Regis Resources Limited

Thanks, Kylie and good morning, everyone. Thanks for joining us on the Regis Resources June 2021 quarter update.

I know the quarterly was released earlier today and occasionally we'll make reference to some of those diagrams and figures. Well what a quarter it's been.

Firstly, on the key area of safety; I'm very pleased to report, our safety metrics continued to improve as we saw the 12-month moving average lost-time injury frequency rate, the LTIFR, continued to drop for - and it dropped to 1.3 from 1.5 at the end of the - which is what it was at the end of the prior quarter. This LTI rate is the lowest for many years for Regis and it's now below the WA Gold industry average, which obviously we're very pleased to have been able to get there, for that journey never ends on safety.

To date, there have been no confirmed cases of COVID-19 on site; and the impact to operations and business is being controlled and well managed by the team, albeit with a marginal direct impact on our costs, although we like others are seeing challenges in relation to labor availability start to bubble way. Pardon me.

Like most, we now hope that the rollout vaccine continues to build speed, as in my view, the real solution to the labor availability is returning Australia to the high workforce mobility that we enjoyed prior to the COVID outbreak. Look, I would say that the biggest outcome of the quarter was certainly the closure of the deal to purchase 30% of Tropicana from IGO.

The transaction has provided several key strategic elements, as you will see. These include expanding and diversifying Regis' production base, strengthening our operating cash flows.

And as you all know, Tropicana is still ramping up to it's normal production level and it's currently targeted to return to a production range which is at 100% of 450 to 500 ounces [ph] after FY22 and certainly considered by the JV partners to have a life beyond 10 years. At this point, I'd also like to acknowledge the support coming from AngloGold Ashanti.

We've had a number of meetings with the teams there - with the team and the teams there, and many, many questions and requests have been fired into that group; and Mike Erickson and the team have been very engaged and very helpful, and we just want to say thanks, certainly - thank you, certainly at this early stage of the year - of our working together. Now, I need to set a theme for our reporting of Tropicana as well.

The deal with a number of dates especially with this transaction, legal ownership, economic ownership effectively, but the deal was completed and legal ownership took - occurred on May 31. But based on the advice from our auditors, we'll be reporting the results of Tropicana in our accounts as of the beginning of May.

So just setting that scene, and we can explain - if people want to know why we can explain it but it's actually pretty clear. So onto our operations, on the production front for the June quarter; we produced a record 114,145 ounces at an all-in sustaining cost of AUD1,387 an ounce.

And there are two parts to this, of course, from that record result; the first is Duketon and the second is Tropicana. Now, Duketon itself had a record production quarter at 96,829 ounces at an all-in sustaining cost of AUD1,254 an ounce, which is a significant drop in costs from the prior quarter.

And saw two months of production at Tropicana at 17,000 - just over 17,000 with an all-in sustaining cost of AUD2,121 an ounce; I'll touch on that in a moment. So, the full year production for our business with 372,870 ounces at an average all-in sustaining of AUD1,373.

Now, that was Duketon for a full year at 355,600 ounces at an all-in sustaining of AUD1,336; and of course, we had the extra two2 months of production of just over 17,000 ounces as well on top of that. Looking a little bit more detail of the granularity of Duketon itself through the quarter, Moolart Well had a softer performance with a production of just over 19,000 ounces; and this reduction was primarily driven by a drop in grade and in the recoveries.

Now, these lower recoveries were associated with complex material if we hit a little earlier than we were planning to. And as a result, the plant wasn't fully set up for it, and we've got on top of that now; and this is now being dealt with and we don't expect that trend to continue.

Moolart Well, it's all-in sustaining cost increased and this was primarily driven by the lower gold production. Rosemont saw a substantial improvement in performance with production of around 32,000 ounces which was 21% up on the prior quarter.

And of those ounces about 65% came from that high-grade underground Rosemont that certainly came home with a wet sale [ph]. All-in sustaining cost decreased by 16%, driven by lower volumes - lower mining volumes and the higher ounces produced.

At Garden Well, we also saw an uptick in production with a 23% lift to around 45,500 ounces gold production. And accompanying that was a 16% drop in the all-in sustaining cost relative to the March quarter.

Across Duketon, the growth capital was AUD16.8 million of which probably about a half was Moolart - pre-strip of Moolart, a third was the Garden Well underground development works, and the rest was just at - minor works at - other works at Garden Well - sorry, at Rosemont, sorry. Now, looking at the two months of Tropicana; total production on a 100% basis was 57,700 thousand ounces, which gave us, as I mentioned before, just over 17,000 for the two months.

