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Ladies and gentlemen, thank you for standing by, and welcome to the Investor and Analyst Conference Call. [Operator Instructions] I must advise you that this conference is being recorded today, 23rd of July 2019. I would now like to hand the conference over to your speaker today, Jim Beyer, Managing Director and CEO. Thank you, and please go ahead.
Thanks, Rochelle, and welcome, good morning, everybody. Thanks for joining us for Regis Resources June quarter update. Before I go on, I just introduce the other players sitting around the table. I've got Paul Thomas, our Chief Operating Officer; Jon Latto, our acting Chief Financial Officer; and Wade Evans, our GM of Business Development.Look, I would note that we've put the -- we released the report earlier today and we'll make occasional references to some of the diagrams in that. The quarter has seen another very good performance by the Regis team. With gold production at just under 91,000 ounces, which was slightly less than the prior quarter, only by 0.1%. And our cash cost before royalties were $949 an ounce with our all-in sustaining costs at $1,189 an ounce, which was as foreshadowed up from the $1,019 in the prior March quarter. We sold 106,628 ounces of gold during the period for an average price of $1,838 an ounce (sic) [ $1,832 an ounce ]. Now this gave us an operational performance which contributed just over $85 million to our cash. Netted off against this, in major outflows during this quarter was around $24 million we spent on pre-stripping -- pre-production costs of new and existing satellite projects and also of deferred waste. We spent $13.6 million on income tax payments, $7 million on exploration and feasibility projects, $6-or-so million on the Rosemont Underground, $3 million on land acquisitions and the rest being picked up by other capital items and our corporate costs. All up, this gave us a net cash and equivalents increase of $18.7 million for the quarter, a solid performance and another pleasing increase in our cash and equivalent balance.Now looking a little bit more detail at our sites. At Duketon North, we produced 20,213 ounces for an all-in sustaining cost of $1,220. Our gold production was up in the prior quarter, pushed a little bit by better grades from Anchor. Mining volumes were down, but due to some one-off cost, the all-in sustaining drop that we were anticipating wasn't to the same degree as we expected.At Duketon South, with Garden Well and Rosemont mills in the quarter, production was 70,753 ounces for an all-in sustaining cost of $1,180 an ounce. Now mining volumes in the quarter were up substantially, up by 11%. And this was driven by a better-than-expected performance from the mining contractor, which was pleasing from that perspective, and it saw the timing of some of our mining being brought forward. Now this high physicals was a key driver in the increase in our all-in sustaining costs over the quarter in the South.So putting that together and looking at our full year, the operation -- the results for the full year were very good. We hit a new record gold production of 363,418 ounces, which is 2,000 ounces more than last year and at the top end of our guidance range. And this record production was for an all-in sustaining cost of $1,029 an ounce, which is just very slightly above the mid-point of our guidance. So overall, a very good performance for the year.I'd like to turn now to a few of our key projects and that are real contributors to the future of the company. Well, first off, looking at resources and reserves, and we published this last week, and as at the 31st of March, and these numbers are as at the 31st of March, and it was good news. Firstly, our resources, the Group resources increased to 8.2 million, up from 7.9 million ounces of gold and at a slightly higher grade. Now the major change here was a drive -- a big step as we included Discovery Ridge at around 390,000 ounces of resources.Importantly, our Group Ore Reserves are now estimated at 130 million tonnes, 130 million, yes, looking good. But it's 130 million tonnes at 1.11 gram per tonne of gold for just over 4 million ounces of gold. So after allowing for depletion by mining, we saw a 4% increase in our tonnes and an 8% increase in our ounces. Now this is primarily driven by 3 key areas. Earlier this year, we added -- we declared a maiden ore reserve for the Rosemont Underground. The drilling results around our open pit areas allowed us to identify and bring in some new ounces and also some optimization work on our current pit shell strategy, where we updated design parameters, our cost, gold price, metallurgy and geotech performance. Now all of these 3 contributed to this good performance of adding to our gold reserves.Now while the overall outcome was very good, it was also especially pleasing to see another year being added to Moolart Well, which is now expected to see a life out beyond 4 years. So moving on from our reserves and looking now at Rosemont Underground, the decline there is making good progress. We see development advances ahead of schedule, and at the end of the quarter was 725 meters. And I think at the moment, we're probably sitting just on a 1,000 or just under or just over it. And also a particular note, we're expecting first development ore to be mined