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Thank you for standing by, and welcome to the Gold Road Resources March 2024 Quarter Results. [Operator Instructions] I would now like to turn the conference over to Mr. Duncan Hughes, General Manager, Corporate Development and Investor Relations. Please go ahead.
Thank you, Melanie. Welcome, everyone, to our March 2024 quarterly analyst call. In the presentation today, we will be referring to the quarterly results slides that can be viewed on the live webcast, our website or the ASX release. Both on the webcast and on the phone are able to submit a question for us to address at the end of this call. On the call today, we have Duncan Gibbs, Managing Director and CEO; John Mullumby, Chief Financial Officer; and Keely Woodward, Joint Company Secretary. Moving to Slide 3 now for a summary of our March quarter results. Gruyere continues to operate safely and reported no lost time injuries during the quarter. As announced to the ASX at the beginning of April, March quarter was impacted by a protracted and substantial rain event. Happily, the mine restarted in April. We were on site yesterday, and it was nice to see trucks moving, all haul roads open, mills turning and clear blue skies over Gruyere again. Despite the substantial rain interruptions in March, free cash flow generated during the quarter was still positive at $5.5 million, and annual guidance is unchanged. And as guided previously, likely to be in the lower half due to these protracted weather events. We closed the quarter at $146 million in cash and equivalents with no debt. The cash and equivalents position follows the payment of a $9 million dividend to shareholders. Our strategic investments continue to hold good value. These investments were worth just shy of $500 million today. I'll now hand over to Duncan Gibbs to talk through our quarterly results in a little more detail.
Thanks, Duncan, and thank you for joining us today. As announced in March and again in early April, the Eastern Gulf fields was hit by substantial and protracted rain events. Australian for us, this came at a time when Gruyere was really starting to hit its straps in regards to mining rates in late February and early March. Rain caused mining to be at lower rates or sustainable for much of the month of March, with production focused on pricing of low-grade stockpiles. The impact of the sustained road closures that provide the normal freight access routes to Gruyere eventually results in the processing plant also having to be shut down due to the lack of consumables. Of course, both can only really be transported at the site by road. Finally, the operation restarted in April with fuel and consumables being sourced by a road from the East through the Northern Territory. Well, that might sound easy. And as you drive in, just look out to Lara drive past on the right. There's been quite a Herculean task requiring a round trip from Perth or more than 9,000 kilometers. I think Google Map tells me that's more than 100 hours of driving. Most of our vendors simply don't have the trucking capacity in the personnel to do that. So we've also reached out to numerous alternative vendors across Eastern Australia. The combined efforts and, of course, the team at Gruyere, Labor Shire, the Gulf Field supply team and the suppliers to great, Yoko and other communities that have helped us return to normal operations and greatly appreciated. The Gruyere JV is continuing to work the labor in Shire Mace, Yelko and others to complete repairs to the Great Central Road, so that can be opened up to all traffic, including the local communities. Both the rain events, 2024 guidance for Gruyere is unchanged and is now anticipated, of course, to be in the lower half of guidance between 300,000 and 335,000 ounces or on an attributable basis, 150,000 to 167,500 ounces. That will also mean that we're in the upper half of attributable all-in sustaining costs of between $1,900 and $2,050 per ounce. The impacts of the rain will result in lower than anticipated previous -- lower than previously anticipated production in the June quarter as a result of the impact of the rain event spending into the first half of April. Gold production, turning to the quarterly summary slide. Gold production for the quarter, obviously impacted by the rain event as pre-released 64,323 ounces. The Gruyere mining contractor, we've been very successful in recurring labor to get up to the expanded mining rates at Gruyere, and we achieved those manning levels in late February. Pleasing we after the rain event, all those people are coming back into site. In line with the increases in mining personnel, of course, the mining rates increased with the total material movement hitting daily targeted annualized rates of approximately 60 million tonnes or some case is slightly above in late February and early March before the rain event. Mine grade for the quarter is about 1.3 grams, obviously, on significantly reduced volume but in line with the ore reserve rate. The process plant head grade at 1.1 gram -- I'm sorry, 1 gram obviously, reflects the fact that we've had to process a lot of lower-grade stockpiles for most of March as a result of the reduced mining activities that were possible. The plant utilization as a result of tonnes