Earnings Transcript for NST.AX - Q2 Fiscal Year 2025

Operator: Thank you for standing by, and welcome to the Northern Star December 2024 Quarterly Results. All participants are in a listen-only mode. There will be a presentation, followed by a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to Mr. Stuart Tonkin, Managing Director and CEO. Please go ahead.

Stuart Tonkin: Thank you very much. Happy New Year, everyone, and good morning, and thank you for joining us today. The December quarter was a very busy quarter for Northern Star. We continue to advance projects to further strengthen the asset base, to position us well for significant growth in free cash flow generation. Operationally, we had some key standouts, particularly with increased milling performance across a number of our sites, resulting in 410,000 ounces sold at an all-in sustaining cost of A$2,128 an ounce. Our team continues to focus on operational performance, cost control and capital discipline, to create additional value for our shareholders. With the first half delivered, we remain on track, with stronger second half weighting to deliver our full year production and cost guidance. The business is in good shape, to deliver for our shareholders tremendous leverage to increase gold prices. Financially, Northern Star is an exceptional position, with an investment-grade balance sheet that is net cash at the end of the quarter, with ability to fund all our capital management initiatives. As I mentioned, it's been a busy quarter for our team, and I thank them all for their efforts. At KCGM, we completed the East Wall remediation and advanced the mill expansion project. We have three portals. We commenced to provide access to higher-margin underground ounces, both at KCGM and Carosue Dam. And at Jundee, the renewables energy project was fully commissioned, providing a long-term strategic power solution, and reducing our carbon intensity. During the quarter, Northern Star agreed to acquire De Grey by a way of a recommended scheme of arrangement, subject to De Grey shareholder and court approvals being obtained in the scheme's implementation. De Grey's flagship development project, Hemi in Western Australia is expected to provide Northern, Star with an additional Tier 1 future low-cost production center, fully aligned with our strategy to deliver superior shareholder returns. And now to Pogo, a fantastic achievement by Alaskan team to deliver 71,000 ounces for the quarter, as the mill operated at a run rate annualized of 1.5 million tonnes per annum. The underground mine also operated at 1.3 million tonne per annum rate, notwithstanding some primary ventilation upgrades and rehabilitation works into new mining areas. As we look ahead to the second half, the Pogo plant is forecast to operate at a targeted throughput of 4 million tonnes per annum, with the next scheduled reline shutdown planned in this March quarter. I'd now like to hand over to Simon Jessop, our Chief Operating Officer, to discuss our operational highlights. Thank you.

