Regis Resources Limited

Thank you. Good morning.

I would like to thank you all for joining us on this call reporting on the performance and status of Regis Resources for the December quarter. I'm very pleased to say that for my Regis Resources quarterly, I can be confident in the fact that the Regis team has again delivered a very solid set of results, not just on the operations front but also in our future lifeblood, the exploration activities.

I know the report was released earlier today and we'll make occasional reference to some of the diagrams. So it probably wouldn't here to have that available.

The quarter has been very solid one for us with gold production of 90,497 ounces compared with 90,879 ounces in the prior quarter. Our all in sustaining costs were $985 per ounce, up from $923 in the September quarter.

And I'll give some more background on the driver of those increases in the all-in sustaining cost shortly. In the quarter, we sold 114,966 ounces of gold, up from 71,000 that we sold in the prior quarter, and sales of an average price of AUD1,719 per ounce and any of the currencies that I referenced to cost are all in Australian dollars.

And this marked increase in sales in the December quarter relative to the prior quarter as typically result of selling down the higher than normal gold on hand that we carried over from September '18 quarter. Now the net effect of the strong sales and operational performance saw Regis cash and bullion increased by $16.7 million to $206.7 million, up from $190 million held at the end of September.

This increase can be broken down to following. We received just over $76 million from our operations and then paying up our costs were about $11 million of pre-stripping of new and existing satellite projects, $11 million on exploration and feasibility study projects.

We paid just over $80 million on income tax payments, slightly over $2 million on tailings system development TSF development, $1.9 million on long lead items for the right on underground and finally, approximately $1.3 million on additional crushing capacity at Gloster. And this is what gave us that net increase of $16.7 million for the quarter, so overall, not a bad performance on the cash generation and the business for the quarter.

Looking a little bit more detail out on the operations front. At Duketon North, we produced 22,174 ounces of gold at an all in sustaining cost of $941 an ounce.

Gold production was down on the previous quarter as a result of a decrease in head growth and lower throughput at Moolart Well at the mill. We did experienced slight reduction in head growth, it's nothing unusual unexpected, it's simply short term operational variations.

The mill throughput has been reducing as a result of the current mine ore source from Gloster, making the planned transition into the harder fresh ore. Also, our mining volumes were down on the previous quarter as the mining fleet also carried out pre-production mining activities at our Dogbolter and Anchor deposits that are coming online shortly.

We also saw the stripping rate go in the north area and Duketon North increasing slightly to 2.8. These items listed work together and combined to lift our all in sustaining cost by approximately 4.8% to $941 an ounce.

At Duketon South, where we have the Garden Welland Rosemont mills. In the quarter, we had a stronger result on product with 68,313 ounces produced with all in sustaining cost of straight on $1,000 per ounce.

Gold production at the South and Duketon South was higher than the previous quarter due to an increase in process price and also mill recoveries. Improved head growth was driven by Tooheys Well all that commenced feed into the Garden Well facility during the quarter.

Strip rate shows in the south increased to 8.4, which was in line with our planned mining sequences. And during the period, we also saw the commencement of the construction of an additional tailing storage facility in Tooheys Well.

As a result, the all in sustaining costs for the southern operations was $1,000 an ounce for the quarter, which was 7% higher than the previous quarter. Now combing the Tooheys north and south and also the first and second quarter of this year that means that our first half year production has been 181,366 ounces of gold for an all in sustaining cost of $954 an ounce.

If we look forward to northern operation, we expect the head growth to lift back up to around a gram a ton for the March quarter, which is in line with the reserve grade of the project. As we noted, the trend of slower milling from as a result of the fresh rock at Gloster was expected, but we don't expect this to have any detrimental impact on our production guidance as this was accounted for.

The southern operations are expected to maintain their strong performance. And so looking forward with these outlooks, we expect the performance in the second half of this financial year to be broadly consistent with the first half production.

So now our previously indicated production guidance of 340,000 to 370,000 ounces of gold all in sustaining cost range of $985 to $1,055 per ounce. If we can look at that outlook in mine and rather than restating the guidance ranges, I simply going to say our guidance remains unchanged, but we do expect production to be in the mid to upper end of the range.