mills was down quarter-on-quarter, reflecting the suspension of operations late in the month due to electrical agents and also other downtime and lower rates of mining is direct impacts -- lower rates of processing as a result of direct impacts of the rain event. Gold recovery, as we've seen in recent quarters, continues to be higher than the feasibility study model sitting in at about 93%. All-in sustaining cost was higher quarter-on-quarter $2,194 an ounce, largely attributable to the lower gold production as a result of the rain events in March. Gold revenue, of course, benefited from a strong spot gold price and was slightly lower quarter-on-quarter, a result of the lower gold sales. Quarterly, all corporate all-in costs were not surprisingly higher at $2.638 per ounce. If we turn to the next slide, fortunately, rain also stop across a lot of our exploration activities for the quarter. At Gruyere, we did get up and going with a single hole drilled looking at resource extensions below the open pit before that activity was paused and that has actually recommenced. Within the JV, our studies continue on the Golden Highway, sort of satellite resources out to the west of the mine, and that's in preparation for mining to commence in that area in 2026. At Humana, I know that we've sort of finished the Golden Highway work. We're now focused on resource drain out of Gilmore, and we released a few economic intersections or really the 1 Morello structure to the immediate north of the existing Gilmore resource and drilling and the Gilmore area should recommence this week.\ Finally, as many -- well, if you have noticed, we made an announcement on Monday regarding media speculation on an analog transaction stating that this statement in that announcement, Gold Road is continuingly evaluating strategic opportunities and look at them, of course, in the interest of its shareholders. Looked at several opportunities this year, and we'll continue to assess opportunities arise. And that's, of course, often determined by vendor sale process. We have been disciplined in considering opportunities from the lens of creating shareholder value, and we will continue to do so. I hope that you will appreciate that I'm not able to comment further on the strategic opportunities during the Q&A session at the end of this call. I'll hand over to John to talk through the financial results.
Thanks, Duncan. Good morning, everyone. Here on the slide, you'll see the usual Quarter 4 charts breaking out our movements in cash and equivalents across the quarter. So starting at the left, you will see that we started with $150 million in cash and equivalents on hand and a slight dip down the end of 31st of March, $146 million. Within that, starting at Endpoint, Dorian Bullion was quite flat at $6 million to $6.3 million, so minimal impact there on the cash flow from any movements. So moving on just to ask some key points of note within the quarter. You've heard Duncan talk about the rain impact. So as a result, the operating cash flow is at Gruyere was somewhat mid $58 million. That was before CapEx spend just shy of $30 million for the quarter as well. The other key point of note in this quarter's cash flow is our dividend. On the back of the record 2023 profits. We did pay a fully franked dividend of $9.9 million, and shareholders didn't see that cash coming in until early April, but that did leave our account before 31st of March, hence shipping up in this quarterly cash flows. So free cash flow is reported before debt and dividends. So as a result, when we add that back, it was a positive free cash flow quarter of $6 million, a good outcome there. And in particular, that means that as of the end of March, our balance sheet and financial strength is as strong as ever with a debt-free balance sheet and closing in on $650 million of liquid assets between our cash and our listed investments. That's basically for me. Just a couple of other things I'd reiterate is in a positive free cash flow quarter, which in light of a rainfall event on the underpins highlights the underlying quality of the Gruyere asset and the resilience of the Gold Road business model. And before the rain is start falling, we obviously track our cash flows quite carefully. And Q1 was shaping up at the time before the rain started before seeing a very, very strong Fed cash flow result for the quarter. It's not one of the strongest in growth history to now the operations ramping up and returning to normal. I'm looking looking forward to some very healthy cash flows in 2024, especially in H2. That's it for me. Back to you, Duncan.
Thanks, John. That brings our results presentation to close. So I'll now hand back the call
[Technical Difficulty] ]
[Operator Instructions] Your first question comes from Meredith Schwarz with Bank of America.
Just a quick question. What's the weather impacting access to the pits and your material movements over the March quarter. And a little bit into the June quarter. Is there likely to be any flow-on effects for FY '25? Or do you think you're able to catch up some of that stripping into the second half of '24? [Technical Difficulty]
Ladies and gentlemen, this is the conference operator. We have temporarily lost connection with the speaker line. Please hold and the conference will resume shortly.
