Resolute Mining Ltd
ASX:RSG
Resolute Mining Ltd
ASX:RSG
Price:
0.495 AUD
5.32%
Market Closed
Updated:
May 21, 2024
Section:
Earnings Call Analysis
Summary
Q2-2023
Q2-2023
Resolute Mining Stays on Track for Q2
Despite a challenging May with issues such as a crusher breakdown at the sulphide plant and lower recoveries due to carbon content in the oxide circuit, Resolute Mining has managed to maintain its guidance. The oxide circuit at Syama experienced lower gold production and higher costs due to these issues, but the company corrected course by moving to a new pit and halted mining in the problematic area. Mako operations also saw a dip in grade, but a rebound is expected in Q4. Although production was down in May, effective cost control measures mitigated the financial impact. Q3 is expected to be stable, with a forecasted bumper Q4 leading to increased production levels.
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Thank you for standing by, and welcome to the Resolute Mining June 2023 Quarterly Activities Report.
[Operator Instructions] I'd now like to hand the conference over to Mr. Terence Holohan, CEO. Please go ahead.
Thanks, Darcy. And once again, welcome, everybody. I know it's been a very busy day already for you, for a lot of you. And welcome to our quarterly call, our Q2 activities, and we'll talk a little bit about H1 for the year. We've got a slight change this year to our format, in that we have loaded up a web -- a presentation, a 17-slide presentation on our website at rml.com.au. And I'll be talking to this through the discussion. So you can actually follow me, and I will tell you what page I'm on, et cetera. It's under the Investors section on the Presentations and its Q2 Activities Report.
So I'm going to go through the bulk of the slides here, and I'll pass over to Chris, our CFO, who will take you through the financials, and then I'll do a wrap at the end and then for the conclusions, and then we'll hand it over for the questions. We've got the normal disclaimer on Page 2. If you go straight through to 3, which is the executive highlights. First of all, picking off on the safety side. I'm really pleased to report that our safety stats is still up there; Syama, 4.5 years without an LTI; Mako, 2 years without an LTI. And we just have the audits of the World Gold Council audits for the Responsible Gold Mining Principles, and we're expecting to hit 100% on those over the next month or so, and we'll report that accordingly. Production. I was expecting to be telling you we're way ahead of guidance at this point. However, we did have a tricky month in May, and I'll go into that in a bit more detail. And that sort of kept us a little bit sober. June, we did get back on track again. However, I will go into a bit of detail, but I think the key thing is that we had a stable month, a lot of improvements, and I will actually highlight those, which you can see in the numbers in the tables. I think if you look at where -- if I just focus on May a little bit, it was a headline week on the sulphide plant, the crushers went down. If you remember, I've been talking about these crushers now for nearly 2 years. We did order new crushers to be replaced in the September month. They are long lead times, they're on their way, they're starting to arrive now, and we will fix them in September. However, one of the crushers went down, it cost us quite a bit of time. Our maintenance team got the machines back online fairly quickly, but it did hurt us a little bit. Also, if you look at the oxide circuit at Syama, some of the last cuts we did in the Taba pit, cut some carbon in the ore, something we didn't pick up in the grade control. That got into the plant and it depressed our recoveries. And we went from typically in the high 80s to the low 80s for a short period. We obviously immediately stopped mining in the Taba pit, and we moved across to the A21. And we did a little bit stripping there. We haven't originally planned to move into A21 so fast, did a little bit of stripping there. So little bit of lower gold production there in May and a little bit of higher costs. So they've been impacted, but we believe we're back on track now. So as a result, we're exactly on our guidance, and we're in no danger of not meeting it. And I would suggest that our bumper quarter will be the Q4 this year after all those 6 years have been sorted out. And we're on to a slightly higher level in terms of production. And as I said I think there are many takeaways from the quarter. And as we're systematically improving, if I go through to Slide 4, if you look at the asset highlights, I mentioned the strip, you can see the quarter there. Taba -- sorry, Mako, I did highlight earlier that Mako is going to a low-grade patch that performed slightly