And we expect the all in sustaining cost for the full year to be at the mid to lower end of the range. And when you write that down, can you please make sure you get the order right.

Our production will be in the mid to upper range and our costs will be in the mid to lower range of our guidance. If I can turn now to our comments on the growth story of our business and Regis has been on the path of increasing its overall production and life by working in two key areas; the Duketon Belt and McPhillamys in New South.

So let me start first with Duketon. And firstly, let's have a look at the Rosemont underground, which has a maiden resource of 1.4 million tons at a grade of 5.1 grams per ton to 230,000 ounces of gold that will be produced over the three year mine life.

I intend to call Rosemont underground as a solid starter mine project, because it's got lot more to offer than just the numbers I stated before. In terms of getting the underground project work started good progress is continued with the installation of offices, change rooms and the extended camp facilities happening or appearing during the quarter.

And all of this is expected to be completed in this current quarter. Importantly earlier this week as you may have seen, we awarded the underground mining contract, which is worth around $130 million to the world regarded contractors, Barminco.

Very pleased to have them on board. On our current schedules, we are expecting development to start this quarter and this identified high grade ore source from the underground will be increasing our gold production rates by the end of this calendar year, and it will continue to do so for at least the following three years.

Of itself, Rosemont underground project is very robust, but really it's quite conservative when we consider the upside potential. The long term opportunity for Rosemont underground is to grow the mine through ongoing exploration and development using their established underground footprint and area of exploration results of Rosemont are starting to support this view.

The focus recently has been to look between the two already planned mining areas, that is looking in this area we call the central zone and also down dip the existing planned areas. And if you have a look at a figure five in the release, it might help you visualize what I'm talking about.

Now the telltales of success in extending the life of the underground are already starting to a peak with exciting results from the recently targeted zones. These includes some exceptional high-grade intercepts such as 4 meters at 26 grams a ton, 12 meters at just under 7 grams, 8 meters at just under 28 grams a ton and 16 millimeters at just under 7 grams a ton.

As you can finally see, these are with sufficient thickness and tenor for the potential underground development. What makes the results really exciting is not just the high grade nature, but the fact that this is in an area outside of current underground resource in the life as you can see in figure five.

Now these results conserve continuity of the gold mineralization and have a strike length of at least 6 kilometers and importantly, it's still open down plunge. And this is why I called our Rosemont underground project the starter pack mine project.

What we've identified and approved the development production is only the beginning. It's always going to be risky to say that what I think it can only get better from here.

It's a great project. The higher grade underground potential doesn't stop at Rosemont.

Regis controls a significant tenement package across the Duketon Greenstone belt. The tenement holding encompasses over 1,000 square kilometers in relatively quite proximity to our existing three mills.

And our exploration teams have worked to prioritize both open pits and underground targets in this area. Another example of the underground high potential is Garden Well.

And we've been getting some very good drilling results continuing from there in the December quarter with the results including 5 meters at 15 grams a ton and 11 meters at just under 4 grams a ton. Figure six gives the picture of how the results are looking and also shows the deposits is still open down there.

We've got other areas such as Moolart Well and Baneygo, for example that have large untested fresh rock targets both underground and open pittable that currently present only perspective targets. We just consider Baneygo, a deposit with the current resource of 11 million tons at 0.96 grams a ton and that's about 340,000 ounces, and in that is a reserve of 4 million tons to 1.22 grams.

But we've obtained more encouraging drilling results immediately to the north and, importantly, outside the existing resource shell. And you will see the results in the release but some of the 5 meters at 6 grams, 9 meters at just over 7 grams, 3 meter at 3.5, 7 meter at 2.5.

And we are seeing this mineralization continue at depth. So we are potentially adding solid open pittable resource and potentially reserves that are already exist around the existing resources, and we're also generating pits that support the concept with expansion of pit.

And we’ve seen similar results for other early stage projects, including Crown, Russells Find and Ventnor. All these areas are presenting grades and scale that Regis has demonstrated a consistent ability in the past to convert into very profitable production sources.

So we're really looking forward to getting our teeth into them. And this of course doesn’t include the greenfield exploration of our remaining ground across the Duketon Greenstone Belt.

