes to provide for the final life of mine requirements, and this wasn't in the original – the previous estimate. So we basically brought that expenditure forward.

And we've increased earthwork volumes to ensure that the final volumes that we're doing put in at the new tailings dam fully accommodates the south operations tailing storage requirements based on current reserves and that was not fully provided for. Now the second area of growth capital is in the Rosemont underground area, where we saw the – where we see the forecast for the full year and up by approximately $11 million.

Now just on half of that or just about half of that is purely in simply the timing of when we're declaring commercial production. And we pushed that back by four or five weeks.

It's a timing issue. It's not a cost overrun.

As I said, we're scheduled to commence commercial production later in May – the month of May. As a result, primarily underground development that was previously going to be ongoing is now has to be classified as growth capital.

It's a timing issue. Now look, the remainder of the expenditure increases at Rosemont, part of it was the additional ground support requirements, as I think I'd indicated in the early stages of development, we had some ground control issues in the early decline that we had to get on top of it primarily required more bolting and certainly more shock creating.

And that's had an impact in our initial estimates of capital. But we are seeing that requirement now easing.

The second area was a very conscious decision that we made around the ventilation vents that we require at the Rosemont Underground. And we made a decision to purchase more expensive higher-spec vents.

They’re more versatile, they're more energy efficient. And while they're more expensive, their operating costs are significantly lower.

As a result, we get lower power. As a result of there being significantly lower power consumption, the ability to be able to throttle it back in real-time and just more efficient.

And this has an excellent pay back to us over the longer term. And this is really quite an obvious decision, not just with the mine life that we've got, but it will continue to pay back to us over the year as we get this increasing confidence for extension of the underground life at Rosemont.

So we see this being a quite sensible additional investment. Turning to other key areas, the Rosemont Underground mine continues to be developed with 7,800 linear meters of development during the quarter.

The ore mined were significantly higher than expectations at 50,000 tonnes. We have worked on the second egress and completed that, and we've also broken another add it through into the Rosemont main pit.

These are key steps in providing improved ventilation and opening up access to the high-grade central area to us, which we're looking to see what we can do to accelerate. First trial stoping ore has started, and really, we're just getting into the ramp-up of that.

While we've had some – certainly safe to say, we've had some learning moments in the first few firings as you normally do with these things, we are now starting to progress and on track at the moment to go with commercial production in the coming months as I mentioned before. And McPhillamys' momentum continues to gather.

The assessment phase of the development application is now well underway with the response to submissions expected to be completed by the middle of the year. COVID-19 restrictions are slowing things a little bit, but at this stage, they're not anticipated to cause any major delay in proceedings through the approval phases.

And on those phases, what's the – now on that, the remaining phases that we've got, we're currently in what we would call Phase 3, which is the response to submissions. As I said before, we expect to provide that around the middle of the year.

Phase 4, which is the assessment by the Department of Planning, Industry and Environment will occur after that, and that's generally anticipated to take between three to four months. And then after that, we know the minister has referred the project to the IPC, the Independent Planning Commission, for hearing and a decision.

Just touching on the IPC, I think I might have mentioned this before, but the final IPC determination process was recently revised based on recommendations from the late 2019 review by the New South Wales Productivity Commissioner. There's no doubt that this revision will assist in making the IPC process more efficient.

And in relation to Phase 5, the Planning Minister has already formally requested the IPC, unless the Planning Secretary agrees otherwise to make a determination within 12 weeks of completion of the assessment by the Department of Planning. So we see all this as being extremely encouraging.

And in accordance with this progress, we’re anticipating the decision will be certainly in the first half of 2021, this time next year. Look, I'll turn my comments now to a bit more of the organic growth opportunities in exploration.

First, Rosemont Underground deep drilling program, which way we joke we let people know about in the last quarter. I remind you that we drilled 650 meters down plunge, of the existing plan working with the Rosemont South.

And we hit quarter volumes with an assay of 0.3 meters, that’s nearly 44 grams per ton of gold. This is an exciting outcome that supports their proposition that Rosemont underground will continue at depth below its currently planned levels.

We are now in the process of deepening the drill holes, tightening the areas underneath the south, central and main zones, which are medium and high growth. Now only the pre collars to theseholes have been done, and we're just starting the diamond drill diamond piles as we speak.

