Gold Road Resources Ltd
ASX:GOR
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Gold Road Resources Ltd
Gold Road Resources has upheld a commendable safety record at Gruyere, achieving over 1,000 days without a lost time injury (LTI). However, gold production in the December 2023 quarter decreased to 74,659 ounces, a drop attributed to mining underperformance and lower-than-anticipated ore mining. As a result, all-in sustaining costs rose to AUD 1,973 per ounce, driving the cost outside of the annual guidance range by AUD 2 per ounce. The quarter closed with a substantial cash position of nearly AUD 150 million and no debt, yet free cash flow saw a significant reduction from AUD 52 million to just under AUD 14 million compared to the previous quarter.
Recruitment challenges and labor issues, particularly over the holiday season, compounded the production shortfalls. Gruyere faced difficulties with its expanding mining fleet, resulting from a lack of skilled personnel, which impacted their ability to achieve production targets. The situation was exacerbated by higher than usual leave during the holidays among employees. Consequently, the company processed lower-grade stockpiles instead of the higher-grade ore planned, which directly influenced the reduction in the mill head grade and total gold production for the quarter.
Strategic holdings, such as the 19.9% ownership in De Grey Mining, remain valuable with these assets valued at approximately AUD 440 million. Exploration and definition drilling across the company's diverse portfolio holds promise for future production, with specific focus turning to projects like Gilmour, where drilling is slated to commence in 2024 and could provide potential value to operations.
The outlook for Gold Road Resources includes extending the mine life beyond 2032 through the recommencement of exploration below the current Gruyere open pit. The annual update reported reserves at 3.67 million ounces and mineral resources at 6.04 million ounces. With a positive note on gold recovery rates, hitting around 93% due to improved processing plant practices, the company is focused on increasing efficiencies and resource growth. Drilling in new areas such as the previously unexplored stratigraphy at Yamarna is set to become the focus for 2024, aiming to bring these assets to mine-ready status.
For 2024, Gold Road provides a cautious production guidance of 300,000 to 335,000 ounces at an attributable all-in sustaining cost of AUD 1,900 to AUD 2,050 an ounce, reflecting the increased waste movement and investment in infrastructure such as the pebble crusher. The company is gearing up for a significant increase in mining and waste movements by adding new equipment to their fleet, which is expected to support the planned output increase. This guidance takes into account the ongoing challenges and the need for a catch-up in waste mining early in the year, showing a realistic and measured approach to projecting future performance.
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Thank you for standing by, and welcome to the Gold Road Resources December 2023 Quarterly Results Call. [Operator Instructions]I would now like to hand the conference over to Mr. Duncan Hughes, General Manager of Corporate Development and Investor Relations. Please go ahead.
Thank you, Lexie. Welcome, everyone, to our December 2023 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. Those 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 December quarterly results. Gruyere continues to operate safely and reported no lost time injuries during the quarter. Gruyere is now over 1,000 days LTI-free, a great result from the operation. Gold Road's 12-month LTI frequency rate is 1.9 and that's significantly below industry average.As released at the beginning of January, the December quarter saw gold production from Gruyere of 74,659 ounces. The all-in sustaining cost was AUD 1973 per ounce for the quarter, higher quarter-on-quarter largely due to the lower gold production in that quarter. The low gold production is largely the result of mining underperformance and lower-than-planned ore mining, something the JV partners and the mining contractor are working hard to resolve. Despite the strong spot gold price during the quarter, we sold less gold and free cash flow fell from the AUD 52 million generated in the September quarter to just shy of AUD 14 million of free cash flow this quarter. We closed our quarter in a strong position with the shy of AUD 150 million of cash and, again, no debt drawn. The lower quarterly production resulted in Gruyere delivering to the lower end of our CY 2023 guidance at 322,000 ounces. This was delivered at an attributable all-in sustaining costs for the year of AUD 1,662 per ounce. That was AUD 2 per ounce outside of our annual guidance range. 2024 will see continued work on the Golden Highway, bringing it into production from 2026, but we'll also see a return to drilling below the current pit with the aim of extending the resource and reserve.Our strategic investments continue to hold good value. Following a placement in De Grey Mining in early October, we returned to our strategic holding of 19.9% of De Grey. And these investments are worth around about AUD 440 million today. We continue to explore across our exploration portfolio in Australia with drilling at Mallina completed and resource definition drilling is set to commence at Gilmour in 2024.I'll now hand over to Duncan Gibbs to talk through our quarterly results in more detail.
