Regis Resources Limited

Thanks Frazer and thanks everybody for joining us this morning. I'd also like to mention that Jon Latto, our CFO and Bill Goldblum, our Head of IR are both on the call as well.

All right. So talking through the FY '22 first half year results, clearly this has been a challenging first half for us operationally, as I think we've covered a number of times prior to this, but now we've seeing here the impacts of this flowing through, into our financial results for the first half to the year.

Look having said that, as some of the results are still quite strong, our EBITDA $196 million, I'll just cover off on the highlights and then pass over onto John to run through some of the detail behind these numbers. Our EBITDA margins are still quite strong at 40%.

Cash flow from operating activities was $136 million and the cash and volume at the end of December was $180 million, all of this delivering to us an underlying impact of $44 million. Look while we continue to invest capital in our operations and the recent underperformance of Duketon has put clearly significant pressure on our overall cash flow.

And this is reflected in our cash balance at the end of the reporting period. As we look forward, we saw some risks, a continuing cash requirement for these investments, both at Duketon and at Tropicana.

We see clear pressures on the cost environment in labor and on in some areas on supplies and certainly in the near term, we see a building risk of COVID here in WA as the borders open and which is an important part of us longer term recovering, but it's presenting a near term risk just with the sheer growing numbers of community cases and the potential flow and that might have into our operations. With these circumstances under consideration and taken into consideration the board has taken a prudent decision on risk and decided to hold off and not declare an interim dividend for the first half of this year.

Looking at very quickly at slide four, this is primarily a financial discussion, but I'll cover off. Our safety is still pleasingly below the industry average below being where we want to be.

Our COVID management to date, we've had no cases, confirmed cases within our business or on our operating sites. We've had -- we've got strong managerial positions with diversity.

On the environmental front, we to continue to build on our catching up on our rehabilitation. We're seeing an increase on that this year, zero non-compliances.

So look on the ESG front, we feel that our results and our performance here have been quite pleasing. So what I'd like to do now is to get into the meat of this and hand over to Jon Latto, who will talk us through a bit more of the detail on the financial results.

Thanks, Jon.

Thanks Jim. If we turn to slide five, we see a summary of our financial results for H1 and I'll note the following.

Revenue has increased by 22% compared to the comparable prior year period, which reflects the new scale of the business with the first full period of reporting with the inclusion of the company's investment in Tropicana. This increase in revenue occurred despite a 6.4% lower spot gold price than the comparable prior year period.

And an additional 10,000 ounce was sold into the hedge book with 50,000 ounces sold into the hedge book in the current half compared to 40,000 ounces sold into the hedge book in the comparable prior year period. I note that the impact of selling into the hedges in H1 is approximately $42 million straight to the bottom line.

As Jim mentioned, we had a strong EBITDA result of $196 million for H1 with a strong EBITDA margin of 40%. We have seen an increase in our cost of goods sold to $427 million from $267 million in the comparable prior year period, a difference of $160 million, which I'll talk about more.

In a moment. We returned an underlying impact of $44 million and a statutory impact of $26.5 million for H1 with our statutory impact being impacted by a writedown of our stock piles, and I'll also talk more about that in a moment.

As Jim mentioned, we are expecting a stronger H2 driven by stronger gold output. I mentioned before that our cost of goods sold has increased approximately $160 million compared to the comparable prior year period.

Of this increase, a $130 million relates to the addition of Tropicana to our portfolio and $30 million relates to Duketon. At Tropicana, we see that a sizable portion of the $130 million in cost of goods sold is non-cash in nature.

I'll talk to three of those non-cash items now. When we completed the purchase price allocation exercise for Tropicana, approximately $500 million was allocated to mine properties.

And this has to be amortized through the profit and loss statement, which generated a non-cash amortization charge of approximately $32 million for H1. We also recognized a depreciation charge of approximately $17 million associated with our 30% interest in the property plant and equipment at Tropicana and the right of use assets.

Finally, we recognized a non-cash writedown of our stock piles of Tropicana of approximately $14 million. And that's really risen because we have to amortize the $500 million component of the purchase price allocated to mine properties through the stock pile calculation.