ahead of production, which was quite pleasing. We've got one more quarter of that before we get into the bumper areas back up to 33 even in Q4 this year and then Q1 following year, et cetera. The oxide circuit, a little bit of a hiatus, as I mentioned there, 15,500 and then the sulphide, 38,500. So this, we expect all back on track again in Q3. There is this table at the bottom there. What's very interesting to see is despite our significantly lower production in May, and we'll see them on the individual tables in a moment, our cost did not go crazy because essentially all the cost initiatives that we've been talking about, and Chris is headlining, are starting to come into effect now. So we didn't get punished as much as we would have done if this had happened last year. So we jump to Page 6, which is the Syama operational highlights. And the key ones are really on the table on the right-hand side. If you look at the mining, we cut back on the sulphide ore. If you remember in Q1, we pushed the sulphide ore just to see what that mine could do, and it did hold the grade at 2.86. So we're really pleased and reported on that last quarter. We took that off a little bit because we do have a lot of stock in front of the plant and grade slightly up at 2.88. And I'd just remind you that the original design of the Syama SLC was 2.71 gram a tonne. And if you look at the table, H1 '23 to H1 '22, if you look at 2 half years, you can see the grade improvement that's taken place over the last 12 months, which is really exciting.
The oxide grades, 1.55, and we did lose a little bit of that Taba material, which was slightly higher grade because of that carbon issue. But again, if you look at the half year, again, you can see with the great control that we put in over the early parts of last year, we're starting to see better performance there. If you look at the processing side, again, I'm focusing on grade, you can see the sulphides in the plants, 2.94 for the half year compared to 2.5, so a 17% step-up, and we think that's sustainable in these sort of levels. Oxides also come up even though we're expecting to see that slowly, but surely will come up a little bit more. And it's also worth pointing out, it's only a small number. If you remember, I said that the magical number of sulphides is to gain 20% recovery. You'll see that it's not an easy job. The closer you get, it's tougher, but we're actually creeping up towards that 80% recovery level that you [ could achieve ] in the laboratory. We're actually getting close to that in the plant now. And the oxide, yes, as I mentioned, that took a bit of a hammering because of the carbon coming through. That's been curtailed now. We finished off that mining at Taba. In fact, there's no mining at Taba. There's only open pits at this point in time and there won't be for some time. So if you look at the costs, you can see, yes, the oxide came down a bit, but there's still lot of concern. We've got a lot of work to do there still on that circuitry, improving that. But what is actually quite comforting is that the all-in costs on the sulphides are fairly stable. If you remember, the huge step-up this last year because of the diesel prices, and we're still in that domain of diesel prices, high prices, but especially at Syama, it's starting to come off now to more reasonable levels.
Just to mention on Mali itself, you've probably watched it all the way. There's a lot of politicking going on. As the country is now moving fully into politicking with the elections, the democratic elections coming up in Q1, there's quite a lot of noise about the new mining code to replace the existing mining code. If you remember, the code was last revised in 2019. And we operate under the 2012 code with stability agreements in place, and we are fully cooperating with the government. We have been right through this audit process over the last 12 months. And we don't see any material changes of this at this point in time.
Let's go across to Page 7, which is the Mako operations. As I mentioned previously, Q2 and Q3 are going to be quite tough for us in terms of grade as we go through the low-grade areas. And then we've got -- when we get to the other side in Q4, we've got 24 months of really good running in terms of cost and upgrade. You can see the grade came down to 1.8, got through the plant because we actually stepped the tonnes up a little bit. We've actually managed to get a grade to the plant at 1.91, but it's nowhere near the above 2 grams that we've been accustomed to on this operation. But that was in line with what we expected. Recovery has come off a little bit because the grades come off. And obviously, gold, as I did highlight previously, we expected about 30,000 for these 2 quarters before we get back to the 32.