Thanks, Duncan, and thank you for joining us today. Gold production for the quarter was clearly below our expectations with production impacted by mining underperformance. Gold production decreased quarter-on-quarter, largely a result of mining less ore tonnes, particularly late in the quarter. As a result, head grade was down due to the processing of low-grade stockpiles rather than the planned higher grade [ runner mine 4 ]. Average grade mined of 1.2 grams gold for the quarter was lower quarter-on-quarter, reflecting the areas available for mining and mining practices resulting in higher-than-desired levels of dilution. Mining early in the quarter started reasonably well with MACA mobilizing new equipments in line with plan and promising results early in the quarter, delivering against daily targets. That improvement was short-lived and largely driven by insufficient personnel numbers for the expanding mining fleet with impacts to drill and blast maintenance and operators.Recruitment, of course, in the market has been challenging over the last year across the mining sector. With Gruyere's expanding mining fleet, we are likely feeling a greater impact than others. Despite repeated assurances from MACA executives for the workforce issues were under control, clearly they were not. The labor issues were particularly accentuated over the Christmas and school holiday period with high levels of approved and unplanned leave. As a result of the tonnes ore mined in the pit, lower rate stockpiles continue to be blended with mined ore through the process plant, resulting in a lower mill head grade of 1.11 gram per tonne, an 8% drop in grade that directly impacted from the gold ounces produced. Ore tonnes milled were approximately 2.2 million tonnes, which was also lower in quarter-on-quarter, driven mainly by processing plant availability, and there's no really individual issues driving that. Gold recovery, I guess, was a positive with processing plant continues to show higher levels of the recovery than we past modeled, sitting at around 93% quarter, really reflecting improved operating practices in the plant.Construction of the Pebble Crusher was completed on schedule in early December and normal operation of the Pebble Crusher commenced in early January with early indications being that it is operating to expectations. All-in sustaining cost was higher quarter-on-quarter at AUD 1,973 per ounce and largely attributable to the lower gold production as well as increasing waste movement. Gold revenue benefited from the strong gold price, but was lower quarter-on-quarter, a result of the lower gold sales. Quarterly corporate all-in costs were AUD 2,390 per ounce.Turning to annual guidance for 2024. We're placing that at 300,000 and 335,000 ounces on a 100% basis at an attributable all-in sustaining cost of AUD 1,900 to AUD 2,050 an ounce. As we have previously flagged, the rate of waste mining needs to step up to a life-of-mine average of approximately 5.5 to 1 with a catch-up now required in early 2024. There is sufficient mining equipments to deal with that at Gruyere to deliver the mining volumes as required and in fact, a new 600-tonne face shovel arrives in late May as a replacement machine and could be used to augment the fleet capacity if required.As I have indicated, the key mining performance is around the adequate number of skilled personnel. In 2024, we've been reading about the pullback of mining operations and, of course, the containment of [indiscernible] metal and alumina operations. Of relevance to Gruyere this includes one of the MACA sites and contingents of employees have already been moved to Gruyere. That's a positive development. Getting Gruyere to a highly productive, high-performing mining operation for both in MACA and Gruyere is likely to take some time, and we've considered the current situation in such guidance. Clearly guidance we are providing is lower than what Gold Road reasonably expected to be and has communicated in the past.On the cost side of the equation, all-in sustaining cost is primarily higher to the projected gold production. Sustaining costs have increased with mining totaling -- targeting total movement rates of up to 60 million tonnes, continuing construction of a TSF raise with approximately AUD 15 million on a 100% basis to be spent in 2024.At Gruyere, the underground studies continue at Golden Highway in preparation for mining in 2026. And of course, that can augment the ore supply also coming from the Gruyere pit. Within the quarterly report, we provide an update on annual resource and reserve statement with little change except for, of course, the anticipated depletion that arises from another year of mining at Gruyere. So pure reserves now as reported, sit at 3.67 million ounces and mineral resources reported at 6.04 million ounces.Gold Road also reports an underground resource below these open pit resources of 0.98 million ounces on a 50% attributable basis. As shown in this image, there's over 3.5 million ounces of largely inferred below the open pit reserve at Gruyere and -- as well as drilling that's infected the ore body about a kilometer below surface. In 2024, the joint venture will