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Thank you for standing by, and welcome to the Gold Road Resources March 2021 Quarter Results Call. [Operator Instructions]I would now like to hand the conference over to Mr. Duncan Hughes, Manager, Corporate Development and Investor Relations. Please go ahead.
Thank you, Ashley, and welcome, everyone, to our March 2021 quarterly analyst call. This quarter was a busy one for us. We continued to grow our cash balance despite a number of scheduled shutdowns for mill relines and the pebble crusher improvement programs. This quarter saw us declare our first dividend to shareholders. It saw us announce a 3-year mine plan with an improving trend to 350,000 ounces per annum of Gruyere. It also saw progress in outlining growth potential at depth at Gruyere. Unfortunately, gold price and, in particular, sentiment, has driven relatively negative trend in gold equities over the quarter. A chart showing our relative performance against peers is included in the appendix of this presentation. Happily, Gold Road has performed better than most over this period. Gold Road also featured in a considerable amount of media speculation regarding the sales process for 30% of Tropicana during the quarter. As stated in past investor communications, Gold Road will, from time to time, assess potential opportunities that align with its strategy. Any opportunity must, however, compete with Gruyere and the huge exploration opportunity we see at Yamarna. Above all, Gold Road will continue to honor its commitment to deliver shareholder value, be it through organic or inorganic means. In the presentation today, we will be referring to the quarterly analyst call slides that can be viewed live on the webcast or on our website. Our quarterly activities report has been released on the ASX platform and can also be reviewed on our website. On the call today, we have Duncan Gibbs, Managing Director and CEO; and Tony Muir, our GM of Finance. Justin Osborne is on site and unable to join us for this call. I'll now hand over to Duncan Gibbs to talk through our quarterly results.
Thank you, Duncan, and thank you for everybody joining us today. Just a quick highlights page here. So we produced 66,213 ounces for the quarter on 100% basis for a year and an all-in sustaining cost of $1,386 per ounce. Happily, production was achieved with no lost time injuries during the quarter, and that brings us to 12 months without a lost time injury. We've continued to make strong cash flows through per year. And at the end of the quarter, our balance sheet showing $150 million of cash and equivalents. We made a number of quite significant announcements during the quarter. We put out our 3-year mine outlook, with production growing to 350,000 ounces per annum. We've reported a Maiden attributable underground resource of below the open pit at Gruyere. And our resources grew to an attributable 4.5 million ounces. First full year of production, free cash flow of $106 million and an NPAT of $81 million. We determined our first fully franked dividend, which was recently paid on the 14th of April. We continue to make progress and look forward to making a meaningful discovery in southern project area at Yamarna. We also put out our first stand-alone inaugural sustainability report at the end of March. The report recovers the material topics that we assessed from consultation with our stakeholders. The report works to GRI reporting standards and exceeds the core reporting requirements. We'll actively be engaging with stakeholders and investors in coming weeks to seek feedback on the report, and more generally, the company's ESG performance. If we turn to the financial performance of the quarter. All-in sustaining costs, as I indicated, was $1,386 per attributable ounce, which increased on the December quarter, reflecting the higher level of plant maintenance where 2 relines, both the SAG and the Ball mill, which was successfully completed, along with the panel crusher upgrade. Gold production is down relative to the December quarter, but largely reflects an increase in golden circuit, reflecting the timing of Ball falls at the end of the quarter. You'll note that tonnes milled, plant head grade and recovery are essentially a copy of the December quarter. Mining total material recruitment remained largely the same as the previous quarter. However, the strip ratio lifted slightly, reflecting a lower portion of all lines relative to total waste movement. Transition of the mining contracts from Downer to MACA has progressed smoothly, with MACA committing to provide a replacement excavator and some other equipment. At the end of the quarter remained at a healthy 3.2 million tonnes at 0.7 grams, predominantly oxide ore. As indicated on the processing side of things, ore tonnes processed, head grade and recovery were largely unchanged quarter-on-quarter. And the main difference in gold produced reflects the increase of gold in circuit. All tonnes milled were in line with the December quarter despite the planned shutdowns for both the SAG and Ball mill relines and the upgrade of the pebble crusher. All-in sustaining cost, as indicated, were higher than the December quarter, reflecting the reduced gold produced and higher expenditures for plant maintenance on the 2 relines with approximately $4 million in sustaining CapEx for the pebble crusher upgrade. During the quarter, we sold 32,100 ounces of gold at an average realized price of $2,138 per ounce. Approximately 34% of our gold sales were delivering to forward sales contract that fell due within the quarter at an average price $1,810. Delivery into the forward sales was a higher rate than looking forward