at sometime in September quarter. In actual fact, we think that's only a few days away. Our crosscut is getting quite close, which is obviously another milestone for us. Further to that, a second development jumbo and crew will be mobilized in December, as we start to open up the number of headings, not in December, sorry, in the December quarter. So things are going quite well at Rosemont Underground.At McPhillamys, work progressed well. And as we foreshadowed, the formal Development Application along with the Environmental Impact Statement was submitted for appraisal and assessment by the Department of Planning in New South Wales. Now this is a significant milestone and represents the start of the formal assessment and approval process for us. In addition, Discovery Ridge continues to shape up as a very significant additional incremental value proposition for the McPhillamys' project. It's expected that Discovery Ridge itself will be subject to a separate EIS and approvals process, and it's contemplated that this will likely be undertaken while McPhillamys is under development. If developed, Discovery Ridge will use the processing facilities at the McPhillamys site. Because of this, most of the key extra works required at the McPhillamys site is being considered for inclusion in the DFS and also in the -- has been included in the site -- Environmental Impact Statement for McPhillamys, the EIS.In the quarter, some work did progress on the DFS, on the Definitive Feasibility Study, albeit it was pretty limited due to the focus on completing the Development Application. The DFS will need to incorporate any additional requirements for the project development emanating from the results of the application process. So in reality, timing of the DFS is clearly dictated by the approvals process.Now while the Environmental Impact Statement and the DFS work is continuing in finalization, it's still subject to a number of variables. We have noted that it's now expected that the updated development capital costs from the McPhillamys project will have a final confidence range that incorporates the upper end of the original PFS estimate from -- issued back in 2017.I'll now like to talk a little bit about our production and cost guidance for FY '20. We expect another strong production year at the operation with the similar goal guidance, same as last year. Overall, our guidance numbers are as follows: Gold production, 340,000 to 370,000 ounces range thereof. Cash costs including royalties have a range of $985 to $1,055 per ounce. Our all-in sustaining costs, $1,125 to $1,195 an ounce; and our growth capital of around $62 million. Now the all-in sustaining costs guidance is circa $130 million above that achieved in FY '19, and I'll take a little bit of time just to explain the changes in the drivers in 3 -- that occur in 3 key areas.Look, about 25% of this increase is driven by our provisions and expectations of escalation of general costs, increases related to modest CPI assumptions, the impact of exchange rates on things like the rise and fall. We have seen some quite significant increases of componentry costs of our heavy mobile equipment, and these are obviously flowing through into our operating cost. And we also anticipate some minor increases in haulage and et cetera. Some of these are real and some of these are our assumptions of what the cost trend is going to do. Of the remaining $100 an ounce increase, about half of that is driven by a change or an increase in the waste mining classified as sustaining capital. Now across the site, the total surface material movement actually falls and that's in line with our current Life of Mine plan. But in this plan, the reduction in the pre-strip growth capital comes along with an increase in the volume of mining classified as sustaining capital. As a result, while the overall mining volumes decrease, the sustaining capital component of the all-in sustaining costs increases. That's to say that a significant part of our unit cost increase is actually driven by a shift in the classification of waste movement from growth to sustaining capital.Now the third area of cost increase is from our early stage high cost Rosemont Underground ounces. These high costs are produced in the early ramp-up stages due to the performance of -- sorry, the proportion of sustaining CapEx relative to the grade and also the lower grade in the South, the initial production area. The end result of this plan in production profile in the early stage of mining has pushed the all-in sustaining costs of the underground this year well above the Life of Mine average, which I would note, when we released it on the 15th of April was around $1,120 an ounce.So we'll see this underground cost profile improve over the quarters as we start to mine the high grades from the central and main zone. So these are the 3 key areas that are pushing up our all-in sustaining costs. The final key guidance area is our growth capital. And this year, it's made up of the following items: This $29 million for Rosemont Underground development has been identified in the prior releases on the approval plan. We also see $13 million of growth pre-strip, which is a significant reduction on last year, which was around $41 million for the open pit, and actually is reflective of what I was just talking about in the shift of growth