So there's no data available yet. At Garden Well the underground story continues to get pieced together and gain momentum.

The gold shoot currently that we’re targeting there are measuring between four and ten meters in true width across a strike of 80 meters to 100 meters across – sorry, four meters to ten meters across strikes, so to speak, 80 meters to 100 meters high. And the whole deposit or mineralization dips to the east at least 500 meters and open at depth.

Drilling has been focused – recent drilling has been focused on increasing the confidence so to support our estimation of a maiden underground resource and reserves. Some of these attractive jets [ph] have been we had 5.8 meters at 7.0 grams per ton and 16 meters at 4.9 grams per ton.

So it's certainly shaping up and continues to. Work on the PFS is now underway and we are expecting this to finish in the December quarter.

We are also seeing continuing, encouraging results coming from below Baneygo and also some very attractive growth coming in from Gloster. Gloster is looking interesting and could be a bit of a dark horse, I think.

A bit of a work still to do there, but I'm not going to list any of the intercepts that are there in report for you to see. Moving on the Greenfields exploration, we are still in the gathering data phase.

And you can see from table two, this really tells a story of how much we have – in table two in the release tells the story of how we’re increasing the physical activity across our leases in the area of greenfields exploration. It's quite significant when you look at historic trends.

It's still early days, but we are seeing gold anomalies, and we are starting to identify some potential targets. Now we don't yet have a new two million-ounce Garden Well type open pit to lay claim to, but the groundwork is certainly being done to chase that.

So wrapping up, I’d summarize by saying, look, COVID-19 ever present to date, limited in its impact on us, but it's real and it's a moving target and we'll continue to monitor it as I'm sure everybody is and you are all acutely aware. We've got work underway to get on top of our underperformance on the safety front.

A solid quarter of cash generation and notwithstanding the COVID impacts, we are on track to hit our production guidance and come in at the upper end of our all-in sustaining costs after accounting for gold price effects. Rosemont Underground is now well and truly progressing to stope production.

Real progress continues to be made on the formal approval process on McPhillamys. And we’re building the confidence of the potential for Garden Well Underground with the assessment of that right under the microscope now.

And in terms of the underground, a lot of very encouraging results continuing to come from Baneygo, Gloster and others. So overall, a solid business performance with a lot of work underway to grow our business.

And I see where we continue to make progress and get encouraging results continuing to set us up for the future. And before I hand over to the questions, Ben, I just want to take the opportunity to thank all the employees and our contractors who have been dealing with significant change across our business over the last 2, 2.5 months.

There’s no doubt that this has put a strain on people, on their family, on their relationships and at work. And I think, with our file, everybody has risen to the challenge.

And I just want to thank myself and on behalf of the Board for the work that everybody has been contributing to that effort. It’s been really appreciated.

Okay. If I can pass back to you, Ben, and we’ll throw it open for questions.

Good morning, guys. Thank you.

Congratulations on the good quarterly. Look, given your Duketon operations run on diesel gensets, I would have thought that Regis should see a larger benefit than peers from the collapse in the oil price.

Can you just talk a little bit about the percentage of your costs that are linked to the oil price? Obviously, there’s a bit of an offsetting there, which the increase in costs from the COVID-19 impact, social distancing and rosters spaced up and people being spaced out on plants and things like that.

Can you just talk a little bit about the, I guess, those three key major changes to the cost in the business?

Okay. Well, look, the – in terms of the fuel, there’s certainly no doubt that the recent movements, and of course, the recent movements have got the potential to impact on us.

Next year, we can – and for the later part of this current quarter – well, this quarter, we certainly didn’t see too much of the benefits of that in the year-to-date relating to trial that coming in, in the March quarter. But our – broadly, our fuel costs represent between 12%, maybe 15% of our overall costs.

And you’re right, all of our power, both – well, electrical and mechanical, is all sourced from diesel. And we have been giving some consideration to what – given the status of oil at the moment and the price of oil as to whether that’s something that we might even consider locking in on hedging.

We’ve decided to back off on that, just wait a little bit while we see how it settles. The other side of that risk is that we need to make sure that we’re comfortable that the potential impacts on COVID are under control before we start to over commit on fuel side – on fuel hedging.