If I look now at Duketon, the $30 million increase in cost of goods sold at Duketon is partly related to increased labor and maintenance costs, as well as an increase in reagent unit costs and consumption, particularly the two as well with its more complex metallurgical material. Moving across to Page six of the presentation, we see four graphs that show our revenue.

Cash flow from operations, EBITDA and EBITDA margin, and they all remain strong despite a challenging half period. Page seven of the presentation shows a reconciliation of underlying EBITDA for H1 of $221 million to our statutory end pack result of $26 million.

Underlying EBITDA is the EBITDA result of $196 million for H1 with the non-cash inventory adjustments of $25.3 million added back in. The next bar in the waterfall chart shows our depreciation and amortization charges and you can see that they're sizeable at $149 million for H1.

Of that 149 million, you can see in the notes to the P&L statement of about $45 million related to depreciation and $103 million relates to amortization. If we look first at depreciation, you can see that it's increased to $45 million from $31 million in the comparable prior year period.

This increase in depreciation predominantly relates to depreciation on Regis' share of the property, plant and equipment at Tropicana. Turning to amortization, you can see that this increased to $103 million in H1 from $44 million in the comparable prior year period.

As mentioned previously, a significant portion, which is approximately $32 million of the increased amortization charge relates to the amortization of the $500 million that was allocated to mine properties when the purchase price allocation exercise was completed, associated with the company's acquisition of 30% of Tropicana, as well as amortization of deferred waste and some capitalized underground spend. There was also an increase in amortization charge at the Rosemont Underground at Duketon of approximately $9 million as production increased by almost 80% to 28,000 ounces in H1 compared to about 16,000 ounces in the comparable prior year period.

We also saw an increase in our amortization charge at Duketon of approximately $12 million as we took the opportunity from the 1st of July to amend our amortization policy to amortizing on tons mined, rather than tons milled, which is a policy that is better aligned to the depletion or addition to our ore bodies. The next major bar in the chart shows our income tax expense of $23 million and that's been adjusted for the estimated impact -- tax impact of the inventory right down for H1 and I'll actually talk about tax more in a moment when we look at the movement in cash and gold on hand across the period, The preceding factors demonstrate how we move from an underlying EBITDA of $221 million in H1 to an underlying impact of $44 million.

The final bar in the waterfall chart shows the inventory writedown on an estimated post-tax basis that we have recognized in the current half. Of the $25.3 million inventory adjustment that we have recognized in the P&L statement, approximately $14 million relates to Tropicana and that's occurring as I mentioned, because we need to include the amortization of the $500 million component of the acquisition cost that was allocated to mine properties through our stock park calculation, and the remaining $11 million relates to Duketon and the majority of that relates to Duketon North, where we've undertaken the Duketon North extension.

These Duketon North extension ounces are more expensive and although we know they will generate positive whole year cash flow over the life, they do come with a higher strip ratio, which impacts the current stock pile cost calculation and requires us take a non-cash stockpile write down as at 31 December. We will continue to monitor this situation as we move forward.

Over on Page eight, we have a waterfall chart that shows the movement in our cash and gold on hand balance from 30 June '21 to 31 December '21. Gold on hand is valued at spot at 30 June '21, and also at spot at 31 December '21.

So the waterfall chart won't reconcile directly back to the cash flow in the H1 financial report as gold on hand is valued at lower cost or net relatable value for statutory purposes. The waterfall chart shows that we opened at 1 July with cash and gold on hand balance of approximately $269 million.

The second bar in the waterfall chart then shows a strong cash flow from operations of $175 million for H1. This bar is basically revenue from operations, less payments to suppliers and employees other than corporate costs, interest paid and income tax payments, which we've broken out in the waterfall to provide some additional detail.