capital waste mining to sustaining. And we're also spending about $7 million on a significant stage of the TSF, a $6 million on the airstrip, an upgrade there, and $7 million on a various array of other growth items for a total of $62 million for the year.Now look, I wanted to just take a few minutes to look at Regis beyond the current guidance year. Given the -- I've just given some detail on the FY '20, but I'd like to look a little bit further out than that and give people a bit of a flavor of what we see as being the future trend. So given the increase in high-grade material from the Rosemont Underground and also the currently planned open pit outputs, we're expecting that by FY -- financial year 2022, our gold production will lift by approximately 10% above the current level. Now I would note that this does include some very small, but nonetheless inferred resources, from the underground and that's noted in our release. Graph 2 illustrates this expectation and this trend, and you can see this is a reasonably material increase in our gold production. Now of course, looking out beyond this timeframe, we see some great opportunity on our production profile outlook, but it's going to be -- and it's going to be impacted -- ultimately, the outlook beyond this 3 years is going to be impacted largely by a few things; the timing of McPhillamys, any additional underground production, exploration successes, reserve depletion of our open pit grades and also, of course, business development initiatives. So for us, a lot of positives beyond the next 3 years as well.In terms of what we see as the all-in sustaining costs for Duketon over this period, there are 2 -- really there are 2 key drivers to the all-in sustaining; the first, strip ratio, which of course only relates to the open cut, but given, as you can see by the graph, the majority of our production still comes from open cut. From this lower-cost source, it is very relevant. And the second impact on all-in sustaining is gold grade. Firstly, in relation to strip ratio, the current Life of Mine plan sees the strip ratio rise slightly next year and then it starts to fall away quite significantly over the following years, and this is a good indication of where we see the open pit all-in sustaining cost is heading. And in terms of the grade, the underground Rosemont material will see at best -- will see good movements as the benefits of the high-grade underground production from the central and main zone start to have a positive impact beyond this year. So look, while not a high degree of detail, I do hope this information provides you with a flavor of what our production profile looks beyond just this year. Now of course the other aspect to that, as I mentioned earlier, any discoveries and subsequent new pits or underground operations are certainly likely to have a constructive impact on that outlook.And on that point, I'll just want to turn some of my comments now to our organic growth opportunities, i.e., our exploration. At Rosemont, we're drilling 2 holes into the deep targets that's identified by our seismic work earlier this year. You can see that on figure 5. We're chasing what could be the feeder structure, 1 kilometer deep. And while it's early exploration, the potential implications of getting some success down there are obviously significant. Anything at that depth gives us hope of deeper extensions of the current mine. At Garden Well, the underground story continues to get pieced together and gain momentum. We continue with gold mineralization now over about 500-meter strike beneath the pit. The high-grade gold shoot currently measures -- it varies between 5 to 10 meters in true width across strike and 8 to -- sorry, 80 to 100 meters high, and this is dipping to the east. And at the moment, it's open at depth as you can see in figure 6. I'll just point out a couple of significant results from the diamond drilling that we did in the quarter; 15.7 meters at 4 grams a tonne with a 3-meter section at 7.9 grams per tonne of gold and another 18.9 meters interval of -- at 5.2 grams a tonne, which included a 4.6-meter interval at 7.2. These are pretty good results. We've now kicked off a preliminary evaluation of the underground potential, and the results will be discussed when they're available.Now Moolart Well work has also been quite fruitful. As I mentioned before, the extra reserves added here has extended our mine life by at least another 12 months, which is great. We're starting to see some good alignment or better alignment between the life of our -- the reserve life of our 3 operating assets. What's also very interesting at Moolart is the program of diamond drilling testing of the stratigraphy and gold mineralization -- mineralized structures beneath the existing oxide pits. Historically, drilling at Moolart was always targeting shallow oxide mineralization, suitable for open pit development while mineralization in fresh rock was largely untested. In the June quarter, we drilled 5 diamond drill holes, just under 3 kilometers of length over a strike distance of about 3.5 km. Now we've only received the results back, the assays back on 1 hole, but that is 1 meter at 11 grams a tonne around 319 meters downhole length. Now that is good news because that supports the view that there is certainly gold mineralization structures in that