But what again is very encouraging here is that the gold port is -- sorry, the all-in costs, even though we have 10% less metal, over the 2 quarters, the all-in costs are essentially the same. So we're really excited about the operational performance there. If you go to the next slide, Slide 8 -- Slide 9, let's talk about the exploration and the expansion, which is where the excitement really is starting to build up. We -- Syama, we finished all the infill drilling for the ore reserve. And that is quite exciting. We've got a draft on the table, and we will announce it fairly quick. If you remember, we put out some [indiscernible] 854,000 ounces. We expect that go up to 7 figures in the next couple of weeks, and we'll actually announce that and drop those numbers into our studies that we're conducting at the moment on the expansion. At Mako, some good news there. If you know, I've been fairly neutral on Mako in terms of exploration, but we've made some huge steps forward. We've managed to sign the joint venture and get into the Laminia area, which on the map there you can see is fairly close to Mako. And also, we managed to finally start, after 2 years of negotiation, but we sped that up in the last few months at Tombo. This is the one that [ Rangold ] originally identified a 300,000 ounce per resource at about 1.7 gram a tonne. We've got back and the drills at turning finally in that area, and that's after quite a long protractive discussion with the community.
What is also very exciting on our exploration is I've just come back from Guinea to look at our projects out there. We do have 3 -- sorry, 5 major licenses out there. And we've hit some gold anomalies at one of them, Mansala. We went on the ground to have a look at it, and we have put a fence line of 40 drill holes, and a lot of them hit gold at economic levels. Obviously, it's extremely early days at this stage. We're not yet in a position to put sections out. However, we will be putting a note out in the quarter. It is a rainy season. We have just conducted [ IP geophys ], which is also showing that there's a structure there, and we'll talk about it a little bit later in the quarter with a view that based on the information that we're dissecting now in terms of the [ geophys ] and the drilling, we'll actually start redrilling again after the rainy season, which is another 2 months. Then the real excitement for us going forward is the Syama Phase 1 expansion project. This was originally called the Syama North PFS. But this, however, has grown into a full study now of Syama. And this is because the sulphide plant is really starting to operate, the underground mine is really starting to hum, and the guys are telling me that they can expand that area now under low capital phase. And we've also got access to the [ Nafolo ] area, which is the south area of the sublevel cave from underground, starting to put drives into there. And we will be exploring it from underground. If you remember me telling you that a long time ago that there are some waste dumps on top of this material, so we couldn't really drill it fully from surface. And now we're from Level 4 in the mine, we're actually online with some of those large high-grade areas that we originally identified. We're actually going to start attacking those now from the level 4, and those will be a long-haul stoping addition to the sub-level caving.
But if you look at the plan, it's becoming a bit of a no-brainer now because it's part of our expansion strategy. We did present it to the Board this week, and they've approved that we go ahead with long lead items based on our study work. So those orders are going ahead, long lead, obviously, being the mill the flotation plant, et cetera. We have got quotes from all the 3 major mill suppliers. And we're actually going through those in detail with the companies. The expansion project will increase the overall sulphide ore capacity by 50%, taking us up from 2.4 to 4, which gives us the flexibility, given that we always said that within 3 to 4 years, there's no guarantee we'd have much oxide left, except those that are sitting on top of Syama North. And the project will give us the operational flexibility to be able to switch to oxide or sulphide casing margin, and this is a huge step forward and the ability for us to have huge flexibility in the operation. The revised capital cost is $52 million. I always said $40 million to $50 million. We do have a 20% contingency on that despite us having quotes to all the major items. We have increased the scope a little bit for water storage in that area, and we've stepped the contingency up a little bit. But we are fairly accurate on our cost now, customs, et cetera. So we expect construction of that to start on the plant in 2024. We're ordering the long-lead items now as fast as we can, that gives a quarter advantage on the study, with a view to commissioning it in H1 2025. But let's say, whereas we originally going to and be looking at [indiscernible] with Syama North, we've actually embraced the idea of taking on more material from underground. We think 2.8 is feasible to get to over the next 2 years rather than the 2.4, so the levels that we're operating now from underground. And we've got quite a lot of high-grade stockpiles, which actually haven't got an opportunity at this point in time to get through the plan.