The next component of the cash flow waterfall is the capitalized mining cost, which started $117 million in H1, and shows that we've made a significant investment in our operations. This expenditure drove a $117 million includes $22 million increased activities, $32 million in deferred waste costs, $10 million in capitalized underground costs at the Rosemont underground, $5 million in capitalized underground spend at the Boston Shaker underground at Tropicana, $13 million in capital costs at the Garden Well underground as we continue to progress with bringing Duketon second underground mine online and $29 million towards the significant cutback that's taking place at the Havana open cut at Tropicana.

The next bar in the cash flow waterfall shows our investment in expiration at Duketon and at Tropicana as well as our expenditure at the McPhillamys gold project in New South Wales and this has come at $33 million for H1. Moving on to the next bar in the waterfall chart, we see other CapEx spend for the half, which was $35 million and this includes $8.1 million on fixed asset addition of Tropicana, which includes items like a TSF raise, a bridge repair and a thickness swap upgrade.

$6.4 million on underground infrastructure associated with the Garden Well Underground, $2 million on land acquisitions associated with the McPhillamys gold project in New South Wales, $2.5 million on DSO processing upgrades, as well as lifters and liners across the Duketon operations and $15.6 million in right abuse asset payments across Duketon and Tropic. Now that's the reason under the recent changes that have taken place for lease at least assets where we are obliged to recognize some payments that we make to our suppliers as leases, where we can direct the use of equipment that's provided by the relevant supplier.

The next bar shows corporate costs before general overhead allocations and that's sitting at approximately $14 million for the half. We then show interest and residual transaction costs associated with the company's acquisition of 30% of Tropicana, which sat at $12 million and I note that the bulk of that is residual transaction costs that were paid in July '21.

We then paid cash dividends of $22 million during H1 and finally we paid income tax of $31 million during the half, which brings us to our closing cash and gold on hand balance of $180 million at 31 December '21. At this point I think it's relevant to say a few words about income tax.

As I mentioned, we have paid $31 million in H1 for income tax payments. In February, so this month we received a tax refund of $23 million for income tax paid in FY '22 to date and we're expecting to receive a further $12 million refund in H2 associated with the FY '21 tax year.

These refunds are a combination of the substantial tax benefits that have accrued to the company associated with our investment in Tropicana and our recent lower profitability as shown in our profit and loss statement. Page nine of the presentation, talk to some components of the company's balance sheet.

I've just spoken about the tax refunds we've received this month and expect also to receive in April, which total approximately $35 million. So I won't go into any further detail on that now, but touching briefly on the debt that we have.

As you know, Regis took on $300 million in debt associated with its investment in Tropicana, and that had a tenor of three years and so will mature in Q4 FY '24. As we look to the capital requirements associated with McPhillamys, we will look at potential options for refinancing this debt.

We also continue to make substantial inroads into our hedge book with the balance reducing by further 50,000 ounces during H1 compared to 40,000 ounces in the comparable prior year period. As at 31 December, the company's hedge book sat at 370,000 ounces down from its peak of circa 450,000 ounces a few years ago.

I'll now hand back to Jim.

Thanks, John. Look, I'll just wrap up on guidance on Slide 10.

The guidance is unchanged as it was when we released back on earlier when we put out our quarterly results. Pardon me?

You see the group production outlook is 420,000 to 475,000 ounces. Our IISC has arranged 1425 to 1500 growth capital and expiration that McPhillamys remains unchanged.

We are expecting a stronger second half and that is really coming from primarily from increased speed grades across Duketon. We'll see higher grade feeds into two, as well as the activity to modify that circuit and accommodate that more complex material albeit at a higher grade starts to be completed and we're also seeing sharing some high grade starts coming in from Rosemont Underground which we'll see over the coming months.

And we will also see some improved grade delivery or we are seeing some improved grade delivery at Moolart Well from the pits, which means we've been able to reduce and as planned our low grade feed from low grade stock files. Part halfway through the third quarter, we see our production run rate is basically on plan pleasingly.

As a result of this guidance and the stronger performance in the second half, we're also expecting to see the a IFC [ph] dropped quite significantly from the first half of an average of 1,527 will, will reduce down obviously to deliver into that guidance range that we've provided above for the full year. Look, there's no doubt.