fresh rock underneath Moolart, so we'll be following that up. Testing also continued at the -- for underground resources at Baneygo with some very encouraging results, including 3 meters at 12.7 grams a tonne; 2 meters at 21.6 grams; 8 meters at 10.8 and 2 meters at 43 grams a tonne. Figures 7 and 8 are helpful here to see what's going on. Look, we'll continue to do this work. This is all pretty exciting, as you can tell from those numbers, and we're working to firm up our understanding of how it all pulls together. Now further to that, at Gloster, the open pit to the north, which is feeding our Moolart Well mill, previous drilling there as well was only targeting shallow oxide mineralization. And we put a few holes in just testing mineralization at depth. And I have to say we've got some pretty encouraging results already from these holes. We've hit some good intercepts. We hit 100 meters down. We hit 7 meters at 26 grams a tonne, another 7 meters at 4.2 grams, but quite shallow holes, only 14 meters or so below the current pit -- base of the pit, we hit 1 meter at 10 grams. So there's some pretty good opportunities there for us as well to have a look at. And figure 9 gives you an indication of where these -- how this is all looking. It's early days, but it is very encouraging and pretty good for the first cracker testing underneath that pit. Exploration work continues across our leases on several other targets, including Pleco, and also a kick up in the greenfields' basic data collection work that we're doing. So as you can see, there's a lot of potential targets, and I look forward to keeping the market updated with progress on this over the coming periods. So look, wrapping up, I'd summarize by saying record year's production with costs overall and guidance. A solid cash and equivalents generation in the quarter with our current end of FY '19 cash balance of about $205.3 million. Rosemont Underground is progressing well with first ore imminent, and material production will start to be seen in the second half of this financial year. We've commenced the formal process for McPhillamys with the submission of the Development Application. We've got a range of very encouraging results from our exploration across our leases at Garden Well, Baneygo, Gloster and others. Look, we've got strong production guidance again this year and a lot of work setting up for the future, which is reflected in our expenditure. And looking a bit further out, we see a rise in production outlook over the coming years with many excellent opportunities to pursue as we work on opening up options to maintain the trends. It's certainly an exciting time to be at Regis.So look, I'll wrap it up there, and I'll pass it back to you, Rochelle, if we can now open it up for questions.
[Operator Instructions] Your first question comes from the line of Daniel Morgan from UBS.
A question on the reserve that's coming out of Rosemont Underground. It looks like the reserve grade there is about 6 grams per tonne, and I thought that the plan of the underground when you first initially put it out to the market was about 3.7 or maybe 4 grams a tonne there about. Can you maybe talk about what the new concept is for Rosemont Underground, tonnes and grade that you're thinking you can pull out there on an annual basis, expectation and what success might look like?
Yes. Look, as I mentioned, we're expecting to see a shift in the ounce -- in the grade profile as we progress over the next -- the 3 years or so in the current plan life. There's no doubt that in this first -- certainly, this current financial year, we're going to see grades that are lower than the average overall because the first area we're targeting is the southern area and the grade in the south is a bit lower than the central and the main. Central and the main are somewhat, so one of the description, the dip and rise of the grades. But we still do quite well from the south, and it's a lot closer to get to, which is why we've targeted that first if that's your question. We will see the growth being lower and -- in this first period and then over the next 3 years. We're still expecting around about 0.5 million tonnes on an annualized basis coming out from the underground. If we can do better, we will, but that's what we're -- as a principle. And obviously, what we'll see -- whatever is lower in this first part of the mine life, we'll see lift in the back end as we have to run to an average grade. And of course, that's also on the basis that we don't get extensions and continue on. So it's not specific. We haven't given a specific grade blow by blow on the grade profile. But you certainly said in the past -- you've indicated that we're expecting the ounces to be lower driven by that lower grade in the early stages, especially as a lot of our ounces come from development mining, which is -- sees a little bit more dilution, but that will lift towards the -- after this year, we'll start to see -- the improved grade start to come through.
Maybe just staying on the underground a little bit. It looks like the future of Regis is moving more underground on any of the satellite deposits. Just wondering where you might see the next underground mine that might be developed, which way you are in the tiering, which one is going to come in, and when are we going to hear more about that and timing?
