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[Operator Instructions] I would now like to hand the conference over to Mr. Matthew Collins Corporate Development Officer. Please go ahead.
Thank you, and good morning to everyone on the call. On the call today, we have Mark Williams, Red 5's Managing Director; along with Chief Financial Officer, Patrick Duffy; and Chief Operating Officer, Richard Hay, who will present Red's fourth quarter results and FY '24 guidance referencing the slide deck that was released to market this morning alongside the quarterly report. As explained by Ashley, there will be time for Q&A at the end of the presentation. And I'll now hand over to Red 5's Managing Director, Mark Williams, for opening remarks and our Q4 results.
Thank you, Matt. Red 5's flagship asset is King of the Hills Gold mine. If we can move the slide along please. Thank you. Red 5's flagship asset is the King of the Hills Gold mine, which has a ore resource of 4.7 million ounces and an ore reserve of 2.7 million ounces, putting the project as one of Australia's largest[ endeavored ] gold mines with an amazing 15-year life of mine. To match this ore reserve, King of the Hills has a significant processing facility, which is currently running at 5.5 million tonnes per annum, and we'll talk about this performance in more detail later in the presentation. Red 5 also owns the Darlot Gold Mine, which has transitioned into a satellite mine, delivering it's ore into King of the Hills. This has been a real success story, which, again, we'll hear more about during the call. To recap, division that we had in 2017 to effectively combine Darlot and King of the Hills from a production stance is working extremely well. What we've been able to create in King of the Hills is a strategic regional processing hub where King of the Hills processes ore from three mining centers, King of the Hills open pit, King of the Hills underground and Darlot underground.
Moving on to the next slide. As part of the Board renewal process, I'm delighted to welcome Russell Clark and Peter Johnston to the Red 5 Board. Peter is the new Chair -- Sorry, Russell is the new Chair, Peter is a Non-Executive Director. Both Russell and Peter are very accomplished directors with extensive industry and governance experience.
Moving on. A refreshed focus on safety by the whole team has very pleasingly led to a much improved safety performance. We have had no recordable injuries for the past four months. This has resulted in a continued reduction in the 12 months TRIFR rates, down to 9 compared to 15 this time last quarter.
A bump at June, quarterly performance produced 61,705 ounces. This came on the back of all three mines performing extremely strongly with the process plants steadily increasing its throughput as a result of previously implemented changes and changes made within the quarter. I'm pleased to say this strong mining performance has continued into FY '24, albeit very early in the year so far. During the months of May and June, the process plant saw days of regularly achieving over 700 tonnes per operating hour, which is the equivalent of a run rate of approximately 5.5 million tonnes per annum. This, again, has been a great new story. We've achieved this run rate well ahead of our [ planned ] timing, which was previously in the second half of the calendar year. The June quarter all-in sustaining costs was very good at $1,690 per ounce, contributing to a total of $45.9 million of cash and bullion in hand at the end of the quarter. Red 5 also paid $22 million of bank debt during the quarter, leaving a total of $127.8 million about outstanding debt as of the 30th of June. During the second half of FY '23, I'm delighted that we've done what we said that we would do. We gave guidance at the upper end of production and in the midpoint of the all-in sustaining cost range, delivering 102,574 ounces at an all-in sustaining cost of $1,837 per ounce.
Moving on to the next slide, I'll hand you over to Russell, who will take us through the operational performance in more detail.