I'll wrap it up and open up to questions shortly. This has been a challenging first half for us operationally.

And as I said before, we've seen the impacts of this flow into our business. The important thing is we are anticipating a strong rebound in the second half of FY '22 operationally and the flow ones there financially.

We'll see significant lift in production and a subsequent overall lift in the business performance. So I'll leave it there.

I won't I won't dwell any longer on the material and I will now pass it back to Frazer and we'll open it up for questions.

Hi, good morning, Jim and John for the call and the Duketon explanation on the financials. So on the dividends, you've typically been at the top of the payout ratios, the gold miners.

I know this half was a bit of a surprise, and I appreciate that you've taken a risk adverse stance here, but how should I think about modeling your dividend going forward? Do you think that you need to give the market clarity about what that will look like?

Well, we don't -- we don't have a dividend policy. We keep -- it's important for us for exactly these sort of terms times remain to allow the board or to allow us to be clear on the fact that we need flexibility, depending on the circumstances set in place a policy or any detail on this and, it doesn't take much for things to change and you are you're backtracking.

Basically, it has been a difficult first half for it's very clear and you can without wallowing around in it, you can see what's happened over the last six months or so. The board as I said, we don't have a policy on dividend payout or dividend ratios.

We will consider at the end of the half how the business has performed. We will be looking at what the outlook is for gold, gold price.

It's certainly very strong at the moment, which is pleasing to see for gold. I'm not sure whether some of the reasons behind that are, there's some concern there, which is always a instability, gives us a strong gold price.

But we will look to see how the longer term capital demands are the business. Clearly there's McPhillamys sitting out there.

So we will take -- we'll look at this time in six month's time, five or six month's how the business performed? Has the recovery in the second half performed as we expected.

And we'll be looking carefully to see whether it's appropriate to pay a full year dividend taking into account all those to risks. But we are not in a position and not -- I mean, the other risks that are sitting around clearly as well are in the medium, short to medium term of the impacts of COVID as it starts to spread through the community over here in the West, which, where we haven't suffered the impacts that the East Coast has been enjoying for the last many months year.

So, we're not in a position to give guidance. We haven't and we won't.

We just give as best as we can to understand the circumstances of what prevails around that decision when we make it.

Yeah. Okay.

Because I guess the wages has typically been, a dividend stock in some ways and so this is a change to.

What it has although that period was in was when it was low capital investment and it was in, I guess what you'd see as a harvesting mode. Certainly there's no doubt, you'd see over not just in the last six months, but over the last couple of years really we've been reinvesting back into the company.

During that time, we have been able to continue to pay a dividend. So we haven't walked away from it and we have right in the last six months with our cash balance moving in the direction that it did on with the known capital in front of us, we just saw as being prudent to hold back at the moment.

That doesn't mean that it may not start up, but as I said, that depends on what could be quite significant recapitalization phase or capital phase for the business as well from McPhillamys. Of course, if it's something that significant might involve looking at using our strong balance sheet a little bit more as well.

So we are very cognizant of the fact that Regis is known as a dividend payer. And we would, I guess, dearly have been able to run the business like that forever, but businesses go through cycles and we are in a cycle that involves some significant reinvestment.

Yeah. Okay.

And secondly this time, last few, you're expecting a deep high recommendation from McPhillamys within the month and fast forward a year, we haven't heard a lot about the progress. Are there any green shoots you can talk to or any progress, any updates on how we should think about timing from here?

Green shoots? Yeah, look again, we snippet off every now and again.

Look, I think certainly a year ago we were the message we were getting was quite encouraging. We've tended to be a little bit disappointed with the speed.

The issue sits in one or two key areas. We are now really quite reluctant to make any kind of timing prediction, because we've been disappointed in the past with how some things have progressed as people indicated were anticipated others haven't, but we are seeing positive progress.

We still believe that this project is permitable and it's a matter of time, it's not, if it's when. We do have know that we have strong support.

