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Thank you for standing by, and welcome to the Gold Road Resources June 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, Rachel. Welcome everyone to our June quarterly analyst call. This quarter, unfortunately saw processing interrupted by a tear in a conveyor belt as we announced on the 28th of June. This was an unfortunate one-off event. We have a team in place to oversee improvements to our maintenance practices, and we remain confident in our ability to deliver against our 3-year guidance. The growth outlook for Gold Road and Gruyere continue to look very promising. This quarter saw wide zones of mineralization and promising geology infected down dip at Gruyere. These initial results support our view that Gruyere's mine life will extend well beyond the current 10-year line. Happily, we also made good progress at our 100% Yamarna project with a number of new targets generated and an existing target potentially expanded. In the presentation today, we will be referring to the quarterly analyst call slides that can be viewed on the live webcast, our website or in the ASX release. On the call today, we have Duncan Gibbs, Managing Director and CEO; Andrew Tyrrell, our General Manager of Discovery; and Tony Muir, our General Manager of Finance. I'll now hand over to Duncan Gibbs to talk you through our quarterly production results.
Thanks, Duncan, and thanks for everybody joining us today. Starting with further highlights for the quarter. So we produced 53,132 ounces from Gruyere on a 100% basis and an attributable all-in sustaining cost to Gold Road of $1,659 per ounce. Our 12 months LTIFR remains low at 1.15. However, unfortunately, there were 3 lost time injuries at Gruyere, but pleasingly, none for Gold Road managed activities. The balance sheet remains strong. But as a result of lower production and a $13.2 million dividend payment paid in April, $11 million in one-off tax and royalty payments. The 30th of June, cash position reduced to $128.6 million. Operate continues to carry no debt. Happily, we saw this quarter is making some progress on the exploration front with some encouraging deep drilling down pit at Gruyere as well as some new targets on our 100% project at Yamarna, which Andrew Tyrrell, our new General Manager of Discovery will speak to later on. Looking at the quarter in a little more detail.Our total material movement improved by 1.8 million ounces quarter-on-quarter with mining of ore from the Stage 2 pit area and ore mining -- I'm sorry, waste mining from the Stage 3 pit. Strip ratio reduced slightly to 2.85:1, ore mining listed quarter-on-quarter. The mine grade fell fairly significantly quarter-on-quarter as mining progressed through the lower grade certain portions of Stage 2 pit, which was basically anticipated and grade reconciliations continue to remain good. The grade mine will increase as mining progresses through the Stage 2 pit into the Stage 3 pit later in this year and through into 2022. Stockpiles at the end of the quarter remained healthy and increased slightly to 3.8 million tonnes from 0.72 million tonnes and they're made up predominantly of oxide for materials. On the processing front, all tonnes processed head grade and recovery were all down quarter-on-quarter. The lower head grade obviously reflects the lower grade mine in Stage 2 pit. And I've stated earlier, the grade we anticipate picking up through the year. Production rates were reduced coming to the previously reported impact from a torn mill conveyor, and then a delayed start-up on the ball mill associated with a coupling failure issue. Recovery in quarter-to-quarter was lower that reflects largely the disruptive plant operations, part of which we were running with the SAG mill and not ball mill, as well as the lower grade ore, and there's a great recovery relationship between grade and recovery. We remain confident of our 3-year outlook despite what is obviously disappointing quarter. And a big part of lifting our future production rates relates to improved maintenance practices and driving up the plant availability, and it's a fairly strong dedicated team now on site looking at how we missed consistent production out of the process plant. As a result of the lower than anticipated gold production and additional plant maintenance costs, all-in sustaining costs for the quarter of 30th of June was a disappointing $1,659 per ounce. This quarterly all-in sustaining costs was slightly better than we projected on the 28th of June, owing to high throughput rates,other grades in late in the month, which resulted in slightly higher than we projected in gold inventories that's assisted with that number. Gold production for the 2021 calendar year is forecast to be within the lower half of guidance of 260,000 ounces to 300,000 ounces on 100% basis, which obviously implies a stronger performance in the second half of the year. Our all-in sustaining cost for 2021 is now anticipated to be between $1,325 and $1,475 per ounce as we updated on the 28th of June. As indicated in the annual [ count ] guidance, our processing rates anticipated to prove and corresponding with that the all-in sustaining cost should fall in the second half of the year. During the quarter, we sold 28,425,000 ounces at an average price of $2,145 per ounce. Approximately 36% of our sales were to hedge positions. Obviously, that's higher than typical, reflecting the lower gold produced for the quarter. Gold Road's group free cash flow for the quarter was negative $3.9 million versus $15 million in the March quarter. Key drivers for that quarter-on-quarter reduction in cash flow, obviously the lower gold production from