Simon Jessop: Thank you, Stu. For the Kalgoorlie Production Centre, which includes KCGM, Carosue Dam and Kalgoorlie operations, we sold 208,000 ounces of gold and an Australian all-in sustaining costs of A$2,019 an ounce. This production delivered a mine operating cash flow of A$358 million. The region also spent A$308 million on significant growth capital projects. This included A$139 million on the KCGM mill expansion, A$64 million on the KCGM open pit development and A$38 million on the KCGM underground mine development. At KCGM open pit material movement of 16.5 million tonnes, as we prioritize the completion of the East Wall remediation project. After 34 million tonnes of total material movement, the East Wall remediation project was completed in November, to unlock Golden Pike North for the future. This is a credit to the open pit team after 4.5 years of successful mining. Going forward, mining is focused on destacking the Eastern side of Golden Pike North that hasn't had manned equipment in since the 2018 slip. We look forward to increased ore and total material movements from KCGM in the second half of FY '25, and beyond. Underground mining volumes for the Kalgoorlie region were 1.52 million tonnes with a grade of 2.6 grams and delivered 129,000 ounces. KCGM's underground operations increased development to 7.2 kilometers for the quarter, which is a 71% increase from six months ago. The development meters will continue to ramp up, as we begin to open up more of the Fimiston underground and Mt Charlotte ore bodies. Two new portals were successfully cut at KCGM as part of the Fimiston underground expansion. The Carosue Dam mines all performed well with 65,000 ounces mined in the quarter. Over 1 million tonnes was milled in the quarter, at a higher head grade of 66,000 ounces of gold sold. Our new underground mine at Million Dollar was commenced during the quarter, and is being operated by our internal Northern Star Mining Services. The Kalgoorlie operations underground mines and mill delivered to plan over the quarter. Processing volumes in the Kalgoorlie Production Centre increased 9% quarter-on-quarter, while KCGM's head grade was flat, due to less high grade ore available from Golden Pike North, and focusing on finishing the East Wall remediation and wet weather impacts late in Q2. The KCGM mill expansion spent A$139 million over the quarter, with total engineering progress at 71% And the major equipment package 91% complete, and all parts either at site or in Australia. The concrete poured is 50% complete and 15,000 cubes poured to-date. We remain very pleased with the on ground construction activities, all being built in parallel to the existing operations. The project remains on time and tracking to plan. At our Yandal production center, including Jundee and Thunderbox, we sold 131,000 ounces of gold at an Australian all-in sustaining cost of A$2,254 an ounce. This production delivered a mine operating cash flow of A$202 million, while we spent A$81 million on growth capital projects, primarily Orelia open pit, Wonder underground and Griffin underground. At our Jundee operation development advance was 7.4 kilometers with over 2.8 kilometers in development drill platforms completed in H1. The drilling will follow as platforms, become available to test a range of geological targets. Griffin development continued to ramp up over the quarter, as a future new ore source begins to be developed, while processing was on plan. Jundee's renewable project of a 16-megawatt solar farm and 12-megawatt battery system with 24-megawatt of wind, has now been declared commercial as Northern Star's largest renewable project [to date]. The Thunderbox underground mines, including Thunderbox and Wonder achieved 656,000 tonnes of ore for 35,000 ounces. The Wonder underground mine continued to ramp up ahead of plan with 1,634 meters developed with one jumbo averaging 545 meters per month. It's a credit to the Northern Star mining services who are building this mine with the Thunderbox technical team ahead of plan. For the quarter, the underground and open pit operation successfully mined 2.2 million tonnes of ore, which is 47% above the expanded mills quarterly nameplate. At the Thunderbox process plant, we achieved nameplate on a quarterly average of 1.5 million tonnes milled, and sold 58,000 ounces of gold. The mill throughput averaged an impressive 791 tonne per hour for the quarter, while a major shutdown was also completed. December mill performance was 588,000 tonnes for the month, well above the 500,000 tonne nameplate and averaged 890 tonnes per hour for the month. I would now like to pass on to Ryan, our Chief Financial Officer, to discuss the financials.

Ryan Gurner: Thanks, Simon. Good morning, all. As demonstrated in today's quarterly results, Northern Star remains in a great financial position. Our balance sheet remains strong as set out in Table 4, Page 9, with cash and bullion of A$1.2 billion, and we remain in a net cash position of A$265 million at 31 December. The company has recorded strong cash earnings for the first half of FY '25, which is estimated to be in the range of A$1.13 billion to A$1.17 billion. A reminder that our dividend policy is based on 20% to 30% of cash earnings. Pleasingly, all three production centers generated positive free cash flow with capital expenditure, and exploration fully funded. Figure 8 on Page 10 sets out the company's cash bullion and investments movement for the quarter, with key elements being the company recording A$692 million of operating cash flow, an 18% lift on the prior quarter. And this includes the semiannual coupon payment on the notes of US$18 million and A$21 million in respect of annual insurance premiums. After deducting CapEx of A$496 million relating to the KCGM expansion, plant and equipment mine development, A$64 million of exploration, A$60 million of lease payments quarterly free cash generation was A$72 million. Investment in sustaining capital, growth capital and exploration are tracking to plan. On other financial matters, depreciation and amortization are in line with company guidance provided of A$775 to A$875 per ounce sold. First half depreciation is at the midpoint of the guidance range of approximately $829 per ounce sold. For the quarter, non-cash inventory charges for the group are a credit of A$37 million, primarily from increasing in stockpiles at Thunderbox. 5.3 million Northern Star shares were bought back and cancelled during the quarter. Please note a blackout period applies up into and including our first half results release on the 13th of February. The company also received CAD189 million from the conversion of its debenture with Osisko resulting in a pretax gain of A$35 million. And as previously mentioned, the company is expecting to begin paying corporate tax on Australian operations in the third quarter. The current tax payment forecast at 30 June, which will be dependent, of course, on gold price, is approximately A$60 million to A$80 million. Note also Pogo operations have paid US$27 million in taxes for the first half with estimates of US$40 million to US$50 million payable in the second half, again, gold price dependent. In respect of hedging, Table 5 on Page 11 sets out the company's committed hedge position at 31 December. During the quarter, the company delivered 120,000 ounces into contracts and did not add any further commitments. I'll now hand back to the moderator for the Q&A session. Thanks very much.

Operator: Thank you. [Operator Instructions] Your first question comes from Andrew Bowler with Macquarie. Please go ahead.