recommence exploration below the open pit to examine pit expansions and underground mining options. We would expect the resource and reserve growth to continue as a result of these programs. Now we start to look at the potential to extend from that. We'll start to look at extending the mine life beyond 2032 with this drilling.Turning to Gold Road's exploration activities. Of course, we hold a diverse portfolio of exploration properties throughout Australia now, including in Yamarna, the Pilbara and the Northeast Queensland. At Yamarna, we continued aircore drilling through the previously unexplored stratigraphy along strike at Gruyere at Hopwood and Jatz. RC and diamond drilling followed up the targets at Beefwood and Hopwood south with some extensive alterations of the zones intersected. However, results returned so far don't look like a new ore body. The focus in Yamarna in 2024 is going to shift to 100% Gold Road Resources. And our intention is to get those to the point where they're mine ready. Gilmore, which is already at the most advanced stage of processing will be our first priority. Gold Road's conceptual studies indicate that these ore bodies can deliver value by pricing as in at Gruyere, particularly if there's a shortfall in available JV ore, and therefore, surplus plant capacity. Drilling has commenced at Yamarna early last week.At Mallina, diamond drilling was completed and followed up encouraging RC results reported in the previous quarter. Drilling has intersected a large intensely altered [indiscernible] intrusive, which is within the Mallina Basin sediments. The intrusive occurs over a 500-meter strike length, which remains open, and we've seen zones of alteration of 150 to 200 meters wide. Not all samples of assayed, but the assay results to date indicates gold is predominantly associated or localized to narrow high grades late stage veins. We've identified multiple intrusive targets from geophysics of Mallina and drilling of these targets will resume once Heritage surveys have been completed.In Queensland, with the cyclone, it's obviously very well over there, and that's likely to delay the start-up of field programs. But we have a couple of solid drill targets to pursue in 2024. The new property at East Laverton, which is an unloved Greenstone Belt midway between Tropicana and Sunrise Dam, where past exploration has been limited to nickel targeting and ultramatics. Work in 2024 will be an initial phase of regional data sets, including geophysics and geochemistry along with heritage surveys so that we can get in, identify and test targets with drilling likely to be either late in the year or into 2025.I'll now hand over to John Mullumby to take you through the quarterly financial results.
Thanks, Duncan. So on the screen currently is the usual chart showing the movement in cash and equivalents quarter-on-quarter. I think at the top, sales for the quarter were AUD 113 million as a result of the strong gold price environment across the quarter and also our production. This translated to ADU 70 million of operating cash flows out of Gruyere and a free cash flow result of AUD 14 million for the quarter. We also ended December with AUD 6 million of unsold bullion and dore on hand. We'll see that across the quarter, cash and equivalents decreased AUD 150 million at the end of December. This is primarily following a one-off payment for investments in De Grey's placement in October of circa AUD 63 million and a half-year dividend, which would be returned to shareholders of AUD 11 million.Closing off with 2 last points around our financial position at the end of the year. Gold Road remains debt free, and we have an undrawn revolving corporate facility, AUD 150 million there to be utilized at any time and Gold Road's listed investments, which were valued at roughly AUD 465 million at the end of December and our value today at [ AUD 440 million ]. Thanks, and back to you Duncan Hughes.
Thanks, John. That brings our results presentation to close. Now happy to take any questions you may have and I'll hand the call back to Lexie.
[Operator Instructions] Your first question comes from Alex Barkley from RBC.
Just some questions around that 2024 guidance, particularly the cost guidance. Were there any expense from the Pebble Crusher, the tailings upgrade, some of the 2023 stuff, is that rolling into next year? Or -- and is there any other one-off costs sort of thing in next year to call out? Or is that pretty much where you think cost will be steady state if material movements hold at that level?
Look, the Pebble Crusher is completed. So other than perhaps a few spares, there's no more costs to come through on that. The single large capital item for the years that [ fails ] them, and as I spoke on the call, we're estimating that to be about AUD 15 million for the year on a 100% basis.
Yes. Okay. Just a couple of ones on exploration. At Yamarna, is there any -- I see there's still some assays pending to come back. Are there any sort of key targets that are less tested coming up? Or are you getting a bit back more to just systemically assessing the whole field? Or is there any sort of exciting targets you haven't checked yet in that build?