Gruyere, we had some one-off payments for accrued income tax payments of $7.4 million and accrued project to date royalties of $3.5 million. If you look through those underlying one-off payments, which reflects the prior accrued payments. Our net cash flow outflow for the quarter was $0.4 million for the quarter. Our corporate all-in costs, which is usually one of the lowest in the sector was high at $2,228 per ounce owing for the lower production in some slightly higher expenditure on exploration activities during the quarter. In April, we commenced the program of deep drilling under Gruyere and the program being designed in 2 phases to the potential for economic mineralization at depth. We completed 3 holes during the quarter with another couple in progress with 2 rigs on site. We've got results in for the first couple of those holes as you can see in the slide. We see those results as quite encouraging and consistent with growth expectations. That's led us to continue into the second phase of the drill program, which we've modified slightly from earlier plans and will now be completed as illustrated on this slide. And we're -- I guess a part of that program, we'll be testing the higher grade northern shapes that we see trending up into the open pit. Pleasingly, the Gruyere open pits resource reserve update remains on track for completion later in this year. If we turn to the cash flow for quarterly -- financially, of course, the business remains strong. We remain debt free and we hold cash and equivalents balance of approximately $129 million. We paid our maiden dividend of $13.2 million on the 14th of April, and this was fully franked for the period for the 6 months to the 30th of December 2020. As waterfalls summarizes the movements in cash and equivalents over the quarter. I'll now hand over to Andrew, who can run through our Yamarna exploration activities.
Thanks, Duncan. As mentioned in the introduction, we are pleased with the progress made at Yamarna this quarter. The team continued to prioritize activities over the Southern Project area with a significant amount of drilling completed year-to-date. There were 5 rigs actively turning through the -- continuing to turn through the quarter, and we have drilled a total of 80,000 meters year-to-date. Of that, 66,000 meters is Aircore and almost 14,000 meters of RC and Diamond.As with other resource companies, assay turnaround has been slow this year, we have now engaged in our alternative lab and assay turnaround has improved considerably. Assay backlog has also been addressed, and we are now seeing a steady stream of results coming in. I'll talk further to our activities and results in the next few slides. Looking at the Southern Project area in a little more detail now. The image on the left shows the areas drilled during the quarter. Aircore are the blue dots and the red and green are the RC and Diamond respectively. We have covered large areas of first pass Aircore across Gilmour South and Waffler in the West and Ono at the northern end of that image. This work is generating multiple targets that will require follow-up RC and Diamond. Aircore drilling commenced and is ongoing in the South and is testing the fertile structural trends between Hirono and Kingston. The Earl target is located southeast of Smokebush along the Smokebush Shear zone. The first hole was drilled here during the quarter and intersected 3.8 meters at 2.35 grams per tonne gold, within a broader envelope of over 40 meters at 0.45 grams per tonne. This result will be followed up with additional RC and Diamond drilling in the coming quarters. Results in Smokebush, Earl and Gilmour South and Waffler highlights the potential of the 30-kilometer Smokebush Shear zone, which we recognize as a fundamental pathway for gold-bearing fluids. This is an area we anticipate focusing on with additional targeting and drilling. The right-hand image shows more detail from the Gilmour South and Waffler target areas. These 2 targets are starting to look quite promising with the Gilmour South showing the same geology and alteration as Gilmour as well as associated regular phenomenalism and Aircore results returned to date. At Waffler, Aircore drilling testing, the hanging wall to the Smokebush Shear has highlighted anomalous Aircore results of over 100 PPP gold over a 3-kilometer strike length, which includes an intersection of 24 meters at 1.04 grams per tonne gold from 23 meters in the whole YMAC01277. Other mineralized turns are also emerging within that area. These results are still at an early stage in white space Aircore drilling, and assay results are still being received. The initial indications are that we have a lot more work to do within this area. At Smokebush, a new geological model resulted in a number of extensional targets to test with RC and Diamond drilling. This slide shows the long projection of the drilling completed at Smokebush during the last quarter.Assay results are still awaited from this drilling. The drilling was designed to test extensions to previously defined mineralization at Smokebush and this aim and purpose of this program was to get a feel for the scale of the mineralized system present there. Initial indications from drill core show encouraging geology and some examples of visible gold have been seen in drill core earned over 3 diamond holes. Assays are still awaited. And until we have these in hand, it is hard to confidently predict the potential of the scale of this deposit. And that's where I should leave it. That is the close of the exploration update, and I look forward to providing or any additional questions you may have at the end of this call, and I'll now hand back to Duncan Hughes.