Andrew Bowler: Good day all. Just doing some comments you had about the weather impact at KCGM. Obviously, last financial year, the third quarter was pretty savage for all in the gold fields. Just wondering if you can make some comments on how the business is prepped for the season this year and sort of how it compares to last year?

Stuart Tonkin: Yes. Thanks, Andrew. I think you're right. I think it was the March quarter, many January, February that copped a lot of - those fallouts from cyclones, et cetera. But we've got good diversification of production centers. We've got good stockpiles, sitting next to our plants and a lot of runway that we're very confident to deliver into the full year guidance. So that's around sequencing and timing, et cetera. But as you know, we pretty proactively we'll park up fleets on wet ramps and those sorts of things and just reschedule. So it's not a case of it's turned off. It's just in a different order. So all those preps are in place. But yes, we're not expecting again massive regional seasonal outbursts like last year, but mining's mining. So I think it's diversification production centers, it really protects us.

Andrew Bowler: And is it fair to say that like given obviously higher grades in the bottom of the pit at Golden Pike, is that a little bit more sensitive to wet weather than, say, the South cutback?

Stuart Tonkin: Not so much. I mean, it is around access to the ramp - safe access of the ramps, but things at pretty quick too after some rain. So reason why we typically don't put either road trains on haul roads or big trucks on ramp is more to damage the ramp and the repair afterwards. You get a bit of rain, you just don't want things slipping around, you wait till the drives and you're back on it. So it's not a huge impost. It's when you've got low lying cause ways and those sorts of things around lakes, et cetera, barns being built around new mines. Those are the things that I think we industry experienced in the Gold Fields last year. So yes, we understand those things. And even last year, in the end of the day, it didn't materially impact the full year. There was intra quarter movements, but ultimately we managed through each of those issues.

Andrew Bowler: And last one from me, just on Thunderbox, obviously, hitting its straps in terms of throughput. Just trying to skim equally now, but it seems like you had a very strong final month. Is there anything special in the blend there that sort of allowed for that higher rate of throughput? Or it just happened to be quite a good period, and we should expect a normalization back to 6 million tonne per annum? Or what would it take for - what would have to take for you to get more confidence that you can do above that 6 million tonne per annum consistently?

Stuart Tonkin: Well, I'll let Simon answer that on the stability of the throughput and sources, if you can.

Simon Jessop: Yes. Thanks, Andrew. It's just a combination of getting the crushing circuit really into the sweet spot now, as well as getting the stability and run time through the process plant. So pretty impressive in terms of the averages we achieved throughout that month. So we can see that sprint capacity is there. We're certainly starting to bed that operation down as business as usual, but probably a higher rate than we expected. So there's nothing - there's not a soft blend going through there or anything like that. It's purely around getting the circuit really humming between the SAG and the mill and the pebble crusher.

Andrew Bowler: No worries, that's all from me. Thanks very much.

Simon Jessop: Thanks.

Operator: The next question comes from Levi Spry with UBS. Please go ahead.

Levi Spry: Good day, Stu, Simon thanks very much for your time. Happy New Year. Maybe could you just step us through the ore mining rates at KCGM, and how they ramp up over the next few quarters? Just maybe remind us of the targeted rates, your exit run rates and how we should think about the step-up Q-on-Q? I guess that was probably what was a bit softer this quarter versus my numbers, so both from underground and from the pit itself?

Simon Jessop: Yes. Thanks, Levi. Simon here. So really, our focus last two quarters, in particular, was just finishing East Wall. Now we finished that - late in November. So it's obviously very unproductive type mining. But we wanted to focus on that to really enable the full access to the bottom of the pit with our manned equipment. So really, we're into full on into the destacking on the Eastern side. But at the same time, we've still got continuity of ore flow out of Golden Pike North, the sort of half of Golden Pike North. So you'll see some material step-ups in ounces from Golden Pike North now that we've got full access to the base of the pit. So very, very exciting for the team after 4.5 years of work, to be almost conventional mining down the bottom of the pit. So really, it steps up massively with the strip ratio for that Golden Pike North of sort of about 2.5

Levi Spry: Okay, thanks. And from the underground, so how does the step-up look like there? I thought we were targeting sort of is 5 million tonne run rate, correct for next year versus the 4 - 7 million in the quarter, so less than 2 million?