So we're in the process of looking at the optimization on the circuit. We're still waiting for that geotech information, so we can firm up the pit angles, et cetera, But we're also looking at extending that pit further with the new mineral resource that's coming in, in the next 2 weeks. But we'll keep you informed as this one grows because it will be a growth project over the next 6 to 9 months. On Page 11, we give you a little bit more detail there. I won't go into that. But this is common across the industry where you have a plan, having the ability to switch backwards and forwards on oxides and sulphides, and that can be done by literally valve changes within 8 hours.
Slide #12 gives you the time line. As I mentioned, we're looking at starting in Q1. And these monies that we're talking about, $52 million, that will be taken from free cash flow. It will be taken if the operation will go to over 250,000 ounces. And our target is $200 an ounce reduction in costs. You also see that the operators are using 2.7. All these numbers are slightly conservative, obviously. This is a function of the study. But we've got tough targets slightly higher than these that we want to meet. And just a heads up, we are starting to work and look at the largest found operation, the 400,000 ounces plus that we're expecting to look at within 3 to 5 years. Okay. With that, on the operations summary, I'll hand over to Chris, and he'll take us through on Slide 14 with the financials.
Great. Thanks, Terry, and welcome, everybody, again. So starting on Slide 14, just a few of the key financial metrics that we are issuing at this stage. So had a very, I'd say, a solid quarter with gold sales of 84,900 ounces, at an average sales price of $1,922, which is slightly higher than the previous quarter. And as Terry mentioned, our all-in sustaining cost of $1,489 per ounce was slightly higher than last quarter due to the issues that we experienced in May, which, therefore, had lower production and higher costs. That being said, we think we've had a very strong first half of the year, and we've provided a few key metrics. So our gold production for the year is sitting at 176,000 ounces at an all-in sustaining cost of $1,469, which is right on top of our guidance toward the year.
We have gone through quite a lot of cost initiatives in the business. And one of the items that we've reviewed in quite detail is our capital expenditures for the year. And we've tracked for the first half of spending $36.7 million, which is below our guidance for the year of $88 million. So I think we'll probably be more in that 75% range for the year, plus or minus, based off some of the reductions that we've done on the CapEx side.
So look, we mentioned this in the past call, we're doing a lot of work on the cost reduction. There's been an awful lot of happening in the first half of the year. We've hired quite a few people in the London office, and we've been reducing our Perth office systematically. To give you some specific context, last year, Perth was sitting at [ 1.8 ] over 50 people, and we're expecting that to reduce to 6 to 7 people by the end of this year. And in London, where we had 3 or 4 people last year, we'll be targeting around 20 people by the end of this year.
So a lot of change in the senior management of the business and also at site. We've been very much focused on reducing the expats at the sites. We've also been looking on how we purchase, do we need to purchase. We've been negotiating key contracts. We've been obviously focusing a lot on inventory levels throughout the business because they were quite high. And look, we're very much trying to instill a new culture of being an owner-operator and changing the way that we think.
So it's a cultural shift which takes time. We've got some of those benefits coming through now, which has offset some of the [ misses ] that we've had in May, but we really feel like the bulk of those cost initiatives will work its way through the business by the end of this year. And so we're very pleased about the progress that we're making on the cost cutting, but obviously, we see that now into the numbers. And finally, on hedges, we're not putting any more hedges. We do still have around 60% of our production hedged through Q1 of next year, and that's an average price of $1,929. But at this stage, we don't see ourselves putting any future hedges within the business. So moving to the next slide on Page 15, just to give you a little bit of overview of our liquidity position. Because of the stable and strong results, we generated good cash for the quarter of $17.3 million of operating cash. This is operating cash flows less CapEx and exploration. And with that cash flow generation, we did reduce our net debt slightly by $2.7 million. So we're sitting at net debt of $17.2 million. And we have a healthy amount of liquidity of around $165 million. So I feel quite comfortable with the liquidity situation in the business. That being said, after the quarter that we have today and knowing that our banks -- effectively, our financing facilities mature in Q1 of next year, we will in the second half of this year be targeting a refinance of existing facilities and also with the intent of reducing our cost of capital and increasing our liquidity profile. So again, from a financial perspective, albeit with the few misses that we had in May, we still maintained a very strong financial quarter. And we will be releasing our H1 financials sometime towards the end of August, which will have the full numbers for the market.