We know that the local member is a deputy premier and is supportive. There's been some ministerial changes in New south Wales, which has sort of slowed the process up a little bit for the end of last year and over Christmas, but everybody's back at work now.

And we do know that they're working on the state departments are working on resolving the one or two outstanding state related issues. So we are pleased to see if progressing.

We're frustrated with the rate of progress, absolutely frustrated with it. But, we can't quit.

It's a great project, 2 million ounces, very strong certainly in this price environment, it's fantastic project, probably one of the largest undeveloped projects in Australia where it's this far progressed. So yeah, it's frustrating, but it is what it is and we are working hard to progress it.

Yeah. Okay.

And lastly, you just for Jon, is that $14 mill of corporate costs. What we probably expect going forward with Tropicana on board?

I think, like I mentioned in the -- so when I was talking to the numbers, we haven't allocated out -- we a bunch of costs to say, expiration and McPhillamys and feasibility. Certainly some of the labor costs has been allocated out, but things like, office ramps and all that sort of stuff, we don't bother allocating it.

So I think on a sort of a general unallocated basis. yeah.

I think that's probably about the number to expect.

Yeah. Thank you.

Thanks and good morning, everyone. So just two good questions on cash flow and on the dividend again.

So, I really appreciate comments you made, in your opening remarks and to the presentation. Just curious, was there any sort of, one off impacts in there in terms of working capital for in terms of cash flow?

I did see that there was a bit of an inventory getting on the balance sheet at the end of the half. So just whether that will be released a little bit this half.

And then secondly, I guess just going back to the final dividend, if McPhillamys if or when McPhillamys is approved, does that basically mean that you will not be paying a dividend whilst that CapEx spend is being committed to thanks.

Well, I'll answer that second question first and I'm afraid, I didn't, I think Jon, did you pick up that? I think so first question.

So yeah, on answering the second piece on the dividend we have, the circumstances of whether we would be paying a dividend under the conditions where we are constructing McPhillamys will depend on a number of things, not the least of which is price, cash flow of the time and us considering that a business is designed to make profit and return it to the shareholders and also take some of that and reinvest it for the future. So bottom line is we don't have a clear position on that yet.

And we won't until we get closer to the time. Certainly, as I said, our options are everything from, we are anticipating that through that period, Tropicana will be in a very strong cash flow making position.

We're very pleased with the way Tropicana is playing out and certainly that was an important part of that investment decision that we made. And, Duketon will also be in a stronger position then as well.

So it's quite possible that we could make a decision to fund it all out of cash flow and hold back. The other side of it is it would make some sense to put a balance sheet to work a little bit and be in a position to continue to pay.

So I'm not answering your question because I don't have an answer to it. I'm just telling you the things that we will be considering at the time.

So I'll pass over to you Jim for that.

Yeah. so Jack thanks in relation to your first question, I just make two observations, first of all in relation to our cash balances, we did see, we did see some residual costs associated with the Tropicana acquisition flow into the early part of this current half.

If you look at, in that cash flow waterfall, there's a $12 million bar. The majority of that is some transaction costs associated with that acquisition.

We certainly don't expect those to recur. In relation to the second component to your question, yes, we have built stock piles across the half.

As, I just can't quite recall as to whether they'll unwind across you in the next half or not, but I'm happy to, I can have a look into that for you and have a discussion offline.

Of the high grade to as well, which was building up in the first half. Yeah.

We built stock poles of the high grade to as well, because we weren't prepared to put that through the mill and suffer the higher significantly higher recoveries. So we basically continued to run the minor schedule, build up the two as well, stock piles now that we are implementing the circuit modifications that we needed to, we're back slowly increasing the rate of feet of that too as well.

So I would imagine that's basically where part of the high grade comes from in the schedule in the second half. So I'd imagine we'll be pulling some of that down.

That's really helpful. Thanks guys.

And then just one quick, last one just on Rosemont post wall, as you're understanding that change at all around some of the recoverability of those ounces?

Not from the potential of getting access to it from the surface. Work continues from accessing it for options for accessing it from underground and we certainly think there's potential there, but we haven't made any -- the work is underway at the moment and so far we haven't seen any reason why we couldn't take at least get some of it.