Yes. Dan, look, first of all, I would say that the future of Duketon operations doesn't just sit with the underground. We also think that we've got some very good potential to find more surface across our leases. We've got 1,000 square kilometers of leases and we -- but it hasn't been -- it hasn't been explored more recently with our updated knowledge of our deposit models, so -- but that's a little bit further behind in our understanding and our quality of knowledge of the opportunities. So we've got to, to a degree, go back to grassroots, which is this greenfield work that I was -- I mentioned. The reality is that the information that we've got that is probably the most mature and untested, is in the underground area and more -- I wouldn't say production ready, but closer on a time line to production. So it might appear that we're only focusing on the underground, but at the end of the day, it's probably because that's the most of what we've got to talk about at the moment while we do more work across the broader Duketon belt looking for and chasing more open pit opportunities. Because underground is good, but I think as we've demonstrated historically at Regis, open pit can be very profitable.In terms of the underground and the order of priority, I don't think there's any doubt that Garden Well is the deposit that's probably the most progressed in knowledge and confidence. We've said in the past that it's coming up behind Rosemont. As I mentioned -- as is mentioned in the quarterly release, we've started to do some preliminary evaluations of what that underground might look like and when it might come in. One of the complications that we need to consider with Garden Well is the position of where we -- for example, the potential best position for the [ add-up ] to go underground is actually in an area or in a bench that hasn't been mined yet. So we're just trying to figure out what's the best way -- when I say it hasn't been mined, it hasn't been mined from the open pit. You sort of coming off [ an old bench ] from the open pit. So there are a few things apart that would -- apart from the ore body itself there's a few other things we've got to work on there with timing. As that information progresses and we get a bit more confident in it, we'll inform the market.
And then just one last question. Just on the hedge book, it is quite a large out of the money hedge position. That seems like it gets rolled every quarter. Can you just talk about how you think about the hedge position going forward? I mean, obviously, the gold prices is a lot higher and it's assisting your cash flows and the share prices. But just wondering how you're going to manage that hedge position going forward.
Yes. Look, it does -- we don't -- we can roll it. They're spot deferred, so we do have that option. But what we have -- what we plan to do and what we have been doing -- so what we have been doing and what we plan to continue to do is we will effectively dribble out fairly modest amounts, a few thousand a quarter of the very low-value hedges. And you can actually see that the average price of our hedge book from quarter-to-quarter is slowly increasing as we work to, I guess, offload, if you like, or sell into those lower ounce -- lower value ounces. Kim Massey was doing that over the past period of time, and Jon is continuing to do that and that will continue to be our plan, just to not sit on them and do nothing but to slowly work them in -- work them out, I mean. Work them out.
Your next question comes from the line of Michael Slifirski from Crédit Suisse.
Jim, just further on that hedging. I wanted to understand really what your strategy is now, clearly, to get rid of the low-cost ounces. But as you deliver into those low-cost positions, do you sustain the book by adding high-cost positions? Or is the strategy now just to run the book down progressively?
Look. Primarily the strategy is to run the book down. However, that is not locked in, we're obviously looking quite carefully at what the options and the opportunities for us to add hedges in particularly at the moment due to pricing. It is very tempting, but we'll continue to contemplate that, so we don't have a fixed strategy that we're working to. We're still thinking about that, but we do have a strategy to slowly work our way through getting rid of those very low value. I think they're around $1,400, $1,500 an ounce hedges that we've got.
Okay. Secondly, with respect to that guidance chart graph 2 or whatever it was, the 3 -- the 3 bars. Trying to get in my mind's eye, what that actually means for an all-in sustaining costs. So the black bit has been the underground, and you're saying that grade improves so that reduces the all-in sustaining costs for the underground, and with time, the strip ratio reduces. So if we look at your guidance specifically for the current year, FY '20, I'm not quite sure how to project what you're saying about all-in sustaining costs. Does it then rise in FY '21? Or does it fall or does it stay the same? I'm not quite sure how to read that chart.
Yes. Look, I mean what we're trying to do and -- we're trying to provide a bit of an insight into what the trends might be. Obviously, there's a lot of things that can impact on cost outlooks. And so rather than trying to get ourselves twisted into a knot by giving hard numbers, we're trying to give an indication of what the trend will be by talking about these 2 big cost drivers. So -- but coming back to your question, what is it that we're expecting to see? All right, well, if you go back to look at what we're saying, the first is that we see a pretty modest increase in the strip ratio. Now strip ratio, if it increases -- we're seeing this trend of the growth capital dropping over from last year to this year and an increase in the material that's classified as sustaining capital. The growth capital trend down is likely to continue certainly from the open pit point of view, which is a key, key factor. But with the strip ratio increasing, that's a reasonably fair indication of what the all-in sustaining costs may trend with that. The impact of the underground is probably a little bit more constructive or positive because as we're expecting in the future years, the overall production of ounces to increase from underground while it's not the majority of our production, it's still a reasonable chunk. But as production increases from Rosemont, the grade increases, and we would expect relative to the underground cost of this year, the unit cost should start to -- should -- will trend down. So we've got upward pressure on the -- for next year with the strip ratio on the open pit, but downward pressure on the open cut -- sorry, on the underground ounces. So we're looking for those and watching to see whether -- and anticipating what degree will get a balance in there. I think if you look at the proportion of open cut to underground certainly next year there's probably more pressure up than down.
