Ramelius Resources (ASX:RMS) Q1 2027 Earnings Call

0:01 Thank you for standing by and welcome to the Remelius Resources September quarterly conference call. All participants are in all this lonely mode. There'll be a presentation followed by a question and then a session. If you would like to ask a question via the phone, you'll need to press the star key followed by number one on your telephone keypad. If you would like to ask a question via the webcast, please enter it into the ask a question box and click submit. I'd now like to hand the conference over to Mr. Mark Zeptner, Managing Director and Chief Executive Officer. Please go ahead. Thank you. Good morning everyone and thank you for taking the time to dial in this morning for our September 2026 quarterly results. In addition to the quarterly report, we've released a quarterly results presentation that we'll speak to during this call.

0:47 Both documents have been uploaded on the ASX platform and will also be available on our website shortly. I'm joined this morning by members of the executive team, our COO Tim Hewitt and our CFO Darren Millman. Initially I will be speaking to the highlights for the quarter which is the first quarter of FY27 and then I'll pass on to Tim who will speak to the operating and project highlights which will include Mount Magnet plant upgrade, Dalgaranga mine development ramp up and Rebecca Road. Darren will then speak to the financial highlights before I sum up at the end. While the presentation is relatively high level I do note that more detail can be found within the quarterly report released today As usual, there will be an opportunity for listeners to ask questions at the end, whether that be through the teleconference or the webinar, depending on how you have joined the call. So if we can make a start, I'll be initially speaking to slide three.

1:47 Gold production for the quarter was 48,839 ounces at an all-in sustaining cost of 2,656 Aussie. In summary, this was a solid start to FY27 underpinned by the processing of 135,000 tonnes of never-never underground ore at an average grade of 4.15g per tonne. A clear demonstration of the positive impact Dalgaranga is now having on overall production. Importantly, we remain on track to achieve our FY27 production guidance of 205,000 to 225,000 ounces. Tim will talk further to the mining and milling detail shortly. We finished the quarter with cash and gold of $768 million up from $650 million at the end of June.

2:38 The quarter generated operating cash flow of $186 million and underlying free cash flow of $62 million after continued investment in growth capital and explorations. The cash balance was boosted by the completion of the sale of the Ednamay Hubs to Forestania Resources which completed on the 4th of September for a total consideration of $300 million made up of $210 million in cash and $90 million in Forestania shares. These proceeds more than offset the $131 million that we paid in Spartan stamp duty during the quarter. On our growth projects we were pleased to have secured Primero as the EPC contractor for stage 2 of the Mount Magnet processing plant upgrade being the new circuit 2. Upgrading the existing circuit, circuit 1 is underway and the broader upgrade has been focused on plant engineering works and preliminary site establishment.

3:38 At Dalgorengas the focus has been on continuing to increase production rates from the Never Never Underground mine and we are now also in the final stages of commissioning the PACE plan. At Rebecca Rowe, importantly we received EPA approval of the Part 5 works application for Rowe well ahead of schedule. Exploration continues to deliver with exceptional results at virtually all of our projects across the portfolio focused on extending mine life at our existing operations. We had eight surface rigs and four underground rigs in use and exploration spend including resource definition was just under $23 million for the quarter. Now we won't be getting into the detail today on our reported exploration results as we will provide a more fulsome update in January but I would encourage you to read the quarterly report which does include some excellent results particularly at Galaxy and Gilby's Underground with grades generally above the exploration targets that we have set for those projects.

4:43 On the corporate front, we completed a further $15 million in share buybacks during the quarter, taking the total since announcement to $156 million, or 62% of the $250 million share buyback program. Our growth projects remain fully funded, and we remain focused on increasing our returns to shareholders as we grow cash flows. On to slide four, which shows a breakdown of gold production by all source over the last four quarters. What you can clearly see is the growing contribution from Dalgaranga, which was again our largest single source of production in the September quarter, following the step change that we saw in the June quarter. The contribution from Dalgaranga will continue to grow quarter on quarter.

5:31 Production of 48,839 ounces was below the 53,466 in the June quarter, Largely due to wet weather impacting the processing of high-grade penny ore and also lower grades from both penny and never-never underground, which Tim will expand on shortly. The map on the right shows our two high-quality hubs in Western Australia, Mount Magnet, fed by Dalgaranga Q and Penny, just noting that the Algoo needs further drilling before being considered for development, and also our Rebecca Road project east of Cowgawling. With that, I'll now hand over to you Tim. Thanks Mark. Good morning all. Moving to slide 5, where I'll discuss the key production metrics.