Simon Jessop: No, not - I'd like to think we're at 5 million tonnes next year, but not quite that high Levi. Really, it's that development for the rest of this year, we're starting to access Union Jack, Golden Plateau areas in the Fimiston underground. So ore driving continuing to ramp up a stoping starting to follow in that part of the mine, as well as Carosue is focusing on the - on the decline parallel decline. And then we're into the main Carosue ore body, which is just below the surface. So you'll see the Fimiston area focused on development. We're getting ore tonnes and ounces from there for the rest of this financial year, not a huge jump up. Mt Charlotte will continue to ramp up as we access more of the Northern ore body and a greater portion of Mount Ferrum. So last quarter, we've prioritized really some development between the Hidden Secret and Mt Ferrum Link, and that really gives us a lot of access to that area to increase production. So yes, you'll see it lumpy as it is as we're growing. But really, the most important thing at the moment is the development opening up the areas.

Stuart Tonkin: Yes. Levi, what we just said was about 500,000 tonnes per annum growth each year. So not million steps sort of step up and it's the lead indicators Simon spoke about, which we're very impressed with, which is that development.

Levi Spry: Yes, 500 gross. But what's the exit rate for this year - on what number I guess, from combined underground production?

Simon Jessop: The exit rate, well, you'll just continually see it step up quarter-on-quarter. So quarter four will be a big step up, because we've got a lot more development in place. You're sort of closer to that 3 million tonne, 3.5 million tonne sort of run rate.

Stuart Tonkin: I said that 2.5 -- 3, that's basically the each year from that 3 going basically growing out 0.5 million tonnes per annum.

Levi Spry: Got you. That's what I was up to. Thank you.

Stuart Tonkin: Thanks.

Operator: Your next question comes from Kate McCutcheon with Citi. Please go ahead.

Kate McCutcheon: Hi, it's Stu and Ryan and Happy New Year. I guess free cash flow was a bit weaker than I thought. And it looks like CapEx was 1H heavy. You kept guidance. Maybe just talk through the area that steps off in 2H, I guess, or how to think about that?

Stuart Tonkin: So what - that's CapEx. I'll let Ryan just go through the capital...

Kate McCutcheon: It's a bit weighted to the first half?

Ryan Gurner: You're right. It's Ryan. Yes, you're right. So if you look across the assets, aside from Kalgoorlie, they're sort of tracking in their run rate as sort of Simon was mentioning. The focus for the first half has been at KCGM, the East Wall remediation and we've mined obviously a lot of that material, put a lot of activity there, and then equally put a lot of activity in Great Boulder. So those two areas are growth, I guess, we allocate cost to growth, because they're not production mines essentially. East Wall we're effectively moving waste and then Great Boulder's got the big cutback. So I guess the costs which are fairly fixed from an open pit perspective, if you think of people and equipment month-on-month out, they really just get allocated to where the work's being done. So that first half is just really a reflection of the activity and where the work is being done. And as Simon said, now with access to Gold Pike, that in production, those costs then will move back into - obviously, you see ounces lift, but costs in OpEx and sustaining capital will then be reflected there effectively.

Kate McCutcheon: Okay. That makes sense. Thank you. And then it looks like the De Grey acquisition is still expected to close in May. What is the top priority, I guess, for Hemi when you get the keys?

Stuart Tonkin: Yes. Thanks, Kate. Look, we won't speak a lot about that prior to closure or completion. So we will update the outlook for inclusion and integration of Hemi into Northern Star's portfolio, as we would do for the forecast for FY '26. But ultimately, they've got a good progressing project that is going through all the usual approvals and tendering and long lead items and securing all those things and building their team, which we've - we're aligned with. So it's really just looking at those critical path items and making sure that those things progress as per plan.

Kate McCutcheon: Okay. And will we have to wait for a little bit after May to get some updated numbers for how you're thinking about that project??

Stuart Tonkin: Yes. I just look using the DFS and published numbers to-date and time lines is probably key. We're not going to come out day one with a torn up change plan. They've done a great, a great amount of work to get where they've got. We've had oversight of those things, and it's a pretty thorough project. So we're not going to wholesale modify and change things there. It's really just going through the critical path items, and that's really the activity through for the next few months.

Kate McCutcheon: Okay. Thank you, Stuart.

Stuart Tonkin: Thanks Kate.

Operator: Your next question comes from Alex Barkley with RBC. Please go ahead.

Alex Barkley: Thanks. Good morning, Stuart and team. A question about Pogo. The milling you had in the quarter was quite strong after the upgrade. I see you still needed some stockpile and maybe development a little bit softer than you wanted. Can mining reach that 1.4 million tonnes per annum, maybe even 1.5 rate? Or is a bit of extra kit required? Is that the long-term target you're thinking about internally? Thanks.