Perfect. Thanks Jim.

Thanks, John. That's it for me.

Jim and Jon. Good morning, Jim to the last question.

So access fire, the open cut, definitely 100% categorically ruled out for the slip areas.

The access from the open cuts from a completely different area to that where we later on think I answered that one before. It has not impacted on the split.

We, enjoyed in the Rosemont main pit but that's actually quite small. But the reason it was an issue was less about global stability of the wall and more around the potential risk of any more small splits because of the nature of the bottom of the pit was so small and tight, it was putting people at risk that were working in the area.

So we just made the decision, it had any on any other stability of access declines or the like.

And I got that. I remember we talked about that in the call in January a bit.

So, but you are ruling out ever going back into that area where the slippers occurred in that narrow small open cut area to access that all from open cut lo be dump from underground.

Yes, that's right. We continue to look at it.

It's hard to know the most important thing with geo I expect the price is unstable is time for longer it's left. The more unstable, that's generally a rule of thumb of geo mechanics.

We just don't see any we just don't see the value of taking the risks that would be required to pursue that. And we do see some opportunity to access some of that material from underground, but exactly how much we're still trying to work out.

Okay. Can I ask Jon on Slide eight cash flow waterfall Jon, can you just walk through that with me?

Can I ask questions as I go? So looking at that and thinking about the second half, so operations bar, which is the first bar that should do better, Jim's talked about the grade and twos and other areas and with goal price being hired, that should be better.

And, my context here is I'm looking at a $90 million cash in last half and that's trouble. So looking ahead, operations, better capitalized mining, let be around about the same level 117, or to some of that capitalized material that's dropped.

Does that start to unwind or reduce?

That's a good question, Peter. I think, the reality is that, a fair capture within that capitalized volume, either associated with the cut back that obviously, that scheduled to primarily be complete this half, but then you'll see some cost transition into operations.

So, broadly I think that between operations and capitalized mining, certainly what I'd say is, Jim's pointed to a much stronger H2. So that'll obviously help that operations cost, I suspect there will be a bit of a transition between capitalized mining and operations, but I think it'll be more than outweighed by the improved second half output.

I think certainly one of the big things you've cognizant in relation to our cash burn is clearly that substantial inflow that we are going to receive or and we've already received part of in relation to the taxation element that I spoke to.

So tax page 31, this half, you'll actually get a credit so far, what you say 23 plus

We've already received it, Peter. So there's $23 million, as I mentioned, we got that in February.

We anticipate receiving a further $12 million in April.

Okay. So when I look at this waterfall, when you do it for the full year, that $31 million is going to actually be a credit of $35 million, so there's no tax, it'll be a credit.

Got it. And no dividend pays for that $22.0 million and the interest in residual transaction cost that declines to what is half?

Well, what I can really say there is that as I mentioned, the bulk of that $12 million relates to transaction cost, we don't expect to recur. Our interest on our debt is incredibly low.

So I would expect, that'll come down to a couple of million bucks.

Okay, great. And corporate you've answered Kate's question that stayed same.

Are the CapEx is that 35 increase decline? What does that look like this ask?

Yeah, look, I sort of suggest it's probably likely to be the same Peter. Without, I don't want to get on my soapbox here, but a large portion of that relates to right-of-use assets.

And I think as we all know, that is an standard to say the least, but that is half of that expenditure is right if you later stage.

Okay, and last on expiration, Jim, given your deliberation of the board and dividends, did they deliberate about expiration spend or given you a gold/growth company, you need to keep spending and within that, does McPhillamys spend given there's nothing happening? Does that decline this fast?

Yeah. A good question there Rocky.

No, certainly not. Well, yes, there was discussion around expirations spend and, yes, a very immediate recognition that if you don't spend money on exploration it's such, where's your future coming from, at least with our holdings, which we've talked about in the past, and I didn't dwell on it today, but our holdings at Duketon Greenstone belt, there's some fantastic opportunities there and we certainly haven't waved from that and we plan to continue working there.