With that, I'll turn it back over to Terry for a few concluding remarks before we open to questions.
Thanks, Chris. So as Chris mentioned, we have been -- there have been a lot of activities going on at the head office sort of level. I do now have my full executive team in place. As Chris mentioned, we've revised a few key positions on site, and I would suggest that we've got a great team now in place going forward.
So if you look at -- in conclusion, Slide 16, what are we focusing on now. I don't think there's any major change in this over the last 2 years, but obviously meeting our production and cost guidance. That May month was a bit sobering for us, and it just reminds us that we're fighting nature, but we do need more flexibility in our operation. What we want to try and do is make sure that it's a crusher as a bad day, then the company does not have a bad day. And I would suggest that in terms of the Syama sulfide, the major step will be in Q3 when we -- the new units actually are installed. Cost guidance -- sorry, and the cost you've heard. We've got a lot to work on Chris. He's got a lot of things in place with his team there, and we're starting to build traction on that. So we're trying to reduce our cash costs, optimize our capital. As you heard, we've actually seriously looking at our capital, what we spend it on and why we spend it. And then the phase 1 expansion of Syama. It's been getting very exciting. It's coming down the track, but that's real. We've actually started, we're ordering equipment. It is really happening now. Phase 2, we're starting the work on that. Obviously, what you don't want to do, and we've always kept this in mind, is put in -- put some piece of equipment in the wrong place if you want to look at expanding further. And we are looking at all major step changes that we would do to actually take the operation up to sort of the 400,000-plus sort of levels.
Syama North, this is a story. We know that Syama is now still open at depth with the 3 major plunges there and open on strike. We're still recording decent hits. We've started going down to testing these hits further again because we've done the infill drilling again for the ore reserve calculations. We will be revising the ore reserves -- sorry, the minerals reserves -- sorry, I'll say it again. We will revise the mineral resources now this month and then again at the end of the year, and we will systematically change those to ore reserves as part of the project and as they come up. But the drilling is still finding decent hits outside our existing pits at this point. So just expect that to keep growing.
First time I'm excited about what's happening in Senegal in terms of the exploration. I think we now got a better chance of finding something there, and I'm very keen to drive this prospect in Guinea because that looks very interesting. And as Chris says, we are exploring ways to reduce the group's cost of capital and improve our liquidity. So with that, I'll hand it back to Darcy, and we'll go for questions.
[Operator Instructions] Your first question today comes from Reg Spencer from Canaccord Genuity.
I guess it's good morning for you, Terry. Congrats on a solid quarter. I've got a lot of questions, but I might just stick with a couple, and then we'll see how we go with other people, and I might come back to you follow up offline. But I'm most intrigued by your stated phase 2 in terms of taking the production up to 400,000 ounces per annum. I was hoping you might be able to unpack this a little bit for me. There's implications about what you've got in terms of resources and potential reserves, which, I guess, you provided a clear resource upgrades through the back end of this year.
But if I just did some quick math and looked at what kind of throughput rate you would need to get 400,000 ounces per annum, it's about 6 million tonnes looking at Syama North current resource and underground reserve at Syama itself. Now it only gives you kind of 10 years. So the fact that you're thinking about a 400,000 production rate, should we be getting a little bit more positive or bullish about the overall resource potential at that Syama complex?