Okay. I gather we're back on now. Something happened when we went on mute. But Meredith, I will just refer back to your question.
So it's just a question with the wet weather impacting to the pits and material movements over the March quarter and obviously, a little bit into the June quarter. Will that have any following effects for FY '25 in terms of production? Or do you think you can catch up that stripping into the second half of '24?
Yes. Thanks, Meredith. I'm sorry about the technical issue we've got. Look, clearly, this quarter is going to be impacted as we get going out from the rain events. We've wrapped up really over the last week, 10 days, still getting enough steel into the ball mill, we are really coming. But the site is actually looking very good shape at the moment. Obviously, logistics challenge bring everything up around Australia, but up and operating. In terms of the second half of the year, we're aiming to try to recover the lost movement, but obviously, basically early in the year and as a result of the disruptions from March into early April. So we're working with MACA at the moment to bring a larger tick unit that should land on the ground early in the third quarter. And obviously, some higher material movement we're aiming to, as we flagged in the quarterly, still hit 60 million tonne total material movement. And that's so that we secure future budget years ounce production. So that's basically how we're trying to navigate from the situation we're in at the moment.
Yes. Okay. Great. And then talking about MACA, how are things progressing with the contractor after the issues in December, are you finding that they're able to get the personnel on site and conditions are improving in terms of availability of machinery and those sorts of things. So do you see any impacts for the remainder of the year or everything looking like it's running pretty smoothly.
Look, a vast improvement than where we were 3 months ago. We've had very good engagement from the senior executive level of sand and MACA. I think as we flagged in the last quarterly call, we were anticipating a large cohort of people coming across from 1 of the nickel operations that was going to shut down that occurred really, we started to hit full labor numbers through Gruyere. And really, that was the key constraint to lifting operating performance. We started to see some very good results in late February and early March. And unfortunately, the rain events, it's really now of that progress. We're still getting things up sort of full crews back in at the moment, but that's just the logistics again people in. But I think it would have been nice to have no disruptions in March, and I think we could have been speaking pretty positively at that point of those issues behind us. Unfortunately, because of the rain delays, we've got to get ourselves back into stride, but I'm confident that we will. And we lot of sort of senior management changes on the site. We've got a new GM there as well. Russell Coal has been a fantastic job navigating us through the rain event.
Yes. Perfect. If I could just ask one last one. With the longer route to get consumables to site. Are you able to give a little bit of a guide as to what that means in terms of dollars per ton cost to the site?
Look, at this point in time, I really don't have numbers on that. Obviously, there are some higher transport costs. But clearly, it's the right thing to do relative to not operating. We're also likely to incur some one-off costs, sees potentially a few million dollars in road -- public road and think that we'll be contributing to reinstate the access along the Great Central Highway. And we're very actively working with local community and labor and Shire and what have you to get back up and going as soon as we can.
Your next question comes from Al Harvey with JPMorgan.
I know you said you didn't really want to talk about M&A, but just wondering if you can give us a high level view just around what your M&A framework is. Any metrics you used to assess opportunities and particularly thinking about geographic exposure that you guys are comfortable with?
Look, I guess first strategic filter we look at is assets that make money. That's amazing how kind of business is about half the opportunities that go around. I think probably from things that we've looked at in the past and investments indeed that we've made. We're willing to look at anything from let's call them advanced stage exploration projects through mine development, of course, operating assets, probably being first price. We certainly look at all the Aussie assets that may be available. And, let's say, North America, so Canada and, let's say, the mining-friendly jurisdictions of the U.S. We really have no interest in Asia or in a Safari to Africa or other higher risk destinations. Probably that wraps it up. Is this kind of a high-level overview.
Sure. And you did just mention before, there's been some changes to senior management on site Gruyere. Can you just give us a bit more elaboration there and what's changed and why that's happened?
Look, yes, we've got a new mining manager, a new general manager on the Gruyere side of things. I think there's a very strong leadership team now at Gruyere. And on the mining contract has -- can quite a number of changes through those -- through the team and brought in I mean, MACA is now been quite bytes. So peace is bringing in I got a lot of more senior people into that organization to lift the performance.