Look, there's still some quite encouraging targets, Alex, but they require more work for us to work through heritage issues to gain access to those. So the timing of when we get to those remains a bit uncertain. So there's one target that I think is really quite promising for the south of Gruyere, and we do want to get in there. But we've got to work collaboratively with the native title holders to do that. But as I flagged, outside of that, our major focus at Yamarna really is starting to put together a string of -- convert our existing resources there so that we have the optionality to put them through Gruyere. And there's quite a lot of value to Gold Road, if we're processing 100% ore through the plant, particularly if the plant has surplus capacity. So we're going to be pushing hard on Gilmore as the first priority to get it to that stuff.
Yes. That was sort of my last question, just following up on that. It was sort of my understanding that the JV-owned mines Gruyere and maybe Golden Highway would go through the mill. Obviously, Gold Fields has exposure to those and Gilmore might be more of an end-of-life kind of thing. You mentioned there could be potential shortfalls in the mill utilization. Is that just something that could sort of happen? It just seems interesting that you might pay the capital to develop a mine and maybe not actually have a mill to process that. Sorry, if that makes sense, I thought it was more of an end of life kind of thing, and you just throw it through the mill? Or is there an opportunity earlier than that?
Well, the highest value to Gold Road is clearly if there is surplus mill capacity. And I guess we've always looked at Gilmore or as you've expressed, to put it through later in mine life. I guess we've really got two critical moving parts as it sits right now. Once the Pebble Crusher comes online and we [ bet ] that down, I expect that's going to take a couple of cycles of mill relines to really optimize the circuit. And we'll see where we really get the plant to. So there essentially could be a bit more upside than what we are modeling in terms of plant throughput and indeed, what we've factored into the guidance at the moment that we've got kind of a high level of confidence about.The other side of things, of course, is I've talked about mining and labor and the challenges there, pretty critical that for us. But both the joint venture and MACA work hard to sort that out. But having the optionality of alternative ore sources clearly is a risk mitigation strategy for Gold Road, and that's part of the reason that we have to be driving that half.
Your next question comes from Andrew Bowler from Macquarie.
[ Just to ask ] a little bit more color about your comments about labor availability issues. Duncan, I think I heard you mention that obviously, there's been some battery metal miners that have come into a little bit of trouble and one of those sites being a MACA site. Does that get you close to full labor at Gruyere? Or is there still some hiring that needs to be done in excess of that transfer from that other MACA site?
Look, I guess it depends on the exact details because obviously, that news was pretty much off the press in the last week. We know -- in fact, there are some individuals that have already come across. It depends exactly where that lands, of course. But if the full contingent of people that are available come across it certainly goes a long way to addressing the current situation. It won't be an immediate solution in that operators, as an example, have to be trained up on the specific equipment that we've got at Gruyere. You've got to get a team headed down and working effectively and driving a high-performance operation. I think realistically, that's going to take us a little bit of time to get to that point. And we also need to understand if there's any critical skill gap within the labor -- within particularly the macro workforce for us to be able to operate. It's not just operations, of course, it spans across drill and blast and particularly maintenance as well.
And is it fair to say that your guidance for calendar year '24 was set before that, call it, a sugar rush of the incoming labor from that other site? Like does this sort of recent development bolster your confidence in the outlook for calendar year '24? Or did you really factor that in the last week?
I guess, as I have indicated, I mean, I think guidance is kind of fairly set at the moment from the current situation where we are at. And we need MACA to step up and deliver. And as I said, there are some risks around whether all of that contingent, all of that workforce is coming to Gruyere because obviously that's also a decision made by their individual employee.
No. And just last one for me, just leading on from Alex. I think Duncan also you mentioned that the Pebble Crusher looks like it's going well and there's potential for throughput above the internal plan at the moment. Can I take that to mean above the sort of stated 10 million tonnes per annum long-term goal? Or is that just more heading from the 9.4 million tonnes per annum in CY '23 up to that 10 million tonnes per annum mark sort of over the next year or so?
Yes. So look, I mean, I think you've got to be thinking we're at 9.4 million tonnes at the moment. And we've always seen getting to 10 million is kind of the target. As I spoke to, there's a couple of -- we're going to need to do a couple of relines, which changes the details of the mill configuration to really then get the full benefit of the Pebble Crusher. But the early indications are that the Pebble Crusher is operating to expectations, but there will be a tuning phase before we really know where that lands out in terms of the throughput capacity at the plant.