on our hedge book, which is around about 25% of production quarter-on-quarter. Our free cash flow for the quarter, $15.1 million, and that excludes the sale of 3,660 ounces held predominantly as dore in the quarter with a value, of course, around about $8 million. Free cash flow fell back quarter-on-quarter largely due to a lower revenue attributable to the lower gold price and the lower gold sales as well as the increase in costs associated with the maintenance and plant improvements, which, in total, were about $6 million for the quarter. Our corporate all-in cost, which is generally one of the lowest in the quarter, remained at $1,707 per ounce. The program of mine-to-mill optimization and improvements of Gruyere continued through the quarter. Really, the mine and mill optimization, so higher intensity blasting and blending of oxide becoming pretty much business-as-usual practice to the refinements to be won. The pebble crushing circuit was commissioned on schedule early in the March quarter and early indications that's been through coming very well. And if you look at the picture that we've got in here, the main upgrade that we've done is a new conveyor that you can see in the foreground of the -- that picture. And that lets us bypass the circuit in entirety, if necessary, for any maintenance issues within this part of the circuit. It's an important part of winning us higher plant availability and utilization within the whole circuit. With the relines now completed and the upgrade of the pebble crusher, we're really in a good position to deliver against our guidance for the year, which is set between 260,000 and 300,000 ounces at an all-in sustaining cost between $1,225 and $1,350 per ounce. Further progress during the quarter made towards the reserve upgrade, which we've flagged for the second half of the year. The pleasing piece of results coming through from the geotechnical studies where there's potential to increase the fresh rock pit slope up to 4 degrees. We certainly think that's going to help drive the pit deeper and support conversion, at least a portion of the 1.2 million ounces of indicated resource that's set below the current pit design. Through the quarter, we put out a 3-year market outlook. We see production lifting to a sustainable 350,000 ounces by 2023. Key pieces, as I flagged, to -- behind that really lifting the plant's annual throughput rate for a targeted 10 million tonnes per year. Key pieces behind that, things like the pebble crusher upgrade really lifting our overall plant utilization from where we're sitting around about 83% at the moment also to industry benchmarks in the mid-90s. The blending of oxide and higher-intensity blasting, as I've indicated, largely becoming business as usual, but it's an important part of getting the tonnes per hour through the plant. We've also committed an upgrade of the power station, including the installation of the 13-megawatt solar farm and 4-megawatt battery, which lets us run the mills at a full-power draw, including through periods where the gas generation sets onsite can be right. We also see higher grades coming through from pit stages 2 and 3 over the next couple of years, and that's an important element wholesale of lifting the production as we move forward. We put out our Maiden resource -- or Maiden underground resource at Gruyere at 0.87 million ounces. This basically is resources sitting below the open pit mineral resource that's constrained within $2,000 per ounce shell, and that hosts so really 2 zones and mineralization of slightly different sales. So a broader central zone, certainly, we think amenable to bulk mining type methods; and a northern zone, which is narrower, but higher grade, which is probably more amenable to potential underground mining practices in Western Australia. We put our economic views around really what is an extension of the resource. Same model was used for estimating open pit to that new resource model. And I guess I'd note that as well as the resources, of course, sitting outside the 2,000 ounces shell, obviously working on expanding the pit, we've got about 1.6 million ounces that sit between the current open pit reserve and the underground resource. And we think we might get sort of half of that into an expanded open pit, which calls assembles to follow ounces that are also available for underground mining. So if we think the sort of mining inventory, as we've already established, is somewhere in the order of 2 to 3 million ounces, I want you to kind of put all those pieces together. So we've really just started the deep drilling program, looking at the potential extensions of the mineralization that's there. We've got a historical hole that was drilled with some EIS funding support several years ago, so we believe the mineralized system certainly continues. We've just started the drill rigs, just mobilized in the last couple of days, to do about a 12,000-meter program, 5,000 meters of deeper drilling below the bottom of the pit here. The drill space in here, very, very wide space are not intended to put together a resource model this year but really for us to understand the scale of the system. And then if the program is successful, would then lead to what we'd see is several years of drilling and studies ultimately to put together resources and build up the right picture for how to look at mining development. We turn to our cash flows. And I guess the waterfall chart here really summarizes the movements of cash and equivalents through the quarter. We remain debt free, of course. And we've built up a cash position at the end of the quarter to approximately $150 million. We've paid our -- made dividend, of course, post