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Good morning, ladies and gentlemen, and welcome to the Karora Resources Second Quarter Conference Call and Webcast. [Operator Instructions].
I would now like to turn the conference over to Mr. Oliver Turner, Executive Vice President, Corporate Development. Please go ahead, sir.
Thank you, operator, and good morning, everyone. I would like to welcome you to Karora Resources Second Quarter 2023 Conference Call. I'm sitting in today for Paul Huet, our Chairman and CEO. Please note, we will be talking to a slide deck which is available on the homepage of our website as well as throughout this webcast.
On Slides 3 and 4, before I begin my presentation, I would like to remind you to please review our cautionary statements regarding forward-looking information and non-IFRS measures. These statements can be found in our second quarter MD&A, news release and in our presentation slides.
Over to Slide 5. On the call with me today is Leigh Junk, our Managing Director for Australia. Lee is joining us on the call from Perth down in Australia. And just last week, Leigh represented Karora at the Diggers and Dealers Mining Conference in nearby Kalgoorlie. Lee will take us through the operational highlights from our record second quarter but first, I will cover some recent achievements and review our financial results.
Following on our record first quarter, we set another new record with gold production of over 40,000 ounces for the first time in our history. For the first half of 2023, we produced a record 80,650 gold ounces. The key to our rapid ounce production growth over the last few quarters has been the increased milling capacity resulting from our strategic acquisition of Lakewood last July.
Turning over to Slide 6, I'll now go over our financial highlights. This morning, we issued a news release with our second quarter financial results. Our unaudited financial statements and MD&A for the period ended June 30, 2023 have also been filed and are available on our website and under Karora's profile on SEDAR.
As I outlined at the beginning of the call, the first half of 2023 was very strong with record consolidated gold production, putting us in an excellent position to achieve our full year guidance of 145,000 to 160,000 ounces. All-in sustaining costs for the first half were USD 1,184 per ounce sold, well within our 2023 guidance range of USD 1,100 to USD 1,250 per ounce sold.
Headline financial results for the second quarter included record revenue of $111 million, up 50% compared to Q2 of 2022 and up 14% compared to the first quarter. The increased revenue is the result of Karora enjoying increased sales and higher gold prices compared to prior periods. Second quarter adjusted earnings were $13.9 million or $0.08 per share, an improvement of $9.1 million or $0.05 per share from the prior quarter. Adjusted EBITDA was $38.8 million or $0.22 per share, which is an improvement of $16 million from the prior quarter.
Our cash balance at the end of the second quarter was a very strong $71 million, and with our undrawn $40 million revolving credit facility, we continue to have a very strong and flexible financial position. Looking ahead, we are poised to generate solid cash flow over the balance of the year as we continue to execute operationally in the currently favorable gold price environment.
So with that, I'll turn the call over to Leigh Junk to take you through our operating highlights.
Thank you, Oliver, and good morning, everyone. I'm excited to be reporting to you today on the strongest operating result in Karora's history. As I did last quarter, I'll start off by recognizing our operations team for their commitment to working safely and buying into our culture of strong operational discipline. We continue to see improvement across the business, which I believe reflects good engagement from our team members to maintain the safest possible work environment while executing the plan.
Operationally, our team continues to meet or exceed our expectations as demonstrated by the record results we've been achieving as we deliver on our growth plans for gold and byproduct nickel production. Now referring to Slide 8, on a consolidated basis, gold production for the second quarter was a record 40,823 ounces from 536,000 tonnes milled at an average grade of 2.5 grams per tonne. The gold production increased from the prior quarter of almost 1,000 ounces was driven by higher tonnes milled.
Consolidated mill recoveries improved slightly to 95% from 94% in Q1, remaining strong and consistent as a result of our strategy to optimize feed blend from Beta Hunt and Higginsville. Consolidated cash operating costs were USD 1,068 per ounce sold, a 5% improvement compared to the prior quarter driven by higher grades and lower costs at Higginsville relative to Q1. For the first half of 2023, we milled just over 1 million tonnes of material and an average grade of 2.56 grams per tonne per 80,650 ounces of gold at an average cash operating cost of USD 1,094 per ounce sold.
Turning over to Slide 9 now. Before I get into the numbers, let me briefly bring your attention to the cat truck shown in the lower right-hand corner of the slide. This truck was delivered to our Beta Hunt Mine late last week and illustrates the ongoing fleet expansion and upgrade that's been underway for some time. The new equipment is more efficient than the models are replaced, so it's always an exciting time from a productivity standpoint when we add new equipment to our mining fleet.
Once again, we attended the Diggers & Dealers Mining Forum in Kalgoorlie last week, and we're proud to have our new truck on display at the main entrance to Australia's largest mining event prior to its delivery to site. Certainly, created some exciting discussion around our to reinforce how far Karora's come in the last few years.