In terms of other impacts of COVID on all these actions, look, I think probably the most significant one that you can immediately see is the social distancing on our flights. We haven’t had to double the flights, but we’ve had to increase from, I think we were running around about five flights a week to theoretically nine flights a week, but offsetting that at least in the short term has been our move to a four on two from two on one.

Now that effectively means that there’s an offset of those flights, we just don’t have to fly to site as often, which is really the reason why we did it. People, we’ve made it very clear we have not changed their rosters to offset the cost.

We changed their rosters to minimize the risk of people interacting. And every time you’re doing transport in context that increases the risk of transmission of the virus.

So that was our primary driver there. So we haven’t seen an impact of that.

If we decide, if – as we look forward, the other impact you’ve got to keep a very close eye on extending the rosters out, because it does. It’s got the potential to have an impact on fatigue, but also mental health.

So we watching all of those at the moment and we’re also watching for the relaxation that’s going potentially going to go on with across the country with social distancing, number of people that can gather, those sorts of things. As they ease, that helps us to action return to things like allowing our gyms to continue to restart, for example, certainly outdoors on site.

So there’s a few things that we’re doing here to help offset that. I think in terms of other aspects o COVID, we really haven’t seen, we have supplies continued to come through in a timely manner, turnover has been quite low.

It’s certainly has the potential to slow down a little bit of our recruitment. But as a side, the other side of that, it’s the people recognize that turnover rights have dropped off quite considerably.

That’s pretty understandable given what’s going on in other less fortunate sectors in the community. So that gives you some idea of where things are at.

Okay. Thanks.

That’s helpful. Just one question on your hedging, so in the last nine months or so, the range of share prices under performed quite a lot compared to, say, Northern Star, -- and Evolution.

And on my numbers, it’s now trading. You guys are now trading at around half the EV to all in sustaining margin after hedging of those guys.

And the pushback from institutional investors seems to keep coming back to hedge book. So look, I just had a couple of questions on that, if I can just spill some of the concerns.

So are there any covenants or counterparty rights on your hedge book? I mean, people are worried that it’s a sort of a big liability sitting there.

I mean, I certainly don’t see it that way. I know counterparties allowed to call in these hedges early for any reason.

I certainly don’t see it that way either, but I’ll get John and I do apologize. I missed at the start, whether when Ben introduced is whether Ben introduced, Jon Latto, CFO, who’s with me and also Stuart Gula.

Stuart’s not here sitting with me, he’s actually up on site. But Stuart is the new -- our new COO as well.

So Stuart’s listening in on this too. So over you, Jon, for comments around the hedging, please?

Okay. Thanks, Jim.

So Steuart, just to be clear, the hedges that we have are not -- they’re not margins. They can’t be called, so they’re not subject to margin calls.

And in the ordinary course of events, there’s no unusual covenants. There’s nothing that could be called and we’ll just continue as per normal.

Okay, understood. I mean, I guess the – may the focus is when I’m looking for gold exposure, I want the maximum percentage of production exposed to spot prices.

And then you guys delivering about 10,000 ounces out of 90 a quarter that leaves you 89% of your production exposed to spot prices, which on my numbers, it makes you one of the best, with the lowest percentage of production that’s hedged on the ASX. So I mean, how committed are you to – you got some language in there about that 10,000 ounces per quarter.

How committed are you to sort of maintaining that 10,000 per quarter, because that’s pretty key to I think invested in cash flow from prevailing gold prices?

Yes. Look, I think, I mean, you make get a couple of good points there.

And there’s an idea that I think there are some that we work hard at explaining the circumstances. They’re spot deferred.

We can – we have the ability to work on the timing. It certainly is, we’ve seen some numbers that indicate that we’re one of the lower exposures who are locked into hedging.

When you look at the hedge book of some of our other peers, but at the end of the day, we have to manage it. We manage our hedge book not on the – some of the bleeding noise, it’s probably not a fair way of describing, but some of the noise that we hear, what we do is we manage it to – the intention, we here to make money and return it in dividends.

We’ve also got a capital project coming up that with McPhillamys. And that is, as I talked about earlier, it started to become quite real on the horizon.