Thanks, Mark. The June quarter has been a very successful operational period for the -- for Red 5. We're mining at all three of our mines exceeding their all production targets and building significant [ raw ] ore stocks. Having the additional [ raw ] ore stocks allowed us to prioritize the highest grade available to the processing plant during the quarter, leading to a record 61,705 ounces produced. This allowed us to meet our guidance of achieving 103,000 ounces for the full half year in FY 2023. The KOTH processing plant achieved a such change of sustained throughput rates in May and June as a result of the TSF 5 being fully commissioned by May and the mill discharge grades further opened up to have all 18 discharge grades at 30 millimeters plus 50 millimeters discharge ports. In June, the long sustained periods of throughput rates exceeding 700 tonnes per hour were maintained, demonstrating the ramp-up to approximately 5.5 million tonnes per annum is well underway. With June being a record total throughput of some; 47,000 tonnes, producing 24,003 ounces. Several smaller improvements were made during the quarter that have also contributed to enhanced stability of the mill throughput, including additional cyclones and increased drive motor size on the mill feed conveyor. Moving to the next slide, previous slide,thank you. February 2023 was the month that the open pit first exposed the main ore body, a major inflection point for Red 5, which was followed quickly by the KOTH underground operation, making big improvements in productivity and grade from March 2023 onwards. Combined with the continued solid performance from Darlot, all the three mining centers contributed to the success of the overall June quarter performance, rounding out the vastly improved operational performance through the second half of FY 2023. This success provided $50.6 million of operating cash flow in the June quarter. Darlot is now well established as a reliable and profitable trucked to KOTH satellite mine with 183,000 tonnes at 2.87 grams per tonne mined in the June quarter. Having had its cost base successfully and significantly reduced over the last 6 months, Darlot is now a far more efficient mining operation and is set up for a profitable FY 2024 and beyond. The KOTH underground has also demonstrated consistent monthly production at vastly improved tonnages and grade with 266,000 tonnes at 1.7 grams per tonne mined in the June quarter, transitioning into a profitable mining center, assisted by the very low processing unit costs that lower the overall cost per tonne for the KOTH underground mine. Newly developed nonremnant mining areas in the Regal, West and East have been pivotal to the KOTH underground turnaround in combination with an enhanced focus on team work with the Red's contract partner. These recent results have been underpinned by the strong commitment to investment in drilling that has produced positive underground results over the preceding 12 to 18 months. The KOTH open pit had an excellent quarter with over 1 million tonnes of high-grade ore mined at 1.23 grams per tonne, underpinning the baseload high-grade ore crushed to the mill during the quarter. As can be seen on our next slide on Page 8, the Stage 1 open pit reached the 5205 RL bench by the end of the quarter. The deepest point in the pit adjacent to the diminishing pit lake in the center of the photo, we are currently finishing off the 5225 RL bench with the 5215 and the 5205 RL benches provided in the September quarter ore supply. As can be seen on the right-hand side bar chart, the next 80 meters of vertical extent in Stage 1 secures the high-grade open pit ore supply through until FY '26, when the transition to Stage 2 baseload ore is scheduled. Stage 2 pre-strip mining commenced in June, located at the Brown Rock top of photo. Stage 2 will contribute relatively low tonnages of high-grade oxide ore until FY 2026, where the main ore zone is scheduled to be exposed providing the baseline open pit high-grade ore. Stage 2 high-grade oxide ore is important for processing, making up approximately 5% of mill feed to maintain optimal viscosity levels, which in turn assist high mill throughputs. Although manning levels contributed to lower total tonnes moved for the quarter, Red's contract partner has been successful in improving staffing levels by the end of June with much improved mining performance being achieved towards the end of June and into July, ensuring ongoing consistent ore supply in FY 2024. I'll now hand over to Patrick to discuss Red's financial performance on Slide 9.
Thanks, Richard and congratulations to you, Andy and Craig [ Hatch ] on profitable quarter and excellent results. The 63,000 ounces produced for the quarter has enabled us to improve our financial position significantly. As of 30 June, our net debt position improved by $45 million during the quarter and is now down to $82 million at the end of June. Our cash and bullion balance is at a healthy level now at $46 million and is after having paid $22 million of debt against our debt facility between the June quarter. Our operating cash flow for the quarter was $51 million. This is an adjusted amount taking into account supply payments that were outstanding from the prior quarter of $23 million and it demonstrates certain cash flow potential at King of the Hills consolidated with the three mines and going forward.