Stuart Tonkin: Look, yes, we lifted -- I think last quarter, we said we've sort of lifted the expectation of 1.4 million. We know the milk can obviously do 1.5. And I think you'll appreciate that there's not a huge amount of real estate to generate big stockpiles. So we know we can mine at those rates or get any rate. It's just around our stockpiled or this time of the year, it's largely stockpiled underground. Seasonally, through the summer, we can create some temporary stockpiles on the surface, but you're pretty much only having 50,000, 100,000 tonne buffer as opposed to Australian operations where we can have millions of tonnes stockpiled adjacent to our plant. So it's a bit of hand to mouth, although we've disconnected some of that for weeks and months on an annualized basis. We've pretty much got to match our mining to our milling, and we can probably store at 80,000 tonnes underground, although that does congest the mine a bit. So yes, it's a bit of just - a bit of the balance. And you'll see in the last quarter, it was a bit of catch up, because there was a lot of material stockpile underground. What you may see is the difference between development ore, and development waste change throughout the quarter in that regard. So if we've got full stockpile ore, we'll be prioritizing waste development, which can go pretty much straight to the surface. And then we just want to make sure that mill doesn't stop.

Alex Barkley: Okay. So it sounds like you are happy with achieving 1.4 plus from - now. Is that right?

Stuart Tonkin: Yes. So we lifted out last quarter to say that's the minimum expectation, not 1.3, but you've seen us work at 1.5. We want to keep pushing testing overall, what they can do. On instantaneous, it's gone up sort of in 1.7, but then the whole circuit has to do that consistently. And the more we put through it, and we'll quit the shutdowns and relines have to occur, and it performs differently throughout the season. So - we're just - we're really honing in on any capital, or any smaller things that can happen to improve and give that consistency there. But the other level we've got, obviously, the balance between stoping and development ore, and the grade we can manage as well. So we're pretty happy with where Pogo is at, and the cash generation, it's knocking out of US dollars is very impressive. And from here, the jaws open up and it really starts to stockpile U.S. cash, which is very helpful at these exchange rates.

Alex Barkley: Okay, sounds good. Thanks very much. That's all from me.

Stuart Tonkin: Thanks Alex.

Operator: Your next question comes from Ben Lyons with Jarden Securities Limited. Please go ahead.

Ben Lyons: Thank you. Good morning, Stu, Simon Ryan, everyone on the call. On KCGM, please, just further to Levi's questions around the material movement, maybe on the open pit, as you're planning to hook into more of that Golden Pike material in the second half. Obviously, we'll be expecting an increase in the open pit grade. Just wondering if you can give any indication of what that growth profile looks like over the second half, please? Thanks.

Stuart Tonkin: Yes. I'll put Simon. I think this is something that's been multiyears, four years in the making and to step up from last year in the 450,000, this year 550,000 ounces and then next year, 650,000, consistently out of KCGM till the mill expands. It's all hinged on the Gold Pike [ph] ounces in the pit floor. So I guess this is right at that inflection point that the grade contribution from the lower part of the pit is restored. Which ultimately brings the ounce profile back up to that 650,000, which is from the pit from the stockpile from growing underground. And then ultimately, as the mill expands, more stockpile comes in as well. Grade-wise, Simon, do you have granularity of average grades across that or do you want to pause that for a later call?

Simon Jessop: Ben, look - it's just a weighted average, obviously, from your two-gram material from the base of the pit, which is the same as pretty close to what we're mining from an underground, but it's the contribution as the half goes along, we'll get more and more access to Golden Pike North. And yes, you'll see the head grade sort of materially step up through the process plant. So, instead of sort of sitting at that one and a bit grams through the process plant, you'll see 0.2, 0.3, 0.5 kicks, as the contribution of the two-gram material kicks in. So those benches down there are 45,000, 50,000 ounces. So, you get a lot of ore very, very quickly. And obviously, we'll prioritize and grade blend as we normally do, and put the best material into the process plant. So, you will see some big kicks in the grade, as we get more and more access post destacking the Eastern side of the pit.

Ben Lyons: Okay. And sorry, just a bit more granularity around that, the timing of that destacking event on the East Wall there. Is that expected in the current quarter or sort of towards the end of the calendar year?

Simon Jessop: It's sort of - we've got access to Golden Pike North, but at the same time, we're still finishing destacking the Eastern side, which is more conventional manned equipment in the area, drill and blast, et cetera. So quarter three is still a heavy activity in terms of just destacking the Eastern side, but at the same time, we're still - we've decoupled half of Golden Pike North, and still getting that contribution coming through. So each week that goes by a month, we get more and more access to Golden Pike North.