So we look – we do want to do what we can to address the hedge book. It’s been there for a long time and there’s, I think the hindsight is one of the most powerful tools now to demand, but we’re dealing with this now and I think we’re trying to run down, certainly the lowest value is about, I think 190,000-odd ounces of hedges that were sitting in that well that’s 1,400, 1,500 category and they’re the ones we’re targeting.

And we’ll continue to do that. We’re not going to make substantial changes.

But we still will continue to look and see, as the price continues to go up and the demand that we know we got to have for capital coming out with McPhillamys and our ability to generate that internally. We may – we continue to assess the 10,000 ounces.

We know – it’s not locked 10,000 ounces per quarter. It’s not locked in at the moment.

It’s having a normally a 5% increase our impact on our gross revenue. It means, on those rough numbers, you could add another 5,000 ounces or even more.

And still only be having a pretty nominal impact on the revenue. Now, we haven’t got anything locked in stone, we’ll continue to look at that.

We’re not going to make some major radical huge quadrupling of it. But we’ll certainly be looking as the price continues to burn.

And we’re looking at what our projected capital requirements are both in terms of the potential to continue to pay dividend and the potential for a large set of CapEx on McPhillamys. We might be in a position to be able to sell a few more into it or not.

We just try to keep all those in mind as we assess the appropriateness of that strategy.

Thanks, guys.

Hi Jim and Tim. Just the capital spending, just in the past few quarters or years it just seems there’s been a lift on capital projects spending.

You also had two mill outages these past two quarters. Just want to hear about what needs you have to refurbish the business.

Can you outline, what spend is needed to get the asset based where you think it needs to be? And maybe it just an outlook over the next few years of what is maintenance CapEx for the business.

And by this I mean the WA business.

Yes. Look, firstly just touching on the mill.

Yes, the mill was quite, I guess, unfortunate or disappointing at current. The motor itself had been in – it was a critical space.

But when we put it in and put it into service, we realized that it had obviously been in the critical space area and probably was a little bit wanting in some of the way it was being maintained. So we had some flow and impacts to that.

And that’s what primarily caused the problem with that mill. Even prior to that, really that was a flag that as part of the review and certainly it’s one of the things that Stuart’s been working on, he’s going back through all that critical space and making sure that we’re happy with the way that they’re stored and they’re also being maintained.

Look going forward, we still – there’s a couple of things woven into your question. There’s certainly been a substantial increase, I guess with some big ticket items like the Thailand’s game, that’s obviously, that could be – that’s just something that may have needed to be done.

Once it’s completed, as I mentioned that, that quantum number is spending on that will now complete will allow us to all renowned reserves in all of the south area and that will be – sorry, will be taken care of. The rest of us, we have indicated that the strip ratio that we’re looking to be mining now in this year and next year, was certainly elevated from prior years.

And then it will start to drop off. So, we’re seeing our stripping ratios, by and large, fairly similar into the next year.

And if we had to go back to, I don’t think there’s too much really in the sustaining area that’s out of the ordinary of the past, and in the past certainly been sitting at circa A$15 million, A$20 million a year at this stage. I wish that we’re actually right now in the prices of working up out our budget, and the way that we’re doing our budgets is a little bit differently to the way we’ve done them historically.

We look – we’re taking a much longer-term look over the production over the coming five or six years, so that we make sure that we can be clear on what might be smart short-term decisions, but not in the long-term or vice versa. So, but that’s, that number is what we’ve indicated historically, and for now, that’s what we’re sitting on.

But obviously, we’ll be able to get to give a much better guidance on that when we come to the June quarter results and we give guidance for the next year, and we’ll be able to make some other commentary around long-term capital at that point as well. But we don’t – we certainly don’t see anything material out there besides what we’ve already discussed.

Yes. I mean, I think, it would be good to have some guidance out there on that.

So, I look forward to that and things like this tailings dam lift; I mean it does look more maintenance in nature to me to how the tailings dam to deal with your reserve. So, having it all wrapped up as what you need to spend as the outlook can say.

this is what the business looks like; I think it would be taken well. Just another couple questions…

Daniel, just – I mean, I completely agree with you on a couple of fronts today and we’re just sort of bringing, there are things that we want to do in the way that we can provide some better outlook and clarity. We need to change enough diet, I guess and some of their longer-term planning systems and we’re in the process of doing that, that’s a sort of stuff like that doesn’t happen overnight.

but that’s exactly the reason that we’re doing it. So, we can be provide a little bit more transparency in a bit more granularity is to have it as a future halls.