This has all led to a significant improvement in our balance sheet and provides us with a very strong platform for FY '24. Pleasingly, our trade creditors were all working down normal trading payment terms at the end of June, and we will -- are now well placed moving forward. Looking ahead, it is our intention to try to prioritize all excess cash flow for FY '24 to accelerate the paydown of the remaining debt facility with the objective of refinancing the debt into a corporate facility with a bullet payment at the end of -- in the second half of next year. Moving on to the next slide is our guidance for FY '24, which is of 195,000 to 215,000 ounces of gold production at an all-in sustaining cost of $1,850 to $2,100 per ounce with growth capital of $40 million to $46 million. This compares well with our production for the second month of FY '23, which was 103,000 ounces at an all-in sustaining cost of $1,837 per ounce. Significantly, as Richard talked about, we have improved -- have managed to see a step-up in process throughput in the process plan. And looking forward to FY '24, operating at a level of 5.5 million tonnes per annum and being fed by the three gold mines, the King of the Mills open pit and underground mines and the Darlot underground satellite mine. Open pit mining rates will remain consistent with mining rates for the last four to five months since we reached the contact in February and completed the pre-stripping of Stage 1. Mining Stage 1 ore body will continue throughout FY '24 and into FY '25 and the Stage 2 cutback of the King of the Hills open pit has already commenced and will go through all the way until 2030 as we progressively work our way deeper into the southern pit and work our way towards the northern end of the open pit during our five stages of the open pit mine plan through to 2037. I think what was lost in some of Richard's presentation was the outstanding performance of Darlot during the June quarter. And we then are more bullish now with its expectation to operate for at least two to three years at Darlot at current gold prices and potentially beyond. The efforts we've made to reduce the cost base at Darlot, which has been a significant cost reduction to reposition it as a satellite underground gold mine plus the mining development that was completed in January this year has made a significantly higher grades and more profitable ounces from Darlot. On that positive note, I'll hand it over to my colleague, Matthew.
Thank you. Next slide, please. Thank you. The final slide continues to demonstrate if you asked about the opportunity we see in Red 5 as we move from the production into steady state profitable operations. This chart compares the enterprise value to ore reserves for Australia's mid-tier gold producers. Today, Red 5 remains valued at approximately $300 per ounce. The two comparison companies we routinely point at are Gold Road been three to four years ahead of [ Red's ] project development and operation and Capricorn at a similar point in its operating life to Red, both sitting at circa above $600 per ounce. For Capricorn this includes reserves outside of its current operating assets. With Red's operating cash flow now positive and the balance sheet building a cash also, [ debt ] also reduces, we consider Red well positioned to build further balance sheet strength moving into FY '24.
Next slide, please. That is our final slide for today. Before I pass over to Ashley for Q&A, I'd just like to remind everyone that you can subscribe to our mailing list via the website and also encourage you to follow us on LinkedIn and Twitter for regular insights as to what is happening within the country -- country -- company.
I'll now hand back to Ashley for a Q&A on the teleconference.
[Operator Instructions]
Just a couple here on guidance. $6 million that's sort of earmarked for Stage 2 of King of the Hills that cut back there. Can you maybe state at or sort of split evenly across the quarters?
Split evenly across the quarters.
Large negative noncash adjustments you've had over the last couple of quarters.
There is a small amount, not couple of differences. Obviously, inflation continues to impact the mining industry and roughly at a global level, with consumables, et cetera. And in the all-in sustaining costs, we also have a lift in the TSF 4 that is in the second half of part of the all-in sustaining costs and partly, we've had to bring forward the [ TSF ] because of the now going up to 5.5 million tonnes compared to what we had previously issued. So I think it's about $6 million to $8 million budgeted within the all-in sustaining costs of TSF 4 in the second half of the financial year.
Yes. Thanks, Patrick, and you had sort of a negative $14 million adjustment this quarter. What can we sort of expect for the forthcoming quarters?
We will continue to grow certainly in the low-grade stocks on the [ ore ] pit as we continue to mine and grade stream to the plant. We'll continue that operating mode. So it's fair to say that there will be continued growth in inventories.
And then just any sort of major planned shutdowns for the year, which sort of quarters should we expect those in?
So we can completed the first one scheduled for late October, early November, followed by the -- there's now one in rates. That's one of the things we're trying to get an understanding of at these higher throughputs below wear rates and timing of scheduled [indiscernible].
And also just what the bullion component cash position is?
Yes, essentially it is $15 million of restricted cash -- and I think we were at about $9 million of bullion at the end of June.
There are no further questions from the teleconference currently. I'll now hand [Audio Gap]
A few questions through from the webcast as well. Some are similar. So excuse me if I don't answer your particular question because they've been covered the grades, about reserve, we maintained same figures in FY '24 guidance is based on the previous version of resource models from almost a year ago. There is likely to be a change in estimation parameters. Given the period of actual production performance, we have now seen at King of the Hills.
In simple terms, the -- what I mentioned in the presentation was that during the June quarter, we had a bumper harvest of the all three mines producing over there, ore tonnages that actually allowed us to raise stream for the full quarter, which allowed us to put higher grade than reserve, as you've noted, through the quarter. The best way to look at it going forward for FY '24 is a steady, steady approach to operations. And if you add the March quarter and the June quarter together, it's more reflective of the go forward for FY '24. And the grade will more than likely drop back from the June quarter.