Here we're working on programs utilizing and leveraging off the knowledge and experience these days known as IP that we’ve developed from within our exploration team. It's an exciting story and a great one and we’ll continue to keep you informed to the exiting results that continue to come in.

Now, last but by no means least, I just want to discuss that our work in McPhillamys in New South Wales. And for those of you who came in late, McPhillamys is a 2 million ounce reserve, it’s got a 10 year mine life and it also has a very interesting satellite deposit called Discovery Ridge, which is just down the road.

I’m pleased to say the team there continues to make good progress working on the complex and detailed requirements for the Environmental Impact Statement, EIS, which is required for the development of approval application and also the Definitive Feasibility Study. As noted previously, the company received what’s called the Environment Assessment Requirements, the EARs, which are issued by the Department of Planning and Environment and we got those in the September quarter.

Now look out the consideration of these requirements that are detailed in the assessment requirements and considering the work that required to satisfy these, it's currently expected that the company will be in a position to submit the final EIS to the Department of Planning in the June 2019 quarter. Of course as we made progress on the EIS, we’re also making progress on the DFS.

And whilst the DFS work is continuing and finalizing is still subject to numerous variables at this stage. It has been noted a few times now that we are expecting the development capital cost will be pushing the upper limits of the PFS, of the primarily stated PFS tolerances.

But also as flagged previously, the DFS will consider the very exciting Discovery Ridge satellite project. And this is located about 32k away from McPhillamys, where recent drilling is continuing to confirm the significant potential of this project.

A reminder that the Discovery Ridge project is an indicated and inferred MRE of around 500,000 ounces with grades that are higher than McPhillamys, and I’ll point you to the release back in February 2017 when this came into the fall. Discovery Ridge is certainly shaping in this significant satellite project to the main McPhillamys project.

And in particular, it represents a significant additional high grade production source and hence has the potential to be a real project enhancer. Regis is targeting Discovery Ridge to contribute a JORC 2012 compliant resource, potentially reserve estimate for the annual reserve statements that released later this year, which is expected to be more positive news.

So wrapping up on this very positive note, it's a good start to our -- the good start from the first quarter has continued. And I'd summarize by saying our solid cash and equivalent generation during the December quarter of $16.7 million.

We see Baneygo, the full year production guidance in the mid to top-end range about 340,000 and 370,000 ounce we've indicated. We see the full year forecast of our all in sustaining cost at the low end of the guidance range of 985 to 1,055.

We're on plan for progress for our Rosemont underground startup with first gold expected by the end of this calendar year. We're continuing to get excellent results from extensional drilling for the Rosemont underground.

And we continue with very encouraging results from our other exploration activity. And we've made good progress on the EIS and DFS at the McPhillamys project.

So thanks for listening. I'll now pass back to our operator, and we are happy to go through and answer any questions that you might have.

Thank you.

Just on the Rosemont underground contribution in the current calendar year. Wondering if you can just give us any feel for how many ounce range we could be producing in the second in the second half of this year?

I think at this stage if we look at what we released, which was sign that that operation was going to run and although recover a bit 270,000 over a three year period. I think at the moment, it's probably safe to say that if you divide that by three and then divided that first number by four, I think we'll get probably million somewhere in between, it's a broad range maybe 20 to 40.

We haven't really finalized that yet. We're working through that budget at the moment.

And the reason that I'm being a little bit evasive about or unclear is because this drilling that we're doing at the moment is bringing in additional -- potentially bringing in additional material in a different proximity to where we're originally planning to mine. So we're rapidly processing that information there in the central zone.

And that may change the dry profile, particularly at the early stages. So we're just assessing that.

I mean at the end of the day, we will have some production in this calendar year, as I say. But exactly where it comes from and exactly the timing of it, we're still working through.

So we'll be able to give some better guidance on that probably on the next call.

Jim, just a couple of questions. Congratulations on the good quarter and particularly those exploration results outside the resource inflow at the Rosemont underground.

Just wondering -- just want to get a feel of I guess how things are going. Are you guys planning on releasing an updated resource, underground resource for Rosemont and if so, what’s the likely timing?