Because I mean, coming back to Stuart’s comment, I think that we want to be able to provide as much information as we can. So, people really understand just agree these businesses.

Some people get it, I think some people understand it, others I think, obviously, we need to do it, there’s lots of different ways we can cut it, but we’ll say that we probably need to make sure we’re doing a better job, helping to inform people as to where their gaps are in their knowledge.

Okay. I appreciate that.

The stockpile position that you’re in, I mean, I just know that the past several quarters you’ve been mining a bit more or than you’ve been milling, just wondering if you could give us an update on that stockpile position, it’s not obvious to me from the release today?

Yes. look, I just don’t have that number relative to hang as – but there is no, we have – we sit, I mean, you can say the numbers that we’ve been increasing our stockpiles.

I can – Jon, have we got the stockpiles, just give us a minute on take that one on though, Daniel...

Okay. Maybe, just a last quick question while you haven’t looked to see for that, just the dividend policy, could just reiterate what that will be in light of make a filmy spend coming up this COVID-19, which carries risks to all operators and you’ve also got your hedge book, which is a liability.

I’m just wondering what the dividend policy outlook looks like?

Yes. With dividend policy, we don’t have a policy.

Certainly, the behavior that we’ve followed over the last several years, has been if we’ve been in a position and we’ve generated the cash and we look to the – and we clear and understand what our future demands are with prior policy – sorry with prior dividends. Obviously, as I mentioned before, we are coming up to a fairly significant place of investment in mid-filmy.

But at the current gold prices and the margins that we're making, I think it's pretty safe to say that we'd be able to self fund that. I guess COVID-19 is a bit of a wild card in this and we continue to just monitor the sea at the moment.

As you can see from our guidance, it's not having a material impact on our production, it might. Quite frankly, I think we're all monitoring this to see what it does and the news is really good across the country.

And we're not anticipating anything, but I think we're not out of this tunnel yet. And so, we'll just continue to watch and see what the impact is and basically keep our decision on dividend live, obviously over the coming half year.

I think the next time we would be assessing, the board would be sitting down and making an assessment on paying dividend for the quarter or probably for four or five months time, we'll have a much clearer picture on by then, I would anticipate on COVID and hopefully absolutely more clarity and certainty on how the future looks to be able to make that decision.

Okay. Thank you very much.

Yes, Jon's just got some info on the increase that we've seen. I mean, there's no idea.

We've seen an increase in our stockpiles. Jon, what’s your view?

Yes. Just sort of the high level, Daniel, we have seen stockpiles across has increased across the financial year.

So it's increased fairly equally across the quarters. It's sitting at March 31; it’s like 6.5 million tonnes, at a grade of about 0.65, something like that for 130,000 odd ounces.

We say, particularly in this last quarterly thing, as we've alluded in the quarterly, we’ve seen fairly increases in stockpiles.

Thank you.

Thanks.

Thanks, Daniel.

Hi, Jim and Jon. Just a few questions on the underground, were there any pre-conventional ounces included in that headline number and then I guess just given 50,000 tons of development ore was above your expectations, wondering if there's any more color there on the decision to push back commercial production now.

And then just those ground support commentary, is that just in zone of weaker grounds that you went through and you're expecting to be transient?

Yes, I didn't quite pick up your first question. Kate?

Were there any pre-commercial ounces included in your headline gold production number from Rosemont?

Any pre-production? Yes.

Okay. So we've probably got about, I'd say 3,500, 4,000 ounces of pre-production gold in that are included in that, sorry, probably about 5,000 ounces in that.

That full year guidance we've given of 340,000 to 370,000 has got circa 5,000 ounces today to the unit. In terms of the 50,000 tons, it wasn't 50,000 additional tons.

It was – we now produce 50,000 tons from – or from development mining. The interesting thing about that is that what we we're seeing a lot of our now that we're getting into the ore bodies and we're mining along the ore bodies, which is where we're getting this development or from – it's part of the reason why we're a little bit behind or delayed in our starting stoping because in some of the ore bodies that we're in – we've found that the ore bodies has continued on for a bit further than we're anticipating.