Second question for Patrick. When will Red be debt free and hedge free?
2026. And we have quarterly payments, the next payment is September, for $4 million, so relatively modest amount. Which is the function of the debt, it flows through till September '26 as well. We do have 311,000 ounces outstanding at the end of June which is in the quarterly at an average price of $2,523 per ounce.
Probably following on -- a short question following on the cash position and our debt position. I heard somebody Red 5 will become a dividend share. Is that going to happen, if so, when?
Yes, good question. So I think our intention is to get to that point. First thing, as I mentioned, is our prioritization to reduce the debt that we have. There are constraints on capital distributions under our projects finance facility, which is normal, much of that is a corporate facility would allow that to happen. So the intent is one first of all, structure that debt. And then have the options around grow capital distributions from operating cash flows and future.
Questions on the phone around the costs and the production levels and just how they compared to quarter 4, the comment from Richard both in per cubic meter and total dollar costs.
Yes, we're confident.
From [ Tyson Kessel ], do you expect trade creditor payments to be recurring, given some of the big ones seen in the March, June quarters, $30 million and $23 million?
Yes. So as stated as we've got to be at a position now where all credit is recurring. And obviously, there has been some in January and February this year, with lower ounces than required to pay those, pay our costs, but since March with our current ratio which is by book assets to liabilities sitting at 1.4 which will be evident in the annual report. Main creditors, current and start building out cash from here.
Q4 saw very strong growth and an ability to grade stream quite aggressively that will normalize over FY '24 to maybe H2 FY '23. We're fortunate to have a strong, strong production period and being a sweet spot in the pit for the more part of Q4.
We do have obviously four levers. So we have -- tried to ensure we put ourselves in the best place and potentially do better in FY '24 so, obviously the key levers, one is the process plan. The open pit has proven -- demonstrated what can be done out of -- on the main ore body. And we just highlighted Darlot has had an excellent quarter and well positioned for the next couple of years, again, benefiting from the lower cost base, we've been able to aggressively reduce costs. And finally, King of the Hills underground, which has taken a year to ramp up, again, impacted by COVID like the open pit but also just the challenges of tracking and putting together a high-quality team with great leadership on the ground now.
And now they're going to these fresh areas, Regal, Central, East and West starting to see really very good grades coming out of underground so, we're quite bullish looking forward and guidance we have been cautious and making sure we don't have any slipups, but also giving ourselves opportunities to perform really well in time.
So I think we'll follow up through that is, again, from Brent, can you outline to continue utilizing grade streaming as you did in the June quarter to lift grades as and when needed?
I think I'll just summarize that. I think we certainly will take that opportunity when it presents itself which it did in the June quarter. However, when we -- the view that we have for FY '24 is more akin to taking the second half of FY '23 and normalizing that over the financial year. So again, in summary, we will certainly look to grade stream if that opportunity presents itself for what we go forward is what we believe is a realistic achievable guidance that we want to achieve. And if possible, overachieve of course, as you've heard that they've hit their [ stats ] on site earlier this week and with some visitors and the feedback is tidy, running extremely well, very professional, competent team who've got a spring in the step [indiscernible].
Thanks, Mark. One point to support that in that through March being circa 10% higher open pit tonnes from the main zone. And that's on the assumption that we see that continue through FY '24, we will take that opportunity. But until we've got 6 to 12 months of really good reconciliation data, we're making sure that we with our forecasting going forward.
And probably a final question from the webcast for Mark. There's several on AFR, as Red 5 being approached by Genesis for M&A in the [indiscernible].
What we can -- is delivering the guidance safely, cost effectively and efficiently. As we've got three excellent -- is a strategic regional processing hub at King of the Hills which has really hit it up, particularly over -- and had an average run rate per annum of 5.5 million tonnes per annum and will be focused on hopefully, cost effectively pay down the debt as quickly as we can and get into a refinancing position in the second half of '24 calendar year. So that's really what the team is fully focused on. And through that, we believe that we'll deliver strong shareholder value.
We'll close the webcast questions at that point. Just from the company and management, I'd like to say thank you to everyone who's dialed in or logged in for today's results call. We look forward updating the market on our full year results in due course and keeping the market informed as we move through FY '24. Operator, that ends today's call. Thank you.
Thank you. That does conclude our conference for today. Thank you for participating, and you may now disconnect.