Our next question comes from Levi Spry from UBS.
[ Maybe ] to sort of delve a bit deeper into some of these questions. So we'll come back to the physicals in a minute. But can you go through MACA a little bit more, like what are the numbers here? Like how many people are they missing? We note that you've only just renewed the mining contract here. So I guess, probably thought things are starting to loosen up a little bit over there. How many people do they need? How far behind are they? And then we can maybe go to the physicals after that, if that's okay.
Look, the objective, I guess, was to ramp up to an annualized rate in the high 50 million to 60 million tonnes by the end of the year. We haven't got to that level. We've mobilized and effectively have all the equipment. There's still a couple of trucks to come in, but that's more about balancing all distances over the longer term. So the equipment basically is on site, and that has largely gone to schedule. But the manning or the personnel numbers have not ramped up as quickly as they needed to. And as I flagged, I mean, we actually started the quarter pretty well, and we were hitting daily numbers up at the level that we needed to. And particularly over the sort of school holiday periodand Christmas, New Year period, there was a high level of both planned and unplanned leave, so we weren't able to operate all of the fleet.And a number of unplanned outages and what have you occurred over that critical [Audio Gap].In terms of -- so where we are, it's basically a MACA personnel problem. And of course, it's not just numbers, it's having the right skills, particularly when you get into the maintenance areas for last crew and those kind of areas are probably a bit of pressure points in the sector at the moment.
Yes. Okay. So you can't quantify in terms of number of personnel.
I guess, as you probably appreciate, I don't have daily detail as to the number of personnel. But I mean, we -- effectively we're down in the entire fleet over the November, Christmas, New Year period, I mean, sometimes missing critical [ loaders ] and things like that as well. So -- and that equipment availability is driven by maintenance, of course, rather than number of units being available.
Yes. Okay. And so just thinking about the guidance for '24. Can you sort of step us through the physicals that sit behind that? And just I guess, in the context of any previous sort of short- to medium-term guidance you've given, like how we think about material movements through the year, accessing the grade, getting that -- getting the plant up to [ 10 ] at the good grade and even whether the impacts can be pushed into '25?
So look, the -- I mean, there's 3 mining areas at the moment. The main current ore supply is out of the Stage 3 pit. And I mean that -- all that ore is exposed. And in fact, the bottom of our pet is pretty much [ wall to wall ] ore. The [ PBIT ] for ore delivery this year is we have to drive the Stage 4 pit and we have to get pretty good advance rates on that, which requires not just manning but reliable, continuous operations. So it's equipment reliability piece. And then there's the Stage 5 pit cutback area, which is less material, of course, for this year's production, but we need to get that script to support the operation into the longer term. So the mining position that we've got to at the end of this year has not accelerated Stage 4 to the level that we would need to, but we were aiming to be really due to lower than targeted movement rates, particularly in the last quarter of last year.
Okay. And can I just confirm that, I guess, the total material movement budget?
Look, we're targeting to be in the high 50 million. I'd like to see it crack 60 million tonnes.
Yes. Okay. And -- but there's been no change to the mine plan or the strip ratio. It's just this year?
Well, I mean we're in a bit of catch-up mode from particularly the last quarter, not ramping up on total material movement rate and getting through stripping that results in us having more limited work areas than we would like to have.
Your next question comes from Al Harvey from JPMorgan.
Yes. Just maybe you can just step us through the underground scoping study, what options you're assessing there, news flow timing and just how you're thinking about weighing up the underground versus extending the open pit?
Yes. Look, I guess, we're recommencing the deep drilling under Gruyere as the first piece. And that's a combination of deep drilling over the period as well as if you look at the section that we provided some shallower drilling on the northern end. I think there's some potential for that to -- depending on what exactly comes out of it, there could be some opportunity to expand the pit as well as looking at underground. So I think first and foremost both of those are actually in the mix in terms of what we're looking at. Really, we've been looking at underground operations really as a mine life extension opportunity rather than something that can be brought in in parallel with the open pit.
Great. And then just following up on Mallina. Do you mind just giving us a little bit more around what was particularly encouraging about that that is quite narrow and high grade? Just kind of want to get a sense of what the go-forward plan is for exploration at Mallina is in quite an interesting area along strike from De Grey and also a few lithium projects. So just how you're thinking about that area now?