Your next question comes from Daniel Morgan with Barrenjoey.
Duncan and team, can I just inquire about the state of the Great Central Highway please? Where exactly if you were to try to orientate someone, how extensive is the damage and where is the road usable to? And then how long is it in your expectation before it's back up and fully serviceable?
Look, I guess there's 2 main areas of closure. So both east and west of the community of Cosmo. There's a section that's basically flooded to the east of Cosmo and there's a section that's very hobby to the west of Cosmo. The Labor & Shire has jurisdiction over the road, as it closed heavy traffic between labor and the Cosmo and the road east from Cosmo is basically close to all traffic. I think it's probably got to be early May, mid-May -- sometime in May, before the road gets opened. Obviously, that will be determined by the shire, but we are actively working at the moment and filling in those areas of flow and the pot holes. And I suspect there will be a progressive reopening of the road initially to full drive traffic and over time, larger equipment right through to heavy vehicles and oversize slides.
Your next question comes from Alex Barkley with RBC.
I appreciate you said you can't really talk about costs at this stage of rerouting all of the supply. But given all the alternate supply and no difficulties there, are you going to, in any way, be production limited, perhaps maybe not acquiring as much of the consumables and inputs that you need?
I don't believe so, Alex.
Yes. Okay, sure. And in the release, you talked about getting to 60 million tonnes for the year. I think you gave that as an absolute figure. Was that based on bringing the extra excavate from MACA, because I thought 60 million was sort of the rate you wanted to get to, but you're getting to it for the calendar year seems pretty strong given issues to date. Is that right? You want to get there and it's contingent on that excavator coming in?
Yes. So the MACA, have a 600 tonne face shovel that they have available, and we're looking at bringing that in roughly July. And we'll step up the margin rate in the second half of the year, and we'll recover the shortfall that we have at the moment.
Okay. How long is that excavator coming on site? Is that just a recovery thing? Or you don't -- do you consider you need it to sustainably be at the tonnage rate you need it?
I guess it's fair to say yet to be determined. Having got exercise, we'll obviously run a strategy of the week a bit longer or do we drop back to a lower commitment rate. These larger machines tend to be more productive, so they also kind of at a lower unit cost. So we need to run the math on doing that.
Okay. And a final question. You talked about Golden Highway, the new mine may be producing 2026. Are we -- when could we expect the study around that? And construction, I imagine sort of 2025. Is there any CapEx number you might be able to point us in?
Look, I guess we sort of manage internally is like a feasibility study level of work. I mean most of that's already done. I mean it's more working through the details of the environmental approvals in terms of being able to get it into production. I mean, ultimately, we'll just communicate as part of our annual guidance and outlook kind of updates. As I said, we see it coming in 2026. Start-up capital, has been relatively nominal in net of the local site infrastructure offices, that kind of stuff and depending on what we do with roads, we may need to construct a small section of Uro. So it's not a capital-intensive project. And I've got to work through some of those details internally at this point in time.
The next question comes from Matthew Frydman with MST Financial.
Sure, Duncan and team. If I could just jump back to that high level discussion on M&A. Can you remind us of the company's view on balance sheet capacity in order to fund acquisitions? Obviously, you've got some pretty long life and stable cash flows there at Gruyere. So how does that drive your thinking about, I guess, the upper limit of leverage that you're happy to have on the balance sheet in an acquisition scenario.
Look, I guess, currently, as we've disclosed, we have a $150 million debt facility. And I mean, the details are in the quarterly of $146 million of cash on hand. Obviously, those could be part of the mix of any transaction. But presenting on a specific transaction that there could be different component underpinned by actually by Gruyere and any assets that we may accumulate.
Yes. Got it. So you've got $150 million today, but clearly willing to take on more debt if the right opportunity presents itself.
Every case needs to be looked at on its individual merits.