So we continue developing them rather than pulling up short and stoping them. However, we've – in a couple of areas now, we've just snapped that off at the base, and we’re started to pull those stopes out to [indiscernible] all the stoping.

In terms of the ground support which certainly there's no doubt in the early stages in the upper levels of the mine as we were mining through the upside and – not the upside, but the transition zone. We had to do quite a bit more bolting.

We lost a bit of ground, I recall letting people know about probably about five months ago, nine months we had to back up and continue mining. It didn't slow our progress down, but it just added to our cost at the time or over time a little bit.

This wasn't substantial over the last 12 months, but it did overall add, I don't know, $2 million or $2 million to our overall cost. Is that – but we are seeing the requirement for that ground support and that shock reading in particular to be easing off.

We've also done some other work in terms of reduce – we can see that we can reduce the size of our drives a little bit without having any impact on – flow or around we are trucking capacity. So we're doing some of those things as well on the plus side.

Okay. That's helpful.

And then just on McPhillamys, is that calendar year 2021 you're expecting decision on the application. And then can you just remind me what else would need to happen before we see an investment decision or before we could say ground broken, I guess?

Yes. Look, I think if we – let's say, if the D.A.

came through, let's say, in the March quarter next year, and I'm just picking that, let's say, it happened in March, I'm just picking that as a date. There's still probably another couple of months of what are – there are permits and certificates that we then need to get.

And so they're not – they're more formalities than they are any kind of go or no go decision, but at bureaucracies wants to be, it just takes time. For example, there is a mutual recognition agreement between the Feds and the New South Wales EPA.

That if the New South Wales EPA is comfortable with something unless the Feds have got a vial and objection to it, which we have – we're not aware of anything on that front, then they will sort of – they'll communicate with New South Wales EPA as part of their assessment and then, it's a bit of a formality when it goes through to the Feds, for example. Notwithstanding that, it's still takes time.

It's interesting that as part of the COVID discussion. There are various departments both federal and stating in South Wales that have been saying they're looking at ways to be able to reduce this time, but without that we'd say probably another couple of months required to the formal permits to be issued for us to be able to breakthrough.

In addition to that, it's going to be really depend on things like how far down the final engineering process we've been prepared to go. And what we've ordered in terms of long laid items.

If this continues at the right, if the approval continues that the way it's going and we get comfortable we'll accelerate our engineering and our design work. We'll look at long laid items and we'll do that on the basis off, we are not expecting anything significant or changes to come out of the planning process that will allow us to get in and start – get formal Board approval if you like earlier as well.

But we can – we're looking and anticipating that we certainly expect to see production in financial year. Well, I'm going to get this right.

Well, sorry, in the latter half of 2022.

Financial year 2022.

Yes. Calendar 2022.

Yes. Calendar 2022, yes.

Okay. That makes sense.

Thank you.

Good day, guys. Just a quick one for me.

Just wondering, you had the haulage issues there. Just wondering if you could provide a little bit of detail on that, was that COVID-related?

And just whether or not that's going to impact you going forward in sort of managing your access to regional pits and your strip ratios?

Yes. Thanks, Al.

Short answer to that is no, we're not anticipating any going forward impact. It was the contractor at the time was struggling with equipment availability and it wasn't COVID-related, it was more just the hard way we had to put on some – we put on some subbies to help supplement that, it’s a little bit more expensive as well.

But what we've been actioning over the last month or so is a transition into a more reliable situation with the holigen we don't envisage that continuing on beyond in the future, as we just go through this transition. So it's not a permanent change that they won't have a – it's not a permanent impact, it's not COVID-related, it’s just something that we've had to deal with the normal course of operations.

Right. And just the recoveries were up a little bit.

Is that just due to input from those regional pits? Are they a little bit better for milling?

Or was that just like a one-off?

No. Look, that’s just driven by the normal ebb and flow that we have, depending on what the blended feed is from different pits.

It does – because we do tend to blend, and that blend shifts over the years depending on which pits of feeding and what phase we're in. You just do see some subtle movements in recoveries, there’s nothing – yes, it’s just a part of a normal ebb and flow if you like.

No worries. Thanks, guys.

Thanks Ben. All right, well.

As always, if anybody's got any follow-up questions, please give us a buzz, we’re more than happy to see if we can fill in the holes. And we appreciate your time this morning.

Take care.