Yes, we’re excited about those results as well. We’re working on that at the moment.

With those drilling results, we’re going to be releasing our resource and reserves in the middle of the year as we normally do. We’re working to see whether we can get that included.

We’re trying to run those things in parallel keeping in mind that Rosemont was only able to resource when we committed to go to it. So, the short answer is, yes.

We’re working see whether we can get that information included in the resource statement. But given the timing, it might end up being a separate note earlier in the second half.

Now just at McPhillamys. Is that DFS still on track to be completed by the end of this quarter?

No, it isn’t, because the DFS -- as I've mentioned the EIS will be submitted during the June quarter. And that’s the light of it from where we indicated on previously.

And the reason for that is as I mentioned the detailed work. Actually there's one thing that has been a learning for me that New South Wales is a pretty complex place.

We commented about Western Australia but New South Wales is our experts. But that’s going to take us -- it takes a little more time to complete the EIS.

Now the EIS is a key feeder into the definitive study. No point completing the definitive study if we don’t exactly show what the environmental -- and the environmental statement commits to so first EIS, second DFS.

And perhaps the DFS in the June quarter or maybe even in the September quarter this year, where it'll be?

That’s what we’re driving for. We want to get that done as quickly as possible.

But ultimately really the key for us is getting the feedback on the EIS, which is really the -- will give us the timing on when we can actually put it to the board for approval, which is unexpectedly a long hit.

And just finally I noticed in the quarterly, you talked about DFS will consider the Discovery Ridge satellite project. But then subsequent to that, you mentioned that there has been a lot of drilling there and there is subsequently a resource update probably due in the second half of the year.

How does that feed into the EIS and the DFS timing?

Yes, good question. It’s -- and that’s part of the complication, that’s why the DFS can consider -- when we say consider it, at the least what we would start to do is look at -- we’re confident that this can be brought in maybe we haven’t got enough information and enough confidence to include the requirements in the EIS to deal with to include Discovery Ridge into the EIS.

But as we go through and do our engineering work and considering the infrastructure requirements for McPhillamys, we make sure that we keep in mind what may be required for including Discovery Ridge. What we don’t want to do is finalize McPhillamys, approve it and get started and then decide, oh, yes that’s right, we’ve got Discovery Ridge, let’s include that.

By now we need all this extra -- maybe we need extra payout capacity or…

So you're catering for it. But I guess my question is more around that existing resource at Discovery Ridge is pre-JORC 2012.

And so including any cash flow and production, I think is a bit tricky under the ASX rules these days until you get that up and you resource out, so I was just wondering how that fits together?

And that's the driver. At the least, it will be updated to the current JORC.

Getting JORC resource, getting into the reserve and to post it, we'll work hard. We'll do the best.

We will do what makes sense. And then if we can't quite get the work done in time and then we will just do it subsequent to that.

Couple of more on McPhillamys, if I may. The EIS that’s been defined for McPhillamys.

Does that also incorporate discovery bridge, or do you have to get a second EIS Discovery Ridge? I am just -- I guess my understanding was historically the concept was the Discovery Ridge would be the grade source early, while the pre-stripping of McPhillamys proceeded.

So has that changed or has that still mesh together? And the capital that's been talked about being at the upper end of the DFS range for McPhillamys.

Does that capture what's required at Discovery Ridge or is there another incremental over and above that discovery ridge incorporation?

So the answer to your first question is, does the EIS address Discovery Ridge. No, they don't.

And this is part of the coordination and the timing effect for us is to whether we proceed with the EIS from McPhillamys and then subsequently come in afterwards with an EIS and approval process for Discovery Ridge. Keep in mind that Discovery Ridge requirements are lot less, because it won't have a processing plant, cyanide, tailings dams, all of being that generate emotion and require detailed work.

Discovery Ridge is pit. It may a crushing facility there, and that’s it.

So the plan is to continue working on an EIS front, we will continue to submit on the basis of McPhillamys alone and then we will come up in light of once we've got that approved or in process and including an adjunct, if you like, I'm not sure exactly what the term is for, but an additional EIS to cover discovery ridge. Now, coming to the second part of your question that means that what we would likely proceed with is something that's on the basis of McPhillamys only.