6:19 We mined 0.7 million tonnes of ore at a grade of 2.56g per tonne for the quarter. Ore tonnes were up 9% on the June quarter, with each increased oil contribution from Kew and Dalgaranga. The mine grade was lower than the June quarter, reflecting an increased contribution from the open pits both at Kew and Dalgaranga and lower grades at Penny. At the Mount Magnet processing plant we milled just over half a million tonnes, consistent with our recent quarters and representing an annualised run rate of 2.1 million tonnes until the plane expansion is complete. Mill grade was 3g per tonne, down from 3.59 in the June quarter. and the key contributor to this was haulage from Penny which was limited in September due to wet weather.

7:10 This combined with lower grades from Penny earlier in the quarter and also Nevernever reduced the head grade. Higher grade material is planned at both Nevernever and Kew resulting in an overall higher processing grade quarter on quarter for the rest of the year. Overall this resulted in gold production of 49,000 ounces for the quarter with a further 4,000 ounces stockpiled at penny at the end of the quarter, noting that we remain on track to achieve a full year guidance of 205,000 to 225,000 ounces. Moving to slide 6, Mount Magnan update, the processing plant bringing that up to 4.3 million tonnes per annum. For those on the call not familiar with the upgrade, the addition of Circuit 2 and the upgrade of Circuit 1 will take the mill capacity to 4.3 million tonnes and increase the recovery of Dalgaranga ore. As we have outlined previously, Circuit 2 is very conventional, a proven flow sheet designed around the matte magnet feed lens.

8:11 We have treated it for years and we know well. It has the flexibility to potentially take the combined plant to 5 million tonnes per annum in the future by relaxing the Circuit 1 grind size. The key milestone in the quarter was the award of the EPC Contract 2 Primero to deliver the 3 million tonnes per annum circuit tube. On circuit 1 the new crusher and cyclone tower were integrated into the circuit in October. The next step is the additional bore mill refurbishment and relocation which is underway. As a reminder, grinding the never-never ore finer to improve recovery only requires refurbishing the existing second bore mill, along with some other enhancements such as the new leach feed thickener.

8:56 The photos on the slide show some of the progress across the border site. Of note, all wind turbine sections are now on site, with the assembly to commence shortly. The additional camp rooms and associated facilities have all landed at the magnet camp. Longleat items for the site pairing structure have been ordered and the ancillary work package is in the final phase of design or out to tender. The table at the bottom of the slide sets out the growth capital for the upgrade, considers how we set up the whole site for success. FY27 guidance is $195 to $215 million Aussie for the processing expansion, $35 to $40 for processing infrastructure and upgrades, and an additional $40 to $50 million for mine infrastructure including road and power upgrades, water, camp and buildings. This is a total of $270 to $305 million FY27 with a further $52 to $73 in our FY28 outlook.

9:58 Moving to Dalgaranga on slide 7 where we continue to ramp up the mine, this remains on track As Mark mentioned, we processed 135,000 tonnes of NeverNever ore at an average grade of 4.15 grams per tonne during the quarter. The chart on the right shows monthly ore tonnes mined, which have increased steadily from under 2,000 in October 2025 to a record 46,500 tonnes in September 2026. We are on track to mine 500,000 tonnes in FY27. and DeepLine Development is on track to open up the longest strike of never-never as we ramp up to 1 million tonnes per annum for FY28. The chart on the left shows the Life of Mine profile released with our updated plan in September incorporating actuals from FY26 and our FY27 guidance plus longer-term outlook.

10:53 Through the FY36 and beyond, our ground will continue to produce high-grade tonnes as a globally relevant low-cost asset. On site, the team's focus during the quarter has been on completing and commissioning the PACE plan. On to slide 8 and Rebecca Rowe, where we continue to make good progress on approvals. During the quarter we received the Environmental Protection Authority Part 5 works approval for Rowe and planning has commenced to obtain the associated mining approvals. Rebecca is already fully permitted, the DFS is complete and the no title agreement has been signed. Rebecca Rowe is a greenfield development that will cooperate our 3.25 million tonne per annum processing plant. We have established most of the project team to build Rebecca Rowe and have been advancing early stage activities.

11:44 We will remain on target for first goal in the fourth quarter of calendar 2028. This project hosts a combined mineral resource of 67 million tonnes at 1.5 grams a tonne for 3.2 million ounces. With that, I'll pass over to Darren. Thank you Tim, good morning all. For the September quarter we sold 51,000 ounces of gold, comparable to the prior quarter at an average realized price of Aussie $6,019 per ounce. The realized price was down 3% on the prior quarter, with 3,750 ounces settled on zero premium collars at $5,906 per ounce. The only sustaining cost for the quarter was $2,656 per ounce, Slightly higher than a plan reflecting less penny ore process due to weather interruptions, resulting in 4,000 ounces of unprocessed high-grade penny ore at quarter end.