Yes. So look, certainly, what we've intersected is a very large-scale alteration system that's overprinting and intrusion. So, analogous to what De Grey isn't reporting in that area, the results that we've got to date out of that more narrow, high-grade intersections associated with kind of late-stage veins within that extensively alterated, really, the rock texture is obliterated by the alteration. So to date, as we've reported, we've got narrow high-grade intersections rather than the large bulk zones of mineralization that De Grey have been reporting. Really, it's the first target that we've tested and was driven by what heritage surveys that we could get done in the course of last year. And the guys -- in fact, girls in that part of the world have done a great job in the work programs that they actually successfully did for us last year. We've got at least 3 other targets that we can quite -- we can see off our geophysical data and we're using more of a geophysical targeting technique at Mallina to get us directly on to things. And we've got multiple other zones up there to go and drill test. But we've got to do some heritage survey and work through all of that before we can go and test the other targets. And the first target that we've tested isn't, in fact, our highest rank target, it's simply the one that we can get to first.
Your next question comes from Matthew Frydman from MST Financial.
Sure. Firstly, can I just ask, can you just give us a bit of context exactly on how you guys derive the 2024 guidance? I guess I'm thinking are these your internal numbers? Is this the JV's budget that's been set for next year? Are these Gold Fields numbers? Obviously, they haven't given their 2024 guidance yet. I think the result is probably about a month away, but could we see -- will we see the same numbers from them? Or do you expect that maybe they may give different numbers? I'm just trying to understand, I guess, how this guidance has been derived.
Obviously, we have presented in a budget, but Gold Road has taken its own view of what we think has delivered -- and as you've indicated Gold Fields is yet to put out their own guidance. Obviously, in us doing every market -- any market release that is passed by Gold Fields. But the guidance we're putting out is Gold Road's judgment based on the current mining position that we're at.
Great. Okay. And would you say that judgment was more sort of conservative than the budget of JV presented given some of these factors that have sort of been constraining the operation in the back end of last year? Or I guess, what sort of stance could you sort of apply to that -- to those numbers?
I think -- well, I mean, obviously, we have obligations to provide to shareholders factual information. So it's our -- Gold Road's reasonable best judgment as to what we think is possible this year, taking into account both the budget that's been presented to us and the position that we found ourselves in at the end of [ 30 ]. At the end of the calendar year, as you probably appreciate, in a larger organization like Gold Fields, the budgeting process goes over about 6 months, and we'll make some assumptions based on where the mine was actually at several months before the end of the year.
Got it. Duncan, that's helpful context. Secondly, you've obviously cited that all-in sustaining costs next year will be impacted by increased material movement costs, I guess, both from inflationary pressures, but also just physically moving more material. I'm just trying to sort of get a sense of how much of those increased material moving costs are going to fall into operating expenses versus sustaining capital and what you've implied in guidance there. I guess if you give it in another way, hopefully, you follow the logic here and not making sense, but all-in sustaining costs in the December quarter was basically the midpoint of what you're guiding to in 2024, and you spent about AUD 70 million in sort of cash all-in sustaining costs. But that included nearly AUD 30 million of capital your share for the Pebble Crusher and you've only flagged, I think, was it AUD 50 million [ 5-0 ] for the TSF on a 100% basis for next year in terms of CapEx, if that's right. So obviously, sort of a big quantum in the amount of CapEx that you're pointing towards for 2024. So is it fair to say that we'll see a step down in sustaining capital into 2024, but that will be offset or fully offset by an equivalent lift in mining costs?
Look, I guess the first point I'd note is that Gold Road is pretty clean in how we report our all-in sustaining costs. So we're not putting part of the mining cost into growth capital, which seems to be a fairly ubiquitous theme across the sector. Check my numbers here, but I think total mining volume by the end of the year is about 38 million tonnes. We're stepping up to targeting about 60 million tonnes. And obviously, within that, there's a bit of a need to do some catch-up with mining from the volume total moved in last year was below what we were planning to do. So that's quite a big driver in cost. I mean, order of magnitude, total mine cost is about AUD 5.Then the single large capital item for the next year is TSF raise. There obviously are a number of other components to sustaining CapEx. We have to do another small village expansion and other odds and ends, but there's nothing of great note to call out within all of that.
Yes. Okay. That's pretty clear. And yes, I agree, your all-in sustaining cost reporting is very clean. Sorry, was I right in hearing that the TSF is AUD 50 million, 5-0 on a 100% basis? Or is that AUD 15 million. 1-5?