The mill head grade still remains relatively low to historic levels as stockpiles are drawn down, while the Havana Pit cutback continues to progress as we chase the high grade ore down. Production in June was also live, specifically in June, with mill availability which was impacted by scheduled shutdown of - I think it was around 36 hours.

So, it was this lower production in short which really drove the higher all-in sustaining cost, no surprise there. And keep in mind, that really it was only two months of production; so the longer the period obviously the more you see those elements tend to smooth out.

So, looking at the cash movements for the business, and you can see in figure one in our release; it's the cash and equivalent waterfall. Now just for simplicity and making the graph a little bit of sensible to read, we've actually netted off the big inflow that we got from the equity and the debt raising, and also, we've netted off against the price that we pay.

And we've just shown the net change as a result of the raising, which is an up, of course, a positive, and the price which was a negative. And I think you can see there the net change is about AUD44 million [ph].

In summary, our operational - from looking at the graph now in a little bit more detail, our operational cash flow from Duketon was AUD82.7 million, Tropicana was AUD25.8 million, giving us a total of AUD18.5 million. And we had - and the major outflows, as I've said before, apart from the acquisition of Tropicana, was AUD39.8 million on capitalized mining costs across our sites.

We spent total of AUD13.4 million on exploration and feasibility projects, which includes McPhillamys, roundabout another AUD7.6 million on minor CapEx and AUD5.5 million on corporate. Then we saw additional non-operating cash movements; sorry, these aren't cash movements, they're just not operating of AUD17 million in tax.

And as I mentioned before, there was a residual AUD44 million from the raising and the price. Now, these movements left us with cash and equivalents at the end of the quarter of AUD268.7 million.

So if you ignore the residual, we added about AUD23 million to our cash and equivalents from operations. Looking more at some of the corporate financing side; on the hedging front, I think we mentioned during the quarter, we've changed the structure and delivery profile of our gold hedges.

We changed them from a spot deferred to a flat forward; this has simplified the position. And I just would also note that Regis retains the right and the ability to pre-deliver into those hedges at a faster rate, if it chose to do so.

So as of 30 June, the company had 320,000 ounces hedged at AUD1,571 with a delivery scheduled over the next three years. Looking forward from here and in relation to guidance; for the Group, our guidance range is 460,000 ounces to 515,000 ounces.

Our all-in sustaining will range - we're giving a range of AUD1,260 to AUD1,365 an ounce. Growth capital, AUD155 million to AUD165 million and exploration sitting around AUD43 million; that's for Duketon and Tropicana.

Duketon is expected to see a modest increase in production this year with the contribution from Garden Well, really - the Garden Well Underground not really starting to have an impact until right at the very end of the June quarter. In fact, I think at the moment we're anticipating commercial production from Garden Well in June.

so that's certainly back-ended there. The guidance range for Duketon overall at 340,000 ounces to 380,000 ounces; all-in sustaining AUD1,340 to AUD1,410 an ounce, growth capital sitting between AUD85 million and AUD90 million and AUD35 million on exploration.

We are expecting the September quarter to be a bit softer than the June quarter, than the one just finished, as we undertake a number of major scheduled mill shutdowns. And the Rosemont Underground as well settles back into a steady state; we were certainly running it pretty hard in the June quarter as we worked to try and catch up what we hadn't managed to achieve in the March quarter and even earlier in April.

So, we want that settled back a little bit. And strip ratio - while strip ratios across the operations are reducing over the year, at Moolart, it will be higher in FY22.

In other words, we're expecting Moolart to be higher this year relative to FY21, and that's what's pushing our all-in sustaining costs up at Duketon. Looking at the growth capital, approximately 75% of that growth capital is actually for all of the Garden Well underground development until that gets to a point where we can declare commercial production and start allocating all the costs to all-in sustaining.

Looking a little bit more closely at Tropicana, our guidance range there, 120,000 ounces to 135,000 ounces, all-in sustaining of AUD1,140 to AUD1,230, growth capital in the range of AUD70 million to AUD75 million and exploration of about AUD8 million. We see Tropicana will also - anticipated to deliver a modest lift in its production relative to the prior year as the operation really focuses on it's - continues with its investment phase associated with the ramping up of the Boston Shaker Underground, and also progression of the significant Havana pit cutback.

AISC continues to be impacted by the gold production levels, the cut-back in early life establishment and the cut-back - sorry, the early life establishment and buildup of the Boston Shaker Underground. And the capital cost that we note there is only - is only - the spend is only associated with the new major Havana cut-back or the existing major Havana cut-back.

Overall, the recent growth at Duketon combined with the addition of Tropicana and it's modest growth as well is delivering into our growth strategy that Regis has been implementing in recent years. This planned growth in production for FY22 illustrated in the graph in figure 2.