Yes, definitely. As we mentioned before, we think this whole area is vastly unexplored. I think Syama North is just indicating that. We've just recently -- we're still looking at satellite ore bodies, and Bruce is still finding oxides where we didn't expect them. We actually found some 3 million sulphides, which is a bit anomalous. It's not -- it's nowhere near at the stage where we can put it into a resources yet. But Bruce is still finding a lot of stuff. We've got joint ventures that we've signed with 2 new parties. We've been to have a look at their areas. And we've got a lot of resources on our books that we've never turned to reserves because of the plants' historic -- because of the mines and the plants historically haven't been able to treat the stuff. But I think if you remember when I first got there and somebody asked me a question, okay, what's your view on Syama in the long term? I said, well, if you've got 10 million ounces on the books and you're doing it at 225,000 a year, you're going to be here for 30, 40 years. That doesn't make a lot of sense. But -- so we need to spend some money on upgrading our resources to reserves, and we're starting to look at it seriously. But we are still finding a lot of material, and we expect to find a lot more as we go forward.
Okay. I've just got a couple of follow-on questions on that potential phase 2, Terry. If you had to think about what you might need to spend to deliver that expanded production rate, an expanded comminution, increased roaster capacity [ pushing up ], and what might the timing be on completion of those initial studies?
We're probably going to spend about 12 months on the study. This is really parallel with the construction now phase 1. Once you've got your engineers focused on these things, it's good to keep the knowledge there and keep them going. And yes, we'd be looking at a new train on the comminution circuitry and that would be key on the sulphide. We're looking at doubling up there. But what is always, I think, I'll be mentioning for a long time, the roaster, you can double the throughput in that roaster by just putting oxygen onto it. It's simple. And an oxygen plant cost you $3.5 million to $4 million. So you've got a $60 million equivalent roasting plant sitting there, which was always the weakest link. I think that now is the opportunity.
You can -- as I say, you can take that off the air flow in there from slightly increased, but you can take the oxygen levels from 20% to 30%. And you bite on the air at the moment is from 20% down to 10%, so you take it up to 30% -- take it from 30% down to 10% because you always need a residual 10% oxygen in the air discharging, then you've got double the ability. It's not necessarily just as simple as that. I mean, there's a lot of engineering changes that can be made. But you're certainly not looking at significantly increased cost of having to build another roaster. It's in a good position.
All your money would be going into the comminution circuits, the mill, which would be a great opportunity to upgrade the existing mills. Those mills have been there for some time, new crushers, more leaching, more [ dilution ], et cetera. And the question mark would be, would you put all the plants in the same footprint? Or would you spend it around the 85 kilometers. So we've got some key decisions to make based on which ore bodies we think are the most accessible and have the best margin.
Okay. Yes. It sounds like there's quite a few things to look at there, Terry. Look, I'll just -- just 2 quick more questions, and then I'll pass it on. Otherwise, I might come back to you. But can you remind me of the oxide to sulphide split at Syama North?
Syama North is 8% oxide, and you're spot on. We have not factored those in, and I accept we've been conservative. They are patchy, but it is still 8% of that 3 million is oxide. And the plan would be as we're coming in because, it's patchy, we'd stockpile and then we campaign back to the oxide plant because they do represent the highest grade oxides we've got on the site at 2.5 to 2.9 gram a tonne. And we've built some basic network on it. We will do a lot more follow-up. But they're looking good on recovery. So it is stuff that is upside on the project.
Great. And one very last quick one, maybe, just on the financials, I think where you thought you might be on cash flow during the quarter was impacted by your capitalized waste stripping, given that you've finished Taba. Can you give any guidance on what the capitalized waste strip would be going forward?
Chris, I don't know, you could help me on that one.
No, I'll have to come back to you on that one. I'd be shooting a bit in the dark with the numbers. So let me just come back to you.
[Operator Instructions] Next your next question comes from Will Dolby from Berenberg.
Congrats on a steady quarter. Just a quick question from me on the Syama expansion. I just saw on Slide 12, and you mentioned around some regulatory approvals and engagement with the local community. I just wondered if you could maybe provide a touch more color around that on sort of the process involved and how that will feed into the time line there?