Okay. And then finally with respect to the declining growth capital, is that just the way you're allocating cost? So moving stuff that was previously considered growth capital into your all-in sustaining costs? Or is it a genuine sort of change? I'm just trying to understand what's an engineered change versus what's real?
Yes. Good question. Look, probably the best way to answer that is that this year's total physical earth movement relative to last year is down by about 5% or 6%. We're seeing an increase in our all-in sustaining costs. So it's kind of telling you what's happening at a high level. We haven't gone and internally suddenly decide to change the way that we allocate costs in growth or sustaining. It's just that the way that we've made those decisions in the past is now driving more of our activity to be shifted from -- going forward being shifted out of the growth bucket, which has always been reported as a single big bucket. We haven't hidden it. We've always reported it, but it's now sort of flowing into all-in sustaining now. I have to say from an overall picture point of view, it's a little bit disappointing because everybody tends to focus on all-in sustaining even though they -- there are -- as we know, when we look at -- as we look at comparing ourselves with our peers. But we know that our -- as our -- we know overall what's going on with our costs and our expenditure. Our growth is certainly dropping going forward, but because of that shift in the allocation of our sustaining capital, we're actually ironically seeing an increase in our all-in sustaining costs, but that's the way it is. We just have to clean out -- our task here is to -- and I might not be doing a particularly good job of it, but my task here is to try and keep that message simple so people understand what's going on.
[Operator Instructions] Your next question comes from the line of Paul Hissey from RBC.
Two questions from me. Jim, lots of discussion around strip ratios and grades, et cetera, et cetera, any -- and cost, particularly mining cost. Any likelihood we'll see a greater level of granularity around your disclosure on those costs going forward? The numbers at the moment are pretty sparse.
Yes. Look, good question, Paul. And now we're getting into the track of giving some indication of what the future looks like. Everybody always wants more detail. I guess as time progresses and we're building confidence and we've got a good picture, we'll start to look to see how much further out we give. For me, the most important message that I wanted to make sure that people got was that; number one, you get a clear picture of what our guidance is for the coming 12 months, and we've done that in the past. And number two, you can at least start to see a little bit of what the future trends of our business looks like. Are we staying flat? Are we going down? Because some people think our production profile is going to drop or does it go up? And that is the key message that I've been wanting to get through here and felt that it was appropriate at least to give some kind of an indication of what the cost might do. Obviously, as time progresses and how -- and we get more confidence, in particular around the underground, we can do some more there. But right now, the outlook -- the longer-term outlook is detailed in the way that we want to give it. And I just wanted to -- just sort of -- so that's the end of that question. I did want to come back and just point out that previous question that we've got from Mike about growth capital. The only thing I would point out would be, of course, if we have success in, say, Garden Well or another pit somewhere then obviously that would contribute to our growth capital again, but none of those ounces are included in our production outlook. So anything there will -- any increase in growth would obviously come with increase in production as well.
Sure. Yes, look, maybe we can chat a bit more about some of the granularity off-line. My only other question was just with regard to exploration budget, and I apologize if you've already sort of been through this. I just want to be clear on any other cash items in 2020 out -- so you've got $62 million growth capital. Obviously, there's a capital component outlined in the guidance for your sustaining cost. Does exploration sit over and above those? And haven't we got a number that you're looking to spend there? And are there any other cash uses that aren't necessarily sort of explicitly disclosed to you?
Yes. Look, our exploration is always a bit of a tricky number to nail because it does tend to be driven by immediate success, but...
But it doesn't sit in either of those current numbers though, is it right?
Yes, yes, yes. I haven't finished my sentence yet. So looking at -- in the past year in our expenditure, we're anticipating that exploration probably be $20 million to $25 million in the coming 12 months assuming that each hole that we're putting is good news and warrants continuing on and probably the only -- there is no other tucked away pieces of capital. The only other thing it probably would be corporate costs, which are sort of running at maybe $1 million a month, something like that.
Okay. And just -- so for the avoidance of any doubt, the $20 million to $25 million exploration would show up as a subset of your all-in sustaining cost?