Thanks, Andrew. I'm Duncan Hughes. That brings our results presentation to a close. We'd be very happy to answer any questions you may have for us. And I'll hand the call back to Rachel.Thank you.
[Operator Instructions] Your first question comes from Michael Scantlebury from Euroz Hartleys.
Just a quick one for me on the grade profile we're seeing at the moment. So just with the -- you said that the grade mine grade was 0.87 during the quarter and was in line with expectations. And just noting that Stage 2, average grade was 1.15. I was just wondering on the question basically, are you anticipating any further quarters of mine grade being below 1 gram? Obviously, appreciating this quarter-by-quarter kind of variation just going forward.
Thanks, Michael. Yes, obviously, lower grade during the quarter than the average grade as a whole, I guess, that is the tenor of the grade in the lower part of the pit. So we are expecting it to increase as we get into the northern zone through the second half of the year and indeed going forward as we put together in our 3-year outlook. So we are expecting growth to trend up lots and don't expect any kind of sub 1-gram quarters going forward. I guess we were expecting, of course, much better mill availability this quarter and then roughly production around about 1/4 of our original guidance. So I mean, the major issue in the quarter isn't the grade thing that's caught us by surprised. It's very much driven by the plant availability and utilization through the quarter with the events that we've had well.
Maybe just a quick follow-up on, if you've got time. Just around the oxide availability from Stage 3. When do you anticipate some of those oxide kind of fee to be available for blending through the mill.
Yes. The oxide from Stage 3 really comes in next year. And I mean, it's a fairly strong part of the production for the next year. I don't have the exact numbers off the top of my head, but the kind of order of magnitude 20% or something of next year's ore supply will be offside material from that area.
Your next question is from Matt Greene from Goldman Sachs.
I have a couple just on your -- the deep drilling at Gruyere. Just firstly, how is the Gruyere JV, have you preagreed what needs to be seen from the Phase 1 and 2 drilling campaign in order to warrant further work, be it an exploration decline or further driven from surface? And then just secondly, I mean, understandably, you're targeting the North there because, I mean, clearly, the higher grades there. But is there a reason why you're not looking at put a few more holes in the southern portion beneath the current underground mineral resource there?
Yes. Look, I guess, at this stage, I mean, the purpose of the program this year is really to understand what have we got there and then from that decide the best way to drill it next year. So that's still very much the plan of the JV. I guess we recognize there is a high-grade zone on the northern end. There's a reasonable cash to starting to put some of that into resource additions. In terms of what we -- we need to make the next decision, I think even with the evidence we're seeing now out of those 2 results and the visual indications from the drill holes, it's fairly clear that the mineralized system is going to extend considerably at depth for the challenge benefits out into -- as you're kind of alluding to, that's why the best way to drill it out at that one is at to try and get a detail in early. We've yet to come as a resolution, that's the best way to do that within the joint venture. We need to get these results through and that will be part of the decision-making for next year's budgeting cycle.
Got it. And then just on the Southern portion, are you -- do you plan to have the next phase of drilling export the southern portion of the pit there?
Well, you can still see we're doing some deep drilling under the southern end of the system. I guess, broadly, we understand that the porphyry is fairly steeply dipping, but we also see as well as the northern high-grade plunging shoot, we do see some high grade plunging shoots that are more subtle orientation, and that's part of the thought process behind drilling holes 1, 2 and 7 in that plan. And we'll see how that comes out relative to our geological models.
[Operator Instructions] There are no further questions at this time. I'll now hand back to Mr. Hughes for closing remarks.
Thanks, Rachel, and thanks to those who asked some questions. I'll just close with Slide 10, a summary of the quarter. Obviously, this quarter was a reminder that our continued focus on maintenance is justified to less part utilization. We are still confident of our 3-year outlook. Partly on the growth front, we are on schedule for that reserve update second half of this year. Drilling down dip at Gruyere is delivering as expected as that's good to see. And happily, Yamarna, we're starting to kick some goals there. The business still stays strong. We're debt-free. And obviously, we paid our first dividend. So I think that brings a close to the call. Thanks again for your interest and goodbye.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.