The Tropicana area, the Albany Fraser belt itself as well has got plenty of expiration opportunity and just with the workshop that was held recently came back from that more excited than we were when we went there and we were pretty excited when we went there. McPhillamys, yeah looked at that a pretty solid spin.

And that it's because part, the cost of the cost of permitting, it's not one admin officer sitting around filling out a form every now and again as consultants and reviews and infield investigations that need to be done everything from, trees to be counted, grasses to be analyzed, there's a significant spend in there. Plus on the DFS side, because of some of the long lead times on some of the areas in particular around power and water supply, we're actually spending, at least a couple of, well, $1 million or $2 million on each one of those alone, just getting the design work and corridor sorted out and the light.

So yeah, that, we'll see a spend, full year for McPhillamys or be maintained on track and I can't see it being too different from the first half.

So to the point of my question is $90 million burn in the first half. Can you turn that around to a neutral/build of cash in the second half?

Well, I think, if you talk about the $90 million burn, you can, first thing you can do is take off about $55 million because $20 million odd of that was dividend, $30 million of that was tax which we're getting back and we won't be paying going forward. So that's the key.

So there's two elements of the cash that's situation that sits on this waterfall chart. The tax at McPhillamys will come back to us and that won't be an element of our going forward.

Certainly not to that extent because of as John mentioned is the Tropicana tax effect on our, on what we pay. So there's it be $90 million, there's over $50 million, that's already sort of one off type of thing.

And the reality is that as where does the rest of the cash come from, that we are projecting. We see a substantial, a solid increase in our performance in the second half.

And so, as you can see from our guidance, yeah, our sales for the first half will be quite significantly higher, and that is all basically under the same cost profile. We just will be processing higher grades and producing more gold, which means that revenue effectively goes straight to the bottom line.

Appreciate the detail. It looks like you had a bit of wiggle room the second half.

Thanks.

Yeah, look, we certainly think that the second half would be materially strong and all really, apart from the one offs which is the income tax and cash, it's off the stronger production.

Thanks, Jim. Thanks, John.

Thanks. Hi, Jim and John.

Question on Garden Well main underground. When should we be expecting a decision there?

Is it still this first quarter? And it already seemed like your upfront capital was perhaps or already justified.

So were there any last hurdles there, or is it just sort of working on the optimal entrance into the area?

Yeah, look, we haven't spent any and we haven't committed any dollars to Garden Mine underground yet. We haven't made a decision on it.

We undertook drilling, we wanted to confirm up the target zone that we were heading into to make sure that we had confidence in the reserves that we were going to be tackling and the work is now underway, as you said, to find the optimum point. Our original concept was to come across from the Garden Well South area, but actually what we've recognized is that the Garden Well mine is probably more substantial than we thought.

And in itself probably warrants something that could be a little bit more substantial to allow it to be a completely independent production zone. So we've been delayed a little bit by what you might argue as being the success of the drilling and what it's in third.

So we are working on it. I think we might be yeah, I know we had a review of it a couple of weeks ago.

I think there's still a bit to do to make sure we've got the optimum point there. So it's possible that we might be in a position this quarter, but I'm more thinking now that that might slip out into the June quarter.

No, that's good, color. Thanks guys.

Thanks very much. And good morning Jim, John, and Ben just showing up a kind of a little bit asking similar question that you had on the cash except on the income statement on it and perhaps you've been very generous to your time.

Appreciate that. I'm just cutting the chase a little bit on one off items in there the stock pile and authorizations and the acquisition cost and so on.

Can you just maybe pull out some off items in that in the waterfall you are the one offs,

Sorry, Dave, I didn't just quite catch the last part of your question there.

The one off items, the nonrecurring stuff that's in the NPAC waterfall, there are a number of, the stock by writedowns and non-cash adjustments that we've seen, which is related back to the Tropicana acquisition. Where are the one offs, I guess in that impact waterfall?

Yes. Okay.

So, firstly, just looking at depreciation and amortization, frankly, I think, that will continue. For the time being, I don't see that off in the interim.