I would at this point also note in the guidance that there is a major corporate one-off expenditure that we're expecting somewhere through FY22 and that's the stamp duty associated with the acquisition of Tropicana, which we think currently is - we've provided effectively for up to AUD44 million, and we think that's a pretty bullish estimate of what that's going to be. In addition to the guidance, some of the other highlights of the quarter; reserves and resource growth.

During the June quarter we declared an increase in our Group resources and reserves, and this was highlighted by an increase in our Group reserves of 30%. We've now got 7 years of reserves at both, Duketon North and Duketon South, with an extra 400,000 ounces added; and also, we had another 800,000 ounces added to reserves from Tropicana.

Our Group mineral resources increased by 35% to 10.4 million ounces with an addition of 0.4 million ounces at Duketon and 2.3 million ounces of resources at Tropicana. Garden Well underground has been progressing with decline development for the quarter of 434 meters [ph], and we are about to put in our first drilling platform turn-out for grade control in the upper areas.

We're getting in early this time and we're certainly learning from our experiences at Rosemont. A reminder that Garden Well Underground currently has a mining inventory of over 1.8 million tons at 3.2 grams a ton for 190,000 ounces.

You see it in figure 3, which also shows where the development is up to; we are expecting to reach first ore later in the December quarter. Now this mine, like Rosemont, will be a value - like Rosemont Underground, will be a valuable addition to our production portfolio.

I'd also note the Garden Well Underground has opened a depth down-plunge of the existing development presenting exciting prospects of further life extension, much like we're seeing at Rosemont Underground as well. So once production is established, work will continue to grow that resource by drilling from those underground platforms.

At McPhillamys, we continue to work with the New South Wales Depot in relation to permitting for the project. Progress has been made on advancing with the administrative aspects still being closed out, with the outstanding elements in the water licensing area as well.

And we are anticipating a recommendation by DPIE to the IPC as the potential for the first half of FY22. But at the end of the day, we don't have guaranteed visibility on that timing but we are working closely with DPIE.

At the DFS, work has continued, however, we have seen COVID-19 is having an impact in a couple of areas. Clearly, travel and availability restrictions are limiting access to site for engineering and potential vendor inspections.

And this along with the heat that we're seeing in the construction market, certainly year-end on the East Coast, has been impacting on the team's ability to complete the assessment of schedules and costs, and what we've seen in the vendor proposals for some of the construction packages. We are seeing pressure from both, labor and commodity pricing, and when I say commodity pricing, we all love the fact that iron ore is up over AUD200 an ounce where it was, but of course, that has a flow onto things like steel.

And projects need steel, so we are seeing flow on there, and we see other COVID-related risks impacting on the project. But we're still working through the detail here to really flesh it out and really understand what the real impacts are and might be on our project.

The DFS is still capable of being completed in the current quarter, noting that finalization is actually still dependent on receiving DPIE approval conditions as these may impact on elements of the DFS that may not have been taken into account; we certainly like to think that we are on top of those but we just need to stay tuned to that. So works are underway to ensure that in the event of a favorable decision from the IPC the project will be ready for FID; shovel-ready as practical.

Look, on exploration, a point here is I haven't covered exploration and the quarterly doesn't. The company, we've made a decision that we're going to transition this routine exploration reporting to a more six-monthly basis, and we will report on exploration separately during September and April; well, probably April will be - well, the April update will be in conjunction with our reserves and resource update.

But rest assured, when we do fund our next Garden Well or significant - very significant discovery, we will immediately be letting the market know. We're just trying to be a little bit more efficient with our reporting.

So in summary, the quarter was - looked very pleasing on a safety front. But as I said before, in this area you can never rest or relax.

We completed the acquisition of a 30% interest in the Tier 1 Tropicana Gold Mine, which is genuinely transformational for Regis, and we welcome the addition of Tropicana production. We saw record production at Duketon, we've had good progress at Garden Well South Underground - at the underground project there, progress continues at McPhillamys.

And finally, the resource and reserve growth that replaced depletion has extended our Duketon life out to 7 years. The June quarter has been a very significant one for Regis.

We've continued to grow the business as a profitable one, producing at a rate of approximately 0.5 million ounces per annum with an outlook to EBITDA margin of over AUD100 an ounce at current spot prices, if you - sorry, AUD1,000 an ounce. Thanks Jon, good point; EBITDA margins of AUD1,000 an ounce at current spot prices.