12:41 The resulting all-in sustaining margin, which is the average realized price less the all-in sustaining cost, was Aussie $3,363 per ounce, representing an all-in sustaining margin of 56%, which remains sector-leading. Underlying free cash flow for the quarter was $62 million after reinvesting $76 million in growth capital and sustaining capital of $31 million during the quarter. Moving on to slide 10 and the cash flow for the business in the quarter starting from an opening cash and gold balance of $649.6 million. The operating cash flow was $186.4 million from gold production of 48,839 ounces at an oil expanding cost of $2,656 per ounce. This operating cash flow funded growth capital investment for the quarter at $53.5 million, being $52.3 million at Mount Magnet and $1.2 million at Rebecca Road.

13:44 Our investment and exploration and resource definition studies for the quarter totaled $22.7 million. We also paid $3.1 million in working capital and other movements and prepayments of $13.6 million for FY27 income tax. The resulting underlying free cash flow for the quarter was $62.1 million. Below the line, we spent $17.6 million on share buybacks and treasury shares, which included the $15 million returned to shareholders through on-market buybacks. We also paid $131.1 million in Spartan stamp duty, which was more than offset by the receipt of the $205 million in sales proceeds from the ETHMA sale. The resulting closing cash and gold position was $768 million.

14:38 As you know, we released our four-year plan in September, which sets out our free cash flow outlook over the next four years. As you can see on slide 11, even whilst we are investing back in our business, we continue to generate free cash flow. In FY29, we expect between $140 and $200 million in free cash flow, with a focus on the Mount Magnet plant outbreak and early works at Rebecca Road. In FY28, as we focus on Rebecca Rowe development, the upgraded Mount Magnet plant will be ramping up to the target of 4.3 million tonne run rate by December 2027 and throughout this period will continue to be cash flow positive and deliver returns to shareholders. And for FY30, we'll be generating up to almost $1.8 billion in cash flow at current gold prices. In our mine planning, we have a line of sight from FY31 to FY35. The story even gets better with both growth and sustaining capital reducing significantly.

15:37 This is why we feel the description of a free cash flow machine is appropriate and why we believe our forward cash generation screams strongly against our larger caps relative to our valuation. With that, I'll now pass it back to Mark. Thanks Darren. So on slide 12, I'm not going to speak to every box in this slide, but just want to emphasise, as I have in the quarterly report, that we are systematically executing and de-risking our business to become a 600,000 ounce producer, the highest production growth profile in the sector. We have the balance sheet that can not only fund our development pipeline, invest $100 million into exploration and execute on our $250 million share buyback program, plus pay a dividend yield that generally outperforms our peers with a track record of doing so consistently.

16:26 We remain focused on internal growth and shareholder returns. That concludes the presentation and with that I'll now hand back to you Darcy to open the line for questions please. Thank you. If you would like to ask a question via the phone you'll need to press the star key followed by the number one on your telephone keypad. If you would like to cancel please press star 2. If you would like to ask a question via the webcast, please type your question into the ask a question box and click submit. Your first question today comes from Jonathan Sharp from JP Morgan. Please go ahead. Yeah, hi, Mark and Sam. Thanks for taking my question. Just first question on cost. The first quarter was about $136 million in absolute or in sustaining costs. Just as you ramp up through the year, should we think about the cost basis broadly flat Are there items that come out, or does it lift slightly with volumes?

17:26 I think that one's yours, Darren. Yeah, so as we've highlighted in the quarterly report, we're going to be seeing grades come up significantly quarter on quarter, especially at Dalgaranga, but also at Kew. So with that occurring, you'll be seeing the cost profile steadily decline quarter on quarter as well as our production comes up quarter on quarter. So you won't see a significant drop come Q2 and then it flatlines at that level. Every quarter you'll be seeing that general decrease in cost, increase in production quarter on quarter with Q and Delgarenga being the reason. That's on a unit cost basis. The absolute dollars? Yeah, absolute.

18:15 Yeah, it's pretty flat. No big increases in any underlying physicals in that context. Just more grade. Okay, great. That's good. And just a follow-up on that site admin cost. They almost doubled in absolute terms. Should we just think of that as that's what it will be moving forward? Let me get into that one, but it should be relatively consistent. There might have been some catch-up from the June quarter, but let me just be 100% clear on that one. We have got guidance out that we do expect to stay within that, but let me follow up on that one, Jonathan. Yep, no worries. And just, yeah, second question on NeverNever.

19:02 You said on the call that you're on track to... for 500,000 tonnes for the year, which looks like you are. I think previously you said you'd average 6.2 grams per tonne this year. Should we just think about, you know, the next three quarters you're averaging 6.2 grams per tonne, or is it over a year? Just wondering how we think about that. I'll say that one, John. Look, yeah. In the budget Q1 was always lower grade just where we were mining in the in the never never essentially so the next three quarters that grade does lift so yeah the 6.2 for the year is representative so yeah that's just where we were in the mine at that time.