Yes. Got it. And then secondly, obviously, you're very clear in looking at things through the lens of shareholder value creation, obviously, very important. Can I ask how you think about assessing operating versus nonoperating interests? And also similarly, the different jurisdictions that you mentioned, how do you think about the value creation that you need from going to a new jurisdiction or taking on a nonoperating interest versus operating interest? Do you need to see a higher return in certain scenarios. And I guess, how do you account for the different risks in those various scenarios?
Look, JVs versus non-JVs, I don't get down the caliber of management teams as to whether that is a risk or actually for. As I said, we're really only playing in low-risk jurisdictions. So I probably don't see much difference between Canada and Australia.
I guess the difference is that it potentially requires additional sort of management overhead to manage a different time zone. And also, I guess, from an equity market perspective, real or not, there's a perception that Australian management teams haven't been very good at acquiring North American assets and again, whether that talks to management capability or the quality of the assets or whatever the risk profile is. The perception is there's risks around it?
Yes. So look, I agree with you. There's been the universal model is going into North America, buying, let's call them, renovate a special underground assets, and putting Aussie management over that. And that model clearly hasn't been successful. We don't have a huge management team in Australia to go and stick into an asset somewhere overseas and do a turnaround. So we don't even bother looking at those kind of things. We really look at the lens of how any opportunity overseas as a general comment and the management capability rather than thinking that we can go and tell people on the other side of the planet to change mining method culture and everything else because that's really difficult to do.
Your next question comes from Hugo Nicolaci with Goldman Sachs.
I just wanted to come back to guidance and today kind of highlighting that we're now looking at the low end on production. But I go back to when that guidance was set in January pre rain. You highlighted it was reasonably conservative and that you being conservative around getting labor back at the mine and kind of the timing of when the third pebble crusher was going to ramp up. So is there still that same level of conservatism, and we're really just factoring in the rain impact to get to the lower end to talk to today? Or have we started to put back in some of those things in terms of labor availability and otherwise and the rain impact is potentially a little bit bigger?
Look, the rain impact is clearly huge. I mean we've really plan away a month. Clearly, we can't afford to have another major disruption events of any form. So that's probably the risk to guidance. I think we are comfortable with where we are now in saying that we think the labor issues are behind us. We're still at that point where we clearly need to demonstrate operating performance. The early indications are that the pebble crusher is going very well. And as I said in the narrative, while we did the presentation, unfortunately, with the rain event, it means that we're not able to seat here now. I can tell you that we've ticked all the boxes because we've lost March. But I think that's where we would have been if we had -- with no disruptions.
[Operator Instructions] We are showing no further phone questions at this time. I'll now hand the conference back to Mr. Hughes for the webcast questions.
Thanks, Melanie. A few questions on the webcast, but I think most of them have been addressed. There's 1 question from Bill. He's just asking, do you have a feel for when you will recommence exploration drilling following the rain event?
So Yamarna basically getting going again now. We got the other. Well, we actually gave a lot of the amount of fuel across to Gruyere and pulled all the rigs out and we get bogged in the Bush anyway. So we've solved that issue now with the supply chain coming through Gruyere and those drill activities are getting going. And it's still pretty boggy out the bush, but the guys are getting going early with the diamond rigs. Queensland also been heavily impacted, but I anticipate we'll probably get coming at mid-year. Malina, we had a big heritage survey planned. Unfortunately, they got flooded out. They just done that recently, but it's set us back probably 4 to 6 weeks. And I think as we indicated in the quarterly, Alta became about the only place in Australia that wasn't flooded. So the team's got deployed up there, and we probably did some work there earlier than planned in doing infill soils and what have you. So advancing that towards a already target. Hope that we actually get to draw some holes in Delta in the second half of the year.
Thanks. I'm just checking the webcast. I think that's everything covered. So I'll quickly hand back to you, Melanie, to see if there's anything else on the phones?
We are showing no further phone questions at this time.
Thanks, Melanie. Thanks again, everyone, for tuning in. That brings our call to a close. I guess I'll just close with, despite a long interruption from unusually sustained rains during the quarter, the operation and the company remain in good shape. Very happy to go to site yesterday and see what a great job they've done in getting things up and running. We look forward to ramping up seeing the target rates that we were hitting in February and early March before the heavens opened. Thanks. See you next time.
That does conclude our conference for today. Thank you for participating. You may now disconnect.