And if we try to look at our all-in sustaining cost and put it in US dollar terms, we are at - or just depending on the foreign exchange rate obviously, at around or slightly below US$1,000 an ounce. We have nearly 5 million ounces of reserves and we have over 10 million ounces of resource.

The company is well positioned for the future and we're looking forward to improving that position further. Okay.

I would like to hand it back to Kylie and open up for any questions.

Good morning, Jim. Good morning, Jon.

Congratulations on the quarterly; great to see the record production at Duketon. Just a couple of questions, one on Tropicana.

You touched on the reporting of the two months production. Can you just sort of run us through that?

And then secondly, what longer-term guidance might look like if you guys are going to be in a position to sort of wait out for there longer-term life of mine plan for Tropicana, now that the acquisition is complete?

Sure. Well, what the - there's actually three key dates associated with the acquisition of Tropicana.

The first is - well, Jon, I'll answer the long-term question first, then and you answer that question on the economic reporting and the legal ownership. So, answering your second question first; look, both of the JV partners - our position and our view is that, we - the Tropicana will transition to - back to its normal range of 450,000 ounces to 500,000 ounces after this financial year.

And so, that's the view and that's where our plans are sitting at the moment. Obviously as time progresses, we'll be able to give a little bit more - build a bit more of a picture around that but I think that's pretty clear.

Certainly, Anglo have been talking about that since earlier in the year and with our works together that's certainly our joint view. So, we see - in summary, we see 450,000 ounces to 500,000 ounces as being the rate that the place will run at after this year.

Jon, did you want to cover over the...

Yes, sure. Thanks, Jim.

So David, in response to your question, there are sort of three key dates that we have to think about. There was economic ownership, which essentially occurred on March 31.

Then there was the acquisition dates for accounting purposes that we determined in conjunction with our auditors, and that's April 30. And then, there is May 31, which was financial close.

So, the impact of those three days essentially means that from the April 1 to May 31, the net benefit that we - that accrued to us from owning Tropicana essentially was adjusted against the purchase price. So, you might recall that when we first announced the deal, we came out with an acquisition price of AUD903 million, that subsequently - as a result of the benefits that accrued to us from April 1 to May 31, that was reduced to AUD889 million.

So, that shows - that's certainly a very positive outcome for us. And then June 4, obviously we just recorded our share of the revenue and expenses in the ordinary way.

Right, okay. So, basically that...

No, I said essentially means that within these results, because of the determination of the acquisition date being April 30 for accounting purposes, we've reflected two months' worth of Tropicana in our numbers.

Right. Okay, and that's - and effectively that's come through in that original price adjustment.

And there is a lot of confusion with that but the revenues and all sort of stuff will be reported on the crude basis in full year accounts as well then?

That's right.

Yes, that's correct.

It is - to say that it's a bit of a woven path that we land on, but yes, there were three key dates. But effectively what - as Jon said, our accounts will reflect as if we took ownership - our accounts will reflect ownership from effectively May 1.

Through the P&L.

Through the P&L. But the price that we actually paid was with the economic adjustments of June 1, and it's taken a while for us to get out and frame how that all works but that's what you'll see.

So, you will see in our full year accounts effectively two months' worth of production and profit from Tropicana for FY21.

No problem. I think that helps.

And secondly, the Rosemont Underground looks it might be a pretty big contribution in the last quarter. Can you just sort of maybe give us a bit more of an insight into - you have some development catch-up to do or something in September and early part of FY22 in order to sort of get those production rates more sustainable?

Look, I think - not quite. We - at Rosemont, we had an exceptional - the team there did an exceptional job in those last couple of months, we've got some extra gearing, we were working our stops [ph] harder.

But the reality was we were - pardon me, we were probably flooding them - flooding the mine a little bit harder than we really wanted to in steady state as we were trying to catch-up some of our - the shortfall that we missed for the prior - for the earlier couple of months. We were producing an EV over 100,000 tons a month out of there, and we see that - we don't see that as being sustainable.

And so, we've back - our plan and see that backing off, and that's what we'll do; we'll probably back off to about 70% odd of that - 65%, 70% of that for the average for the year because tons are only one element, the other part is grade. But it will still be a significant contributor, it's just - we need that to settle down.

Otherwise, we'll just end up in a - too much of a whiplash cycle with Rosemont; we want it to be smooth rather than up and down.

No worries. Okay, understood.

Thanks so much, gents. And good work on the quarter.

Okay. Thanks, David.

Okay. Thanks, Kylie.

Look, we can see - thanks very much, everybody, who's joined. We do appreciate it.

And if anybody has any follow-up questions, of course, please get in touch. We're more than happy to fill in any gaps and explain what and where we can.

Thanks very much for joining. Have a nice day.