And then Discovery would come in and get approved subsequent to that. That doesn't mean that by the time we get everything -- by the time we get the EIS approved and by the time we get the plant built and by the time we actually get started, Discovery Ridge will be in a position to be able to come in their early stage and supplement McPhillamys production.

But that's the detail that we're working on at the moment. And we don't have a -- really the unknown is in terms of getting that mission right is the EIS.

But the short answer -- the summary is that the EIS there will be separate. At the moment, we have to proceed on the DFS basis on from a production and mine point of view on McPhillamys as standalone.

But we are, as I mentioned before, looking at elements of the infrastructure. Now which comes into your question as to why is the price -- why do we see the capital pushing up.

So we haven’t -- you'll see there's words to say that we still got an updated work in motion, either a lot of balls in the air with this. In short, yes, Discovery Ridge is potentially pushing up some of that capital but that’s something that we’re working to make sure we’re not overdoing it, and either overcooking the plant to something that hasn’t even got approval.

We’ve got to keep focus and keep one eye on what may -- what’s required. You might leave a little bit of concrete space for extra grinding capacity, or something like that.

But you sure as hell don’t -- you should certainly don’t put it in. You might make sure there’s room in the switchyard for extra payout or things like that, because you don’t want to light up one project with some other elements capital.

So bit of a long-winded answer there but that’s sort of a reasonably complex set of questions you’re asking there.

Maybe just following on McPhillamys just probably higher level question. Just how are you guys now seeing the timeline for it?

Our expectation is that the EIS, as we’ve said, we're going by the end of this financial year. With part of the reason we’re spending a lot of time, making sure we get it right upfront is to ensure that it doesn’t -- it happens as quickly as possible.

It happening meaning the approval is processed. The historic performance of EIS assessments in New South Wales on projects similar to this is the order of 400 days.

On average it is known that some can come in early. And the reason it takes so long is there’s a public consultation process.

You've got to accommodate -- you’ve got to consider due consideration in response to queries that arise and that will take time. There’s a triple -- there’s a formal consultative committee.

So it wouldn’t be on realistic to think that it could be 12 months to run for that process to occur and then you’ve got construction after that.

So just following from that, when does it finally get to FID or button-pushing stage?

Waiting...

Is that what straight up EIS approval and potentially through that’s basically the last hurdle?

Yes, look this is a -- take a step back. This is a project, it’s a great project.

It's highly valuable. It is a key economic benefit to the region, but there was a project particularly in that part of Australia where you just need to work it through.

Now, as we already understand that the areas of concern around the impact, the potential impact that the project has on the environmental and the community and we’re working on those. So as we submit and as we work our way through that formal review and a modified approved process, we’ll also be doing the detailed engineering and get everything ready towards the back-end, we’ll be making decisions about long lead items and things like that already.

So, we won’t be sitting around the table receiving the EIS and saying, we've been doing some work on and we'll be ready to punch the button as soon as we get it. And I think how it's progressing we may even look to make sure that we've got the long lead items covered off.

And just quickly on Duketon South. The cost strip ratio and DFS work that's going on there this quarter and it helped with the cost up little bit.

How should we see it? And so regarding something -- are they going to be those extra costs as we maintain through the current quarter next quarter?

Or will we sort of start to see those falling away, just putting it in the September quarter perhaps?

I think this like any operation, some activity will drop off and other activities we've got, it will contribute to the all in sustaining cost. I think the best thing to keep it simple and high level is to say the all in sustaining is going to come in where we believe it's going to come in where we've guidance to.

That might mean that where the money is spent might be in a different location or given a different title. But at the end of the day, it's still catching up the door at that similar level that we've been building and coming in line with what we've guided.

So we could go into the ABC and the XYZ of detail, but I think broadly in the end, when you come out and run the numbers, it's still going to -- they're going to be coming in on the guidance which is…

Yes, lower half of the cost guidance range overall, okay.

Thanks Kevin and thanks everybody for joining us. And I look forward to getting you updated on the progress at Rosemont, in particular, but also where we're at with McPhillamys.

And I think the next time we'll be chatting will be probably in about month time when we've got the half year results being released.