No. We showed that...
Okay. So it will be over and above that, and your corporate cost would be over and above that as well?
Yes. Yes. They're all similar during the past years -- part last year.
Your next question comes from the line of David Coates from Bell Potter.
Look, yes, I was also going to ask about the exploration budget, but obviously you've gone through that. Looking as to that -- any -- you mentioned I think at the start of the call some one-off cost that boosted the all-in sustaining costs. Can you give us more detail on some of the things that sort of popped up during the quarter that you weren't expecting last quarter?
Yes. Look, I don't -- I won't go into a huge amount of detail. But to give you a flavor of it, we were doing some work and we have been doing work with our mining contractor on rates. Obviously, these things move around and we were undertaking some negotiations. We had expected and been making a provision for that increase. At the end, the increase that we agreed to was a little higher than what we would have anticipated and we've been accruing for. And as a result, we sort of had to -- in this last quarter, we had to do a bit of a catch-up accrual. So the prior quarter -- so we've sort of got the -- a bit of a double hit on that. But before we run off with that on the cost, one of the -- as part of that negotiation, we were anticipating and are incorporated in our outlook, we saw some increases in our near-term costs. But what we also saw -- see is some reduction in what we were originally expecting in our longer-term outlook in the next 2 or 3 years. So we've just seen some timing movements in those unit costs, but in answer to your question, it was around that accrual catch-ups, estimates that we've made so that's why we sort of -- we just got, I don't know, I suppose caught a bit flat-footed on that.
Okay. And we see -- and growth capital in the final quarter, was that in line or below what the run rates been for the year?
Was it in line or below? I think overall it sort of came in pretty much where we're expecting, maybe a little bit higher because some of the work came forward. I haven't got the numbers right here in front of me, but I think that's around about where it was.
Your next question comes from the line of Cathy Moises from Patersons.
From Melbourne, just a couple of questions as most of them have been answered. McPhillamys has been dragging on a long time and I -- probably more so for you than me right now. But any indications when you think we'll at least start budgeting for some spend into that, let alone production? And the other one is with the new management and quite a lot of capital, is there going to be any change to the dividend expectations?
Okay. So McPhillamys and just net of dividends -- so yes, look, McPhillamys is -- I've been with the company less than a year and it's a challenging process. I have a great deal of sympathy for the members of the team that have been on this for a number of years. But the great thing is that we have now formally kicked off the development application process. So that doesn't have a top -- that doesn't have a clock that ticks. But what it does do is that means that we're now -- the process can get moving, the regulators get formally involved with assessing the works, and we also start at this. It will -- this will go for public viewing or public comment. I think with -- and New South Wales, the timing on these being shifted around a little bit, you get confidence in how long it will take and then other things. Perspectives change and that timing can be a little bit softer, so -- but what we do know is that a record approval time would be 365 days to get the approval along with the development conditions or the operating conditions. Typical is 500, which is around about 18 months. Now we've done a considerable amount of work. We're a reasonably friendly commodity relative to some of the other commodities that have been -- look for Development Applications in New South Wales. So we are hoping and encouraged that, that approval for us to start work will be somewhere in that 12- to 18-month period. Then our current estimates for construction is 12, 14 months construction to commissioning, and then we'll be ramping up production from there. Now that's what we're currently anticipating. The construction time we obviously have a reasonable degree of experience in predicting. The business, really just the unknown unfortunately is that development approval process could go well or it could be -- it could carry on for a while longer.Now the second question was around our -- the view on dividends and our cash build. Look, right, it's safe to say that every time the Board meets, we do have a discussion on dividend strategy and capital returns, and we're looking quite carefully at why people invest, number one; and number two, what is the capital demand outlook. Obviously, with McPhillamys potentially coming up, we need to consider how that will be funded, whether it's from cash flow or whether that would have some level of debt funding. All of these things are under consideration. None, no decision is specifically being made. So all I can really say about the dividend is that we don't have a policy, and we continue to assess what we think is the right thing to do based on the outlook for capital demand in the business.
[Operator Instructions] There are no further questions at this time. I would now like to hand the conference back to today's presenter. Please continue.
All right. Thanks, Rochelle. Thanks, everybody, for joining us. And as always, if you've got some follow-up questions, please get in touch with us, and we'll do our best to answer them within the limits of what we can say. All right. Thanks. Goodbye.
Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.