Turning to quarter 2. At Beta Hunt, we mined 297,100 tonnes, which is flat when compared to the prior quarter. Similar to the first quarter, mining was focused in the central Western Flanks and A-Zone areas. The average mine grade for Q2 was 2.97 grams per tonne, consistent with the mine plan for the year. Through to processing, 390,000 tonnes of Beta Hunt material was milled at an average grade of 2.62 grams per tonne for production of 25,709 ounces of gold. For the first half of 2023, we milled 618,000 tonnes of Beta Hunt material at an average grade of 2.77 grams per tonne for the production of 52,286 ounces.
Now looking at Slide 10. Higginsville mines contributed 15,114 ounces of gold in Q2, produced from 217,000 tonnes of material milled at an average grade of 2.31 grams per tonne. Higginsville mine material was 178,100 tonnes at an average grade of 2.76 grams per tonne. Mining commenced in April 23 at Mousehollow, which contributed 115,300 tonnes of mined material through the quarter. First half production from Higginsville mines was 28,364 ounces from 420,000 tonnes milled at an average grade of 2.25 grams per tonne. Higginsville production is scheduled to come from a combination of Mousehollow and Pioneer open pits and the Aquarius underground for the balance of the year.
With respect to our growth plan progress, our overall plan's moving forward well. During the second quarter, we progressed work on the second bank raise and underground development at Beta Hunt, tailing storage facilities at Higginsville and Lakewood and mill upgrade work at Lakewood. We do note, there's been some delay in the capital spend schedule due to particularly wet weather at both sites as well as continued contract labor force availability in the region.
We remain well on track to deliver our capital program during 2023 where we previously forecast a total of approximately AUD 105 million in capital during the year. However, we now anticipate a back half-weighted spend as we move these projects forward. During the first half, we spent approximately $45 million on our planned 2023 capital program. We want to be clear that we do not expect the minor delay in capital outlay to impact any of our production targets or guidance.
Turning to Slide 11. One area from Beta Hunt that I'd like to highlight is our most recent exploration results from the Fletcher Zone. In June, we began a 9-hole drill program at Fletcher to follow up on significant results we reported in April this year, which included an intercept of 46.5 grams per tonne over 7 meters and 6.5 grams per tonne over 26 meters at the southern end of Fletcher near the Alpha Island Fault.
Assays from 4 of the 9 follow-up holes received to date all intercepted strong mineralization and further increased our confidence in the continuing of Fletcher mineralization. The results from the latest drill holes are highlighted in yellow on this slide and include intercepts of 4.7 grams per tonne over 11 meters, 11 grams per tonne over 2.9 meters and a very wide intercept of 2.8 grams per tonne over 52 meters.
We look forward to receiving more outstanding results for the remaining 5 holes from the follow-up campaign before the end of this quarter. As a reminder, Fletcher is considered a structural analog to Western Flanks, Beta Hunt's largest and most prolific gold zone. Fletcher is positioned west and parallel to Western Flanks in the Hunt block and extends to the Alpha Island Fault. The most recent drilling in Fletcher south is only 230 meters from existing nickel infrastructure in the Beta block and 150 meters from the Larkin Mineral serve to the south.
Fletcher remained open along strike with the potential to extend for up to 2 kilometers and is open at deck. Overall, Fletcher looks very exciting and is certainly an area with high potential to be converted into new mineral resources. We'll be updating our mineral resource before the end of the year.
With that, I'll turn the call back to the operator to poll for questions.
[Operator Instructions] Your first question comes from the line of John Sclodnick from Desjardins.
Yes, great quarter. Nice to see costs come in slightly ahead of expectations as well. The 1 outlier versus my model was the top line. I'm just curious if you can comment at all on the average realized gold price, which was a bit below spot over the quarter.
Yes, John. I can take that one. Yes, so minorly below the spot price there. We did have some internal contracts during the quarter while we had some of the capital outlay that we planned just to lock in some of that period and rolling forward to the third quarter, we're fully exposed there.
Okay, perfect. I appreciate that. I guess over to Spargos, just curious, I think you guys are working on some underground development. Just curious on what we could expect for production and grade ranges there and when that could come in.
Yes. will grab that, John. Yes, we're still working on that. We haven't started underground development yet. Decision will be made this year and potentially get going next year. It will be reasonably small but high margin, probably 15,000 ounces a year or something like that, but good grade and high margin. So we'll make a decision on that later this year.
Perfect. Yes. No, always good to have a little sweetener in the mill there. I guess looking over to another potential sweetener down the road, Fletcher. Just curious on maybe timing for resource in that area and just how much drilling might you require there.
Yes. We will be -- with these results, we will continuously be drilling to the north, but the idea was to earmark a section of 500 to 600 meters at the southern end and drill that to at least and in third resource, which will probably need a few more holes after this program to get a few more holes on each section. So this was a bit of a patent and will probably require a few more holes to have a few on the same section and then we can get a resource out. It won't take long to get a resource out. So yes, it could potentially get 1 towards the end of this year or early next year. [Indiscernible] so much of Fletcher to go.