Yes. In terms of regulatory stuff, it's really we've got all the permits in place. We wanted to build another water dam, so we've asked for a permit for that. We have got one of the satellite pits there that is permitted for water. With the footprint growing, we said all well, we'd like to move that down. So there's nothing that's going to stop the movement of ore. It's really just having us consultations with the villages. And we do have the communities on site. So they will happen. It normally takes us about 3 to 6 months to get those things formalized. So I certainly don't see that as a roadblock.
[Operator Instructions] Your next question comes from Matt Griffin from Maple-Brown Abbott.
Just a question on Syama expansion phase 1. Just wondering what sort of recoveries we should expect from that plant when it's fully up and running?
In terms of sulphides, we expect 80% right across the board and 80% with underground is the target because you can get that in the laboratory plus a little bit. I mean, what we do on recoveries in the lab, we discount by 2% for large plant scale up. And so you can get 2% in the lab, so you aim for 80%. With the Syama North stuff, it's coming in slightly higher in sulphides. It's coming in at about 84 in the lab. But at this stage, we're sort of targeting 80 as well. It's really straight off the back when you start with the new ore body. You will get a slightly higher discount than 2% and then [indiscernible] just have to tweak it over about 6 months to 12 months to get it up there. But in terms of ore studies, we're focusing sulphides across the board at 80%. And the oxides, we are at 87%, which is our experience right across the Syama belt.
I guess just trying to work out some of the math because of a plug-in 4 million tonnes and [ 2.7 ] grams, you've given an 80% recoveries and getting a fair bit above the 250,000 ounces you're saying. So is it...
Remember what will happen, it will displace oxide. So that plant will be doing -- whereas it's doing 1.7 million tonnes now of oxide at 1.5 gram a tonne, you're going to replace that majority with sulphides and then just treat the higher oxides.
Okay, okay. Makes sense. And then just the $200 cost reduction you're talking about, is the base for that [indiscernible] guidance this year. So you are going to get under kind of $1,200. Is that what we should think?
Yes. It sounds aggressive, but we're comfortable with those numbers. And these are conservative and also it's -- generally to get something like the first 100 done, that's generally easy on these things, and it's hard work to get to the next 100 of it. But -- and these are conservative numbers right now given we don't have the full geotechs on the pits, so our strip ratios [indiscernible], and we don't want to talk about them yet because they're provisional until we've got the geotech. But we expect them -- the strip ratios to come down with the work, and then we'll be comfortable presenting it to you.
Your next question comes from Tim Elliott from Regal.
Terry, could you just give an update about the status of Ravenswood and whether there's any likelihood of receiving proceeds from that? And if so, what sort of time frame?
That's a good question. Chris is on top of this. Chris, I think, if you could just give us a brief update. We are in consultation with them on a continuous basis.
Yes. So to answer the question, as Terry mentioned, we are in constant dialogue with the team Ravenswood and [indiscernible] as they are ramping up their profiles on their project. The first payment due to us would be sometime next year when they achieve 500,000 ounces of production cumulatively. And we think they'll be making that target and that would trigger a AUD 50 million payment to us. And then there is a note of another $50 million due either upon they achieving some sort of liquidity event, selling the business or having an IPO or as a term of maturity, which is in 2027. Those are the, they call it, the 2 key future milestone payments that we see happening. Those may change if they come and talk to us about wanting to revisit the deal. But right now, that's what we have.
As there are no further questions at this time. I'll now hand back to Mr. Holohan for any closing remarks.
Okay. Thank you very much again for listening. And I think the mantra is exactly the same as it has been for the last 2 years. It's all about productivity, cost effectiveness and growth, and all of that to give us that flexibility that we're getting slowly but surely and systematically. So it's all productivity, cost effectiveness and growth. Thank you very much.
That does conclude our conference for today. Thank you for participating. You may now disconnect.