the end of quarter on the 14th of December -- or 14th of April, and that was fully franked and determined for the 6 months to the 31st of December 2020.As we look forward, our hedge deliveries were higher during the quarter, so that subdued the cash generation, as I've previously indicated. Looking forward, our hedging is around about 25 production -- 25% of production through to November 2020. And details of the 63,000 ounces that we've got hedged are with our quarterly report. Exploration. We're back out there. We've got a number of rigs, so drilling for this year is budgeted at about $27 million, focused predominantly in the Yamarna belt and in the Southern Project area. We're currently about halfway through the program at south of Gilmore, where we've got a new tenements, so granted with access in that area. Again, down in the Southwest Yilgarn, we've got eco rig currently operating like that down there. And I guess, like others in the industry, we've had a bit of a slow start to exploration this year with the COVID lockdown in WA early in the quarter, which coincided with when we're about ready to gear up exploration activities. And we're also facing some headwinds with drilling contractor, staffing and slow assay turnaround. So next quarter, we should see assay results really start to flow in, and we're also working towards a resource model on some of the prospects on our 100% Yamarna tenements. This is a strategy slide that we've been talking to now for over a year, and probably worth revisiting this in light of some of the media speculation that Duncan spoke to. Really, our strategy remains unchanged for Gruyere, as we flagged through this presentation on our more comprehensive 3-year outlook. We intend to grow and improve and really understand the long-life and full asset value of Gruyere. We got opportunity for discovery and to grow the business through successful exploration, and our systematic efforts continue on that front.Clearly, we've been flagging for a while. We will look at corporate development opportunities, and we'll seek to find those. Or if they become public processes, we'll look at those where they're appropriate. The opportunity to look at Tropicana obviously presented itself through the last 3 to 6 months, however long it was going for. I guess our view, a high-quality asset and made reasonable sense as a potential portfolio fit to Gold Road. It's an asset that we know. I think there's something like 50 years of -- man years of direct Tropicana experience within the Gold Road management team. However, as the center of this slide illustrates, the name of the game is not just growth, it's to unlock shareholder value. like I said, our assessment, that at least somebody else was prepared to pay more than what we saw as being value accretive for Gold Road shareholders. So I guess the number of the slides, this is the strategy, and we'll stick to it. And we've got plenty of work to do to focus on delivering value out of Gruyere and ongoing further exploration success. Okay. So I think that sort of summarizes the presentation and the quarterly, and happy to hand back to Duncan and open up to questions.
Thanks, Duncan, and that brings our results presentation to a close. We're now very happy to answer any questions, and we'll hand the call back to Ashley. Thanks, Ashley.
[Operator Instructions] Your first question comes from Paul Kaner with RBC.
Just on throughput and mill volumes, what do you see as your sort of main constraint in achieving that 10 million tonnes per annum rate now with the pebble crusher complete? Just any color on that.
Yes. So I think as we've been flagging, Paul, there's kind of 2 key pieces here. One is really around the throughput rate, if you like, for the tonnes per hour. I think we're largely there with the blending and the more intensive blasting, but more refinement. But we're probably largely there on that side of things. The big piece really is driving up the mill utilization. So if we can get that up from where we've been sitting in recent quarters, around about the 80% to 83% up into the mid-90s, I mean that's going to be the major driver. Pebble crusher, an important part of that. We've had good early results, but the crusher was brought online sort of second week of March. Just wanted to get a few more runs on the board, but we're certainly seeing positive early signs from that.
[Operator Instructions] There are no further questions at this time. I'll now hand the conference back to Mr. Hughes.
Thanks, Ashley. Not too many questions. Must have covered it all. But thank you all for listening in to our quarterly results. Obviously, this quarter for 2021, we view as the quarter where we were setting up for the year. We've now set up the pebble crushing circuit and the pebbles there increased throughput. We're very pleased with our 3-year outlook that shows growth in production, up to 350,000 ounces sustainable. Growth is a message at Gruyere, and hopefully, that came through again on the 15th of February, where we show the real potential at Gruyere. And pleasingly, the geotechnical studies are starting to look like we can steepen those pit slopes at Gruyere. Exploration continues. As Duncan said, it was a little delayed, still a big focus for us. And next quarter should start to see some results flowing through from exploration. Our balance sheet is strong. We still get free -- we declared our first dividend in the quarter, and we paid our first dividend a couple of days ago. Thanks very much for tuning in and obviously, hope to hear a bit more from you over the coming weeks and months.
That does conclude our conference for today. Thank you for participating. You may now disconnect.