Yes. No, fair enough. That makes sense. And exciting to see what you guys there. Last 1 for me before freeing up the line. Just curious, you guys are tracking to the top end of guidance, I think, 56% of the midpoint through to year-to-date. Just curious how third quarter is going and kind of how you see the rest of the year evolving.
Yes. The rest of the year will be very similar to the first half that we're pretty fortunate that we are not relying on coming home with a huge production quarter in the last quarter. Each of our quarters this year will be pretty similar. So yes, we -- so what we've done to date for the first half, we'll -- yes, we'll be looking to replicate that in the second half.
So we've made good progress in this quarter and certainly a ramp-up at Beta Hunt is going well. We have had a bit of downtime with our crusher over at Higginsville for about a week. While we're doing some repairs on the connection with the pad there, we won't see much impact on production. There'll be a slight impact on cost but we could see that coming through in this quarter. But production, as I said, should be pretty similar to what we're seeing in the first half, aiming for the top end of guidance.
Perfect. Okay, that's great. Yes, nice you don't have to rely on a massive Q4 like some -- many mining companies out there. So I know that's great. You guys are really well positioned and great first half. That's it for me.
Your next question comes from the line of Matthew O'Keefe from Cantor Fitzgerald.
Another great quarter, so thanks for that. Just a couple of operational questions here. One on data or actually on both -- on all operations. Your production was -- your throughput was, I think, record on both Beta Hunt and Higginsville, largely on Beta Hunt 2. So what are we looking at from driving that? I mean, you've got a second decline. Is that operational? And what are the -- what's the outlook for the rest of the year on throughput?
So we are using the second decline so that's operational now. So we are beginning to be more efficient with our trucking, which will help us going forward. So that is helping where we're still doing our third of our 3 primary event raises to go into predominantly Western Flank. So that will help us towards the end of the year. And our third 1 is in and all links up. So we've got a few things to go until we are fully going there. But we've certainly started. The ramp-up is going well.
That's great. Okay. And then with respect to that, I guess, a follow-on there would be on -- with respect to the range this year was, I think, AUD 85 million to AUD 105 million. So with that, is that still what we're expecting for, for 2023? And what are the items to fall into that for the remainder of the year?
Yes, we'll be looking at delivering the top end of that is about $105 million. We're going well with gold pricing cash so we'll deliver in the top end of that -- for our capital. What are the bigger buckets? There's some mill upgrades at Lakewood, dams, TSF facilities there, some equipment at Beta Hunt, the primary fan to put on top of those raise bars. I just said a bit of surface infrastructure and more equipment and some work to do on the Higginsville processing plant as well.
So Lakewood, you're, so far, happy. No surprises there? Anything you're pretty happy with the operation?
Yes. Lakewood is going right. It was in far better -- much better conditions than I was even hoping for when I started, so Lakewood's going really well.
[Operator Instructions] Your next question comes from the line of Jeremy Hoy from Canaccord Genuity.
Wanted to start brief is the reserve and resource update that you guys guide is coming out later this year. So it sounds like there's potential that some of Fletcher could make its way in. But what else are we expecting to contribute to that?
Yes, we'll put out our -- yes, like you say, resource and reserves towards the end of the year. I don't think we'll bank on Fletcher coming in. It could happen depending on our drilling that we do between now and then. We have -- we'll have a new zone just in the south of the Alpha Island Fault, Mason, which is next to Larkin. So we'll be bringing Mason in for its first resource. And Castle, which sits right beside Larkin, will be splitting last year. We had Larkin sort of encompass both that we'll be spending out of Larkin. So just out the there will be Larkin, Mason and Castle down there. And just, yes, and the big ones of Western Flanks and A Zone.
Okay, sounds good. And then I guess just 1 more quick 1 for me. Are you seeing any limitations or easing of some of the pressures you've seen in terms of labor and supply chain at your operations? You did mention contractor labor there.
Yes, a little on the contractor, but it's not across the board in all things. We have a full labor force that -- so we have all our positions are full. And like I said with the new truck, we are getting all our equipment right on schedule. So the big piece of equipment that we really need to arrive and arrive on time for us to deliver that growth, they're all turning up right on time. So yes, all the bigger things. And so it's not all across the board that it's slowing absolutely everything down. So maybe we've seen the peak of the supply chain issues, but touch wood. But yes, we're coping okay.
There are no further questions at this time. I'd now like to turn the call back over to Mr. Turner for any closing remarks.
Yes. Thank you very much, operator, and thanks to everyone who took time this morning or this evening if you're over in Australia to listen to our call. We appreciate the support. And look, it's been a great first half of the year operationally. Outstanding job by Australian operations, and we're excited to deliver into this guidance for the second half of the year. So once again, thank you for the time. And operator, you can close the line.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely day.