Ben Lyons: Okay cool. Thanks very much Simon. The last one from me, maybe for Ryan or Stu. Just on the capital side, maybe if we can ignore the KCGM expansion, the rest of the bucket that's allocated to growth capital, as you sort of cast your mind forward into fiscal '26, I think we've got additional TSF capacity at KCGM coming up. But just like holistically the picture, is there any reason to expect the growth capital allocation to reduce into coming years? Or should we just sort of think about? You're still opening up satellite ore bodies and punching new portals, et cetera, et cetera. So just maybe just a general answer around that sort of growth CapEx allocation please?

Stuart Tonkin: Yes. I think '26 is still a flat investing year to you pointed out that the TSF brought forward for the larger mill throughput starts to step up, and there's still continuing waste stripping to the Southern part of Great Boulder and the sort of, which is still a lot of material and you've seen the volumes of the super pit change when we move the fleet to the bottom of the pit versus sitting up top, and you'll sort of sit between even 60 up to 80, 90 million tonnes per annum movement. Ultimately, that's the capital that Ryan also spoke about of allocating it to waste stripping or operating, sustaining down the bottom of the pit. So, those CapEx numbers will be swung on that, although dollar millions effectively will be the same spend with the fleet and people. Regionally, you just see those satellite mines being turned on. So your Yandal region, you've already got Cook-Griffin being developed this year, down at Thunderbox, you've got your Bannockburn developments. We've got some new undergrounds we've just established a millennium - sorry, Million Dollar and other thin end of the wedge. So, we're only talking tens of millions, not hundreds of millions in that growth capital that essentially life asset plan being delivered. So those - the big lumpy ones is TSF KCGM, as well as the mill expansion, which would be the final year in '26. And then obviously, that continued waste stripping to the Southern part of the super pit. And then incrementally for that development rate to be increased at Mt Charlotte and Fimiston, as those development meters get up to 7, 8, 9 Ks a quarter. You'll see the capital associated with that, again in tens of millions to open up new production centers there. Other than those things, Hercules in '26 could be in development phase, which is South Kalgoorlie, but most other things are incremental to existing production funds.

Ben Lyons: Okay, awesome. Thank you very much Stu, appreciate that.

Stuart Tonkin: Thanks, Ben. And then obviously the, to Kate's question and probably further is [Hemi] development. The capital associated with that, it's all - I guess it's well understood, but it's more about when it starts, and that's all approval hinged.

Ben Lyons: Yes, got it. Thank you.

Operator: Your next question comes from Matthew Frydman with MST Financial. Please go ahead.

Matthew Frydman: Yes, sure. Thanks. Morning Stu and team. Can I ask one on, I guess, cash balance and shareholder returns. I'm sure it's one that we'll talk more about at the financial results. But just looking at the numbers at the end of the quarter. You've got over $1.2 billion in cash and bullion, $265 million net cash. Obviously, hopefully, that continues to go up with the cash generation you've alluded to in the second half, and also a chunk of cash potentially coming in the door with the De Grey acquisition. You've got a buyback that's mostly complete. And as Ryan outlined, you've got dividend policy as well, which is pretty clear. So a chunk of that cash is going to come back to shareholders with the first half dividend. So I guess the question is, can you remind us how you're thinking about what sort of ranges you want to see the balance sheet in and you want to see that sort of dry powder cash balance sitting out, given the gold price environment given your outlook on, I guess, cash generation and spend? How much cash do you need on hand versus - is there an option to maybe repurchase the U.S. dollar bonds, which have obviously had a negative currency impact? Or what are the other options for returning that cash? Thanks.

Stuart Tonkin: Yes. Maybe just, Ryan, just speak to the general. We don't have covenants, I guess, but general planning around balance sheet, and then I'll talk about some potential uses. Thanks.