In relation to the stockpiles, what I would say is particularly at Tropicana, as we are very confident that Tropicana will continue to build and increase its reserves. As they do that and as we can continue to amortize down the $500 million of the purchase price that we had to allocate to mine properties as they continue to increase their reserves and as we continue to amortize down, I'd suggest that the likelihood of future stockpile, impairments at Tropicana becomes less.

I think, as you are probably aware, the time when you're most susceptible to sort of write downs is just when you've done the acquisition, because everything's just been fair, valued, and there's not a whole lot of headroom, but we are very confident in the Tropicana operation and we believe that, that reserves will continue to be increased and that will reduce the likelihood of stockpile write-downs going forward.

Okay. Right.

Cool. and let's see, you mentioned just briefly one responses there that you started feeding it to as well or through the process plant, how that's recovering?

Yes. It's recovering well, thanks.

We haven't, our plan is to ramp up the feed there to, probably around about 35%. We're not at that rate yet.

We've been changing the circuit, but we still have to finalize putting in the slam jets, which is a way of more efficiently introducing the oxygen into the circuit. And also that's been delayed a little bit, probably about two or three weeks more than what we originally scheduled.

That should be, which should be finished at the end of this month. That's been delayed because we struggled to source around Australia, thanks to COVID implications the specialized stainless steel piping that we required.

It was interesting, we actually found all the valves and all the controls really quickly, but it was just the basic pipe a week or so ago and sourced it. So everything's continuing to plan.

And just quickly M&A, you guys are probably in the penalty box a little bit, according to the market, but you've got your foot on probably the better heart of 700,000 ounce of Australian base goal production. You're feeling bit vulnerable.

Well look, I think everybody feels vulnerable at different times. We are not getting too sweaty in the box about that.

We just focus on making sure that we work hard on the on getting our performance up. We see our performance, it's important for us that people understand that this situation that we're going through at the moment is it's not a structural issue with our business.

It's just a near term operational issue with our business. And we think people understand that.

And we think that the thing that to be focused on from that front is to make sure that we continue to deliver on our plans and keep one eye out for opportunities that might come our way to be honest.

Thanks so much, Jim. Thanks for your call this morning.

Hi, Jim and team. Just got the one question looking at you all understanding cost guidance and what's required in the second half.

I'm just wondering if you can provide a bit of color on what you're assuming around potential COVID impacts just with the border opening up.

Yeah. In our all-in sustaining cost estimates, we're assuming that our operation continues to be able to run as it has done.

There's a little bit of provision in there for things like the added admin cost of testing and there's a, there's an extra flight that we've gone on to manage those things and we've established a testing station at the airport. But in terms of making a provision for 15% or 20% absentee, and because of COVID like we know that some of our competitors have seen on the East Coast, we don't have built in.

We do have plans. We have contingency plans.

We have now been running and continue to run with our COVID emergency response team that meets at least weekly, depending on the circumstance, we have contingency plans as to how we run the site in the event of 20% absentee and because of COVID 50% absentee and how we manage the site down, but that's certainly not built into our production outlook.

Hi guys, look just one quick question. And it was just stamp duty on the Tropicana acquisition.

I had a line item hanging out through this morning. That's still made my numbers look a bit odd.

Has that been paid or is that still to come? Cheers?

Yeah, it's a good question, Matthew. Basically the answer to that is that we've done everything we can in relation to that.

We just, at that we are waiting for the government to issue us with an invoice. It's a provision we've got there out there.

It could be next week. It could be next year.

We do don’t know.

No worries. Thanks.

That was it.

All right. Thanks very much, Frazer, then.

All right. Thanks everyone for joining us.

We do appreciate the questions as we've seen, it's been a challenging first half for us, but we're certainly in a position where we are looking forward to a stronger second half and watching that flow through to our both operationally and to our financial performance. So thanks very much for joining us.

As always, if anyone's got any follow-up queries, please let us know. Contact Ben and we will endeavour to get back to you as soon as we can.

Thank you very much. Have a nice day.