19:53 Okay great so seems like you'll you'll lift a bit there okay I'll pass it on thank you. Thanks Jonathan. Thank you. Your next question comes from Richard Nice from Baron Joey. Please go ahead. Hi James, thanks for the call. I just wanted to push you a little bit more on the Never Never volumes. In the release I think you mentioned a million tons since it commenced from the Never Never underground by the end of this financial year. I just want to understand if That's correct. I'm just trying to reconcile that with Tim's 500,000 tonne number that he just mentioned. It's the run rate. Yeah, Richard, yeah, essentially we want to exit the year at that higher run rate. So yes, we'll mine 500,000. We want that to steadily increase during the year. So we're at that essentially the run rate by the start of the next financial year quarter.

20:57 Thank you. Once again if you'd like to ask a question please press star 1 on your telephone or ask your name to be announced. Your next question comes from Levi Spry from UBS. Please go ahead. Like I was saying, it's probably the same question. Can we just talk a little bit more about the movie ahead at Dalgaranga?

21:43 So, you know, the post plant, when does it get turned on, how does the ramp up look, and then does this idea of Yeah, it looks like you're already at 500,000 tonnes per annum now, but you're going to finish the year at a million, so the grade profile and the tonnes, just a bit more detail on that maybe, given that's the key value driver. Okay, there's a few questions there Levi, but so essentially the tonnage is, we're pushing the decline to open up that strike, so that's that. the key one that we're pushing there that opens up more headings and gives that ability to keep pushing that mining rate up. As you commented, we've been building that steadily and we expect that we'll continue to go along like that. The other one, the paste plant, obviously is a key part of it as well. So that has been complete in terms of build now. We're just going through the commissioning phase, running that on surface and then underground.

22:47 and obviously that's the other key component. So as we open up the strike, more headings and get the post online, then we'll continue to push those volumes up and the appropriate personnel and equipment coming from Bumminco to meet that are on track as well if not already in sight. Okay, thanks. And then maybe just on Rebecca Rowe, so yeah, you confirmed first goals, fourth quarter, 28. Can you just remind us of the critical path items to hit that timeline? You go, Tim. Essentially, there's probably two components. Obviously, the long lead irons in the ETC for the mill. So we're just working through The tender documents for that at the moment. And the other one is the obviously the mining as well. So again, we're working through those documents.

23:49 So that's probably the key critical part areas in terms of permitting and the like that's all done. So it's just basically getting boots on brand now to start that work. Yeah, just as a broad comment on Rebecca Rowe, we're in really good shape because effectively permitting has come in earlier. Got it. Okay. Thanks, Mark. Thanks, Tim. Thanks, Leroy. Thank you. Your next question comes from Adam Baker from Macquarie.

24:41 Please go ahead. Hi, Mark and team. Just firstly on growth capex, only $53 million during the quarter. I guess that makes sense. You've only awarded the EPC contract to Prime Euro quite late in the quarter. I guess when does growth capex meaningfully ramp up for the Mount Magnet expansion over the Corsair Flight 27s? and in addition to that, just noticing Eridanus, you know, the loyal X capital was spent there. Equally, I guess, same question, when are we going to get a ramp up in CapEx at Eridanus? Thank you. I might answer the last one. So Eridanus, we're essentially mobilising there at the moment. So November is when we budget to start that material and we're on track to do that.

25:32 On the plant upgrade, as it's flagged, we've just signed the FEC contract. We'll have boots on the ground sort of late November, early December. So the spend will probably really ramp up come January. Yeah, so both of them are really second-half weighted, not surprisingly. Yeah, yeah, that makes sense. Cool. And then secondly, I guess, and apologies I missed it earlier on the call, but I guess the wet weather impact between Penny and Mount Magnet, are those roads now restored? Yeah, they're up and running. Penny, it's got its own weather system there. It tends to get more rain than, you know, we do at Mount Magnet, Dalgaranga, for example.

26:19 and it's a longer stretch of road so yeah it did knock us out for a lot of September that's why we had a much larger stockpile we have actually an internal KPI of having no more than 5,000 tonnes on the on the rime at the mine so to have 30 to sort of give you an insight to the issues but now we're back up and running and we obviously want to be processing all of that material through this quarter remembering that end of mine mine plan is also this quarter as well at Penny Yeah, okay, cool. I'll hand it on. Thanks, guys. Thanks, Alan. Thank you. There are no further phone questions at this time. I'll now hand the conference back to Mark to address any webcast questions.

27:05 No webcast questions by the looks. So just to wrap up, final comment, the guys did mention that first quarter was solid, but we do look forward to increasing production quarter on quarter going forward Thank you all for listening in. Enjoy the rest of your day. That does conclude our conference for today. Thank you for participating. You may now disconnect.