Ryan Gurner: Yes. I mean, yes, in good position to have, Matt. It is. So we always want to be - I think we've always kept -- as you know, get balance sheet in good nick. Simply because it gives us opportunity allows us to invest, whether it's exploration organically all the things really. That's what it allows us to do so to be nimble to be flexible to get returns on our investments entity invest. Look, as the company gets bigger, it's good to have more liquidity. You're right. We could - the beauty of those U.S. notes is that they are - they do have the ability to buy them back. I probably wouldn't buy them back at this exchange rate, but they're 10-year money. So you've got opportunity there over the cycle to potentially do that. We've got a dividend policy that's pretty clear. It doesn't include growth CapEx. So the company is paying a very healthy dividend. And that cash earnings number over A$1 billion. That's effectively the sustaining free cash of the business. So, as you said, as the CapEx is still - we'll still hold up as we're still going through that investment phase next year. But as it winds off in the years ahead, there's going to be significant free cash to generate. So, we want to keep the balance sheet investment grade. That means gearing and leverage need to be at a reasonable spot, albeit we're getting to be a bigger diversified company. Now so those things can, I guess, be tested a little bit more to keep our investment-grade ratings. So yes, we've got plenty of options and we're paying good healthy dividends. And we've got buybacks. I think - again, we're close to completing that. I think it will be a tool that we use going forward as a business. And it's something that you can turn quickly on and complete really. I don't know, Stu, if you want to add anything more to that?

Stuart Tonkin: No, you said growth doesn't affect the cash earnings figure, which doesn't affect the dividend payout. And that midpoint of the forecast cash earnings for the half is A$1 per share. Very impressive generation for six months, dollar per share, cash earnings. Obviously, dividend policy in 20% to 30% of that continues and the buyback ultimately as well. We're able to complete some more, we're out of blackout, as people may appreciate once De Grey got announced, we were able to continue on with that buyback, as we've got through now until September. So we're doing it all exploring growing resource reserves were dividend paying through cash earnings generation. We've got a buyback active. We're building cash and we're net cash. So I think these are all very, very good healthy signals of a strong business. Attitude generally will be around good, effective ways to generate those returns for shareholders, and we're not afraid to hand it back.

Matthew Frydman: Okay, thanks for the details, Stu. Thanks, Ryan.

Operator: Your next question comes from Paul Kaner with Ord Minnett. Please go ahead.

Paul Kaner: Yes, hi Stu and team, thanks for taking my question. Just a quick one on mill recoveries there at KCGM that's been a little lower for a few quarters. Is that mainly grade related? Or is there something else to call out? And I guess what should we be assuming with these higher grades come through over the next sort of 18 months or so?

Stuart Tonkin: Yes. I can sort of speak to that and Simon cover, but somewhat head grade related with the low grade. You've got a fixed tail. But still, we see some improvements off that 79, 80 to where historical has led. So a lot of those float plants is all around stability. And on the expanded plant, we've got a whole recovery sort of project that we're targeting much more improved recovery. So we're not spending a huge amount of time on those longer-term things, because it's got to last the next year until the new expanded plant is on place. But we're aware that stability is probably the best thing in all source or type head grade affecting that. But at the moment, we want to make sure that for the longer term, fixed larger-scale plant, recoveries 1% on a 900,000-ounce profile pretty significant losses of gold, if not dealt with. So and then it draws your head to the pressure of scenario for Hemi getting 90s recovery. It's a different method of taking that concentrate and oxidizing it. So they were the type of things that we see as strengths of that asset, because we've got that refractory capability across all of our plants. It's effectively looking at those recoveries in the business case, to make sure the infrastructure supports it. So yes, we see what you see at KCGM presently.

Paul Kaner: Yes, understood. That's it from me. Thanks very much.

Operator: Your next question comes from Hugo Nicolaci with Goldman Sachs. Please go ahead.

Hugo Nicolaci: Morning Stu. Ryan Simon, thanks for the update and happy New Year. First one just on Jundee. Will you want to just talk through the lower equipment and heading availability issues in the quarter, specifically, what were the issues on equipment? And then as a kind of slow on effect, how do you expect that to impact access to higher-grade material and production into the second half? Do you expect FY '25 gold production at Jundee to be sort of around the same levels as FY '24, or maybe that should be down year-on-year now?

Simon Jessop: Yes. Thanks, Hugo. Just on the development, as I sort of mentioned in the first half, we've done 2.5 kilometers of drill platform across a whole range of areas at Jundee. So it's one drill platform. It's lots and lots of drill platforms around the operation. Those headings are typically set up as potential declines return Airways and things like that. So they're slightly larger development. So with a real focus on some of those areas of the mine, we sort of backed off a little bit on development, to bring up production areas. So it's just balancing those two things. So that's really one of the changes at Jundee that has taken away from some of the production areas short-term. And just in terms of jumbo availability and trucks and boggers, we just - every now and then we go through one of these cycles where we seem to get on a roll for downtime. We're through all of that now and sort of back on deck - at the start of Q3. So nothing long-term, just one of those cycles that had some impacts as well as larger headings, not opening up quite as many ore areas as we typically do, but it's better for the long-term position at Jundee.