1-5 on a 100% basis for next year and it's probably going to take us somewhere into the third quarter before that's completed.
Got it. And then just finally, you've -- as we've been talking about and you just -- you cited that the catch-up in stripping that's required through 2025, particularly in Stage 4 will elevate that material movement temporarily, I suppose. But do you expect to demobilize fleet once that catch-up is done and the mine is trending back towards life of mine strip ratio? Or is this the right level of fleet going forward as the mine gets deeper and waste dumps get further away?
Well, life mine ratio now is about 5.5 to 1. We need to push hard in the next 12 months to provide continuous ore supply and particularly obviously at a performance out of the -- out of the plant. Golden Highway becomes an important part of completing -- keeping the mills full and we're actively working on that through the study type phase and certainly targeting to get that into the plant by 2026.I mean, the strip ratio is going to stay up with a free mining fleet for I think it's about 5 years. So we're going to be holding a similar level of total mining cost, total mining volumes that I've sort of spoken to.
Your next question comes from Daniel Morgan from Barrenjoey.
I think it's fair to say that inconsistent performance has persisted and it's been a frustrating time for all involved with the mine delivering below its potential. Is this a view shared by your JV partner? Is the JV working well? Is there an opportunity to be more activist on your side or even approach a JV partner to go back to 100% and you run the whole thing as maybe it's not delivering to what you think it could do?
Well, I'd concur with your comment that it's not delivering to what the ore body should be capable of doing. In terms of Gold Fields, probably worth highlighting that there's very significant changes in the Gold Fields executive that have occurred over the last 12 months. That includes, obviously, the corporate level as well as the Australian region level. I'm hoping and optimistic that the incoming leadership is going to drive higher performance than what we've been seeing.
Is it something you would contemplate where you would take an activist role and say, will this value to be made if we go back to 100% ownership and cut them a check. Is that something that could be contemplated and create value for your shareholders?
I don't think Duncan really talked to whether Gold Fields is a willing seller or anything like that. I mean of course, we'd love to own 100% of Gruyere. And then, of course, you can be masters of your own destiny. But I mean, from where we are at the moment, the important thing is to basically work with what effectively is the new leadership is seeming Gold Fields to drive better and more consistent performance.
And how active is your role in that JV in decisions like the selection of the -- or the extension of the mining contractor MACA? Were you a very active participant in that? And can you bear more influence over the performance of that contract and the performance of the overall operation?
I'd say our role is more active than you would expect for the partner, but is not the manager of the site. I think it's fair to say that Gold Road took a very active role and a leadership role in the retendering of the contract. We certainly and I personally rewrote the comps of it to set it up for the longer-term future. We went through a tendering process. The reality is that in terms of the time you looked at pricing and risk of changing out MACA to another party, it was very hard to see, one, the economics of that working. Of course, changing out the entire mining team to the new contractor added another level of risk. I guess we're also quite optimistic that MACA, of course, is now owned by Thiess.Thiess, if you are not aware, is really the largest global Tier 1 contractor. [ Out of ] Gruyere operations, it's firmly within the central part of their capability in terms of capacity, equipment, scale of operation and all those kind of things. So from that point of view, we look to Thiess ownership as being a positive. And certainly, I've worked with other contractors that have delivered better performance than what we've been seeing. The change out risk for Gruyere was pretty significant and hard to see an economic value for us in doing that. I've also been very active in conversations with MACA executives and are more to an extent than you'd expect from a non-managing partner of the joint venture.
And sorry, last question. What happens if the performance does not lift and meet your standards? What course of action can you or will you take in that situation? Is there avenues to move to owner operator in order to better manage this productivity?
I think the contract -- like any contractor contract has all of the legal avenues that you can utilize up into and including termination of contract, but of course, exercising those rights needs to be considered very carefully because there's significant risks in changing out a contractor of the scale of operations that we have at Gruyere.
Your next question comes from Mitch Ryan from Jefferies.
Just sort of following up from Dan's line of questioning here. Given your interaction with MACA has been probably higher than you would have expected from someone in your position, are there -- what's your perception? Are there ongoing cultural issues at sites that have led to this lack of labor? And is there an appropriate focus for MACA on the site in addressing this from your perspective?
Look, I think you probably have to put things in context because, of course, MACA purchased the business of Downer. And certainly, Downer was not capitalizing their mining business. So if you recall, I spoke in June about challenges with drill rig reliability to give MACA and Thiess the new owner credit. They have actively worked on addressing the unreliable equipment, and they've bought in all the trucks and things like that, that we require. Obviously, as I spoke to during the presentation, we're in a phase where we are lifting the mining rate. That obviously means bringing in additional personnel, and we've struggled to -- or MACA have struggled to get them in at the right quality, skills and numbers, the rate we needed to deliver to our own plans and as a flag, particularly over the Christmas, school holiday period.
[Operator Instructions] Your next question comes from Paul Kaner from Ord Minnett.
Yes. Most of my questions have been answered. But maybe just holding in a bit more on that 2024 guidance and the grade expectation. How should we think about sort of open pit contribution and then the sort of stockpile contribution through 2024, I mean, specifically, this quarter wherein right now given the issues you had in the December quarter?
I think you're going to be looking at the plant head grade of being about 1.1. The reserve grade, of course, is 1.3. We don't see there's anything -- fundamentally the reserve grade is correct. There's 2 components. We're obviously blending in stockpiles of about 0.8 to get to that 1.1 grade. And with the restricted mining areas that we have got at the moment, we've got some less than optimal mining practices, which are undoubtedly creating some extra or loss in dilution within.
Yes. No, understood. And then just maybe looking at the life of mine plan, I mean, we got the staged picture in our presentation a few months ago. I mean, has that stage approach changed at all? I mean, have those physicals of those various stages changed?
No, they're still the same. And I guess, within the quarterly, we update the resource and reserve, but effectively, there's no change to the reserve and resource other than just the mining depletion of the year. And we don't see there's a need to change the resource and reserve. It's pretty mining operational factors that are driving the performance.
There are no further phone questions. I now hand it back to Mr. Hughes for the webcast questions.
Thank you very much. A number of webcast questions, but a number of them have already been answered through the Q&A on the phone. So picking aspects that have not already been answered. Larry Hill from Phoenix Gold Fund. There's a question on how long is the contract with MACA. And I think we already touched on if performance doesn't improve, are there options available to us to improve that.
So the contract -- this contract was put in place from middle of last year. It's a 5-year contract with various options to extend. Yes, of course, there are provisions within the contract where you can terminate it for various reasons. The reality is that doing so is quite challenging in terms of changing out a fleet and create other risks. Reality is we need to work with Thiess as the owner of MACA or with the MACA executive to drive our performance.
Okay. On here from Bradley Watson from Bell Potter. His question essentially is if we achieve our CY '24 plan, will Gruyere be back on track to achieve a sustainable 350,000 ounces of production through to 2032.
Look, I think it should be a 350,000 ounce mine. It's fundamentally driven by -- mining performance is a critical issue at the moment and the overall management of the site to drive delivery.
Now I'm just going through because there are lots to see what has not already been answered. There's a question here from [ Tom Lin ]. Given the heavy reliance on high gold prices at the moment, what is the company doing about reducing expenditure to maintain profitable in the assumption that gold price doesn't stay as high as it is now?
Look, I guess, at any point in time, of course, we run strategic options as to how we might react in a more subdued gold price environment in terms of the life of mine plan and what we're doing at the moment, I think it's appropriate for the current setting. But it's always something that can be reviewed by management, if necessary.
Thanks. Other questions that were already dealt with on the phone. So I'll hand back to the operator now to see if there's any more coming through from the phones.
Thank you. There are no other phone questions.
Thanks very much. Well, that brings our quarterly call to a close. Obviously, last quarter was disappointing. We have -- we're working very hard with MACA and the operator to resolve this. Gruyere is still long mine life, at least to 2032. And as you heard on the call, we're drilling beneath that to look at extending this situation. We're in a strong position for growth. Our investment portfolio is around about AUD 450 million today and hold strategic positions in companies we like the look of their projects.We are still actively exploring, and we -- our strategy hasn't changed there. We're looking for [indiscernible]. Cash flow for the quarter of AUD 14 million. Cash flow for the year has obviously been good and with average higher than that. Our cash and equivalents is AUD 150 million, and we are debt free. We did pay a dividend in October. As you all know, we pay a dividend every 6 months.Thank you for your attendance today. We'll speak to you next time.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.