Hugo Nicolaci: Got it. So in terms of the impact into the full year, you'd expect a similar sort of gold production from last year?

Simon Jessop: Yes. Jundee is a project that up and down depending on the areas. I think you'll read one of the notes in there. March quarter growth outlook will be slightly lower before quarter picking in Q4, and that's just what we see in the schedules.

Hugo Nicolaci: Thanks for that extra color. And then just second one around exploration full your guidance at A$180 million. You spent A$118 million of that so far in the first half. In two parts, I guess, how should we expect that work to flow through first half drilling and exploration to come into the FY '25 reserve and resource update? And then I guess going forward from here, how do we think about that exploration spend rate going forward beyond the second half. Maybe if you could sort of remind us on what areas are in focus next for some exploration work?

Stuart Tonkin: Yes. Thanks, Hugo. That's - it will be success driven. So you see us each year give a bit of a boost the gates to you get ahead on the drilling and get the inflammation, because you've obviously got to get through assays and interps, et cetera, for our March end resource reserve count. So sometimes through that period, you have a little bit of hiatus. We'll just assess the second half. We're not afraid of spending a bit more if it's success driven. And also some of the allocation can be around those drill drives on indicated that will be the Jundee or particularly around Fimiston, Charlotte area and drill drive. So yes, we see the run rate, if it's delivering low-cost ounces to our resource reserve growth, we're very happy with that return. But it's a discretionary spend, so we assess it pretty regularly.

Hugo Nicolaci: Great. Thanks extra color. I'll pass it on.

Operator: [Operator Instructions] Your next question comes from Al Harvey with JPMorgan. Please go ahead.

Alistair Harvey: Yes, morning, team. Quick one from me. Ryan, just a follow-up on the capital returns. You noted that the buyback, you like the flexibility of that could continue into the future. So - just wanted to get a sense if the current program had made more sense in light of that low franking credit balance recently. And I suppose how you balance up returning cash to shareholders from - divs versus the buyback?

Ryan Gurner: Yes, thanks. I want to Stu and maybe you're coming after me, Stu. Yes I mean, obviously, we've got a pretty clear dividend policy at the moment. I think it works well. As Stu said, cash earnings A$1 of shares like really not nice growth, right? So we want to return that money. You're right. I mean the buyback, we initiated there's a couple of reasons around it. Obviously, we look at our own value internally, and we say, well, we can get a good return on that money and where we the market being. So that's one element. The other element is, you're right, we didn't have franking credits. So again, it's a helpful way to give returns back to shareholders. So they're all in the mix. I guess what I'd say is we've got a pretty clear dividend policy. I can't see that changing in the near term, surplus cash, we then need to find a really good place to put it to get a return or we should look at the way the best ways to give it back. So - yes, I think the share buybacks work well. I think we've been asked about it for a long time. We've been a little bit stop starter, that's been opportunistically. I think we've done well. I think we're averaging just over A$10 a share. So it's worked well. And I can see in the future, where we've got excess money that being in the mix of the discussion of the Board, to potentially increase or add a further one. But we've got to be making the returns in our own business to do that. We see them in the future. I don't know Stu if you want to add. I mean, on the franking we will return - as mentioned, we will return or we will start paying tax, which means we'll get franking credits. It's unlikely that this interim dividend is going to be franked. But the full year, that's when we start to generate them. So they'll come back into play, but I don't think - we'll think differently about a buyback just, because we've now got frank credits. I don't know, Stu, do you want to add any of that - anything there?

Stuart Tonkin: It's the only two elements include De Grey, Hemi effectively can generate another tax yield. So as the continuing franking kind of shield. And therefore, buyback was a bit more effective. And then, I think one of the original questions around the bond given we're trading pretty strongly on a healthy balance sheet with those bonds, they're not at a discount or liquid. And it's good cost money. So it's unlikely bond repay as well with exchange rates where it is. So capital returns through divestment or through capital return is probably the only other avenue we haven't done before. But that typically has to be triggered by an asset sale and get tax approvals and those things on it. So we just think between current dividend, special dividend and buyback as well, as all the other organic investments. There's not many other options left that we're showing, we were able to do all of them.

Alistair Harvey: Yes, understood. Thanks, gens.

Operator: There are no further questions at this time. I'll now hand back to Mr. Tonkin for closing remarks.

Stuart Tonkin: Well, thank you, and a Happy New Year to everybody. 2025 is going to be a fantastic year and our second half is going to be much stronger, giving us a great springboard into 2026. Look forward to updating you as we continue to advance our profitable growth strategy, and thank you very much, and have a good day.

Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.