Earnings Transcript for RRL.AX - Q4 Fiscal Year 2024

Operator: Thank you for standing by and welcome to the Regis Resources Limited Full Year Results Briefing. 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. Jim Beyer, Managing Director and CEO. Please go ahead, sir.

Jim Beyer: Thanks, Ryan, and thanks everybody for joining us. Good morning. I would point out that we have released our results. There is a word document along with PowerPoint slide that we will be referring to, let's say, keep up. So thanks for joining us on the FY '24 results. In the room with me, I’m joined by our CFO, Anthony Rechichi; our Chief Operating Officer, Michael Holmes, and our Head of Investor Relations and External Affairs, Jeff Sansom. Pardon me. I'll also point out our release yesterday afternoon that related to the immediate impacts of Minister Plibersek's declaration of a Section 10 over the McPhillamys' project. I'll touch on this briefly now, as there are implications of this decision that have been reflected in our accounts. Firstly, I note we continue to assess all legal options available to respond to this decision and we'll be chasing every one of these. As I've said before, Minister Plibersek's decision did take us by surprise and it has meant that Regis has been required to assess the consequences of this action and this has resulted in some material adverse commercial outcomes for the company. Firstly, Regis has withdrawn the outcomes of the recently released DFS. This has given the failure to achieve one of the key assumptions, which was a satisfactory resolution of the Section 10 application process. As we've said, the decision means we cannot construct and utilize the plan TSF and as a result of this, Regis and investors can no longer rely on the outcome of this study. With this in mind, and taking into account the complexity and the length of time required to find a potential alternate TSF location, and we know certainty that a viable option can be identified, we have impaired the carrying value of the project to the tune of $192 million. That is the immediate cost of this decision. With this Section 10 decision, we've also assessed the McPhillamys' ore reserves and we can no longer declare 1.89 million ounces of reserves related to the project. As a result, our group ore reserves have been reduced from 1.89 million to zero. Now, I'll let somebody else put a value on that gold. we also reviewed the mineral resource estimate and while the risk profile has changed considerably, the key assumptions remain valid and unchanged. As I said earlier, we also continue to assess our legal options available, however, I want to -- and risk that are available to respond to this decision. But I do want to reiterate that these actions that we've taken as part of this in relation to the reserves and the write down, have not been made lightly. The decision and the resulting actions that Regis has had to take in response have had a material impact on Regis, but more so, the impact to the communities in New South Wales is equally as significant. Regis can no longer deliver the expected 580 jobs in the construction phase and the 290 full-time jobs went in production. The Blayney community can no longer rely on the socioeconomic benefits that were to stem from the project in the form of jobs, procurement, training, infrastructure upgrades and other associated benefits. New South Wales can no longer rely on the $200 million of royalties from the project, let alone the hundreds of millions of dollars from rates and taxes and revenue that were contributed to the Australian economy over this project's life. Now to change gears a bit, I'd like to discuss the Regis' overall FY '24 results. So if you could turn to -- well, move on from slide two, the disclaimer, and now move to slide three, please, have a look at that. During FY '24, the rest of the Regis business delivered very impressive results both from an operational and financial perspective. But I'm pleased also on the ESG outcomes. So firstly, on these ESG from an ESG perspective, we delivered meaningful outcomes across safety, diversity, workplace culture, rehabilitation, decarbonisation and indigenous engagement with working together agreement and heritage management agreements at our Duketon operation, where our mutual objective is to build capacity, not dependency. As you can see, and as we discussed in our June quarter release, we either met our FY '24 predictions on production, all in sustaining costs and growth capital, or outperformed by coming a little under where we spent less on exploration and McPhillamys. Now, getting into this performance, I want to point out some high-level metrics. Anthony will certainly drill deeper and put some more detail and context in later slides. Regis remains one of Australia's largest 100% unhedged. That's unhinged, not unhinged, 100% Australian centric gold producer listed on the ASX. In FY '24 we delivered several records, largely due to the fact that we were no longer delivering into our onus historical hedge commitments. And as we pointed out before we ended the year with record cash and bullion of $295 million. And our operating cash flow is also a record at $475 million. If we exclude the impact of hedge and one-offs in FY '24, we delivered an underlying net profit before tax of $106 million. Now to demonstrate the value of the business since we became unhedged of the $297 million of EBITDA that we made over the year, we generated $234 million of that since the closeout of the hedge book. The $297 million in EBITDA over the year, $234 million since we closed out the hedge book. Our record cash and bullion of 295 was built with $140 million adding to it in the second half of '24. Our record cash flow from operations of 475 we generated 349 of that in the second half after the hedges. Seeing a pattern, there is some excellent more detailed analysis on our profit as well that Anthony will go into. So all-in-all a very strong underlying business demonstrating the profitability and cash generating capacity of our current suite of assets as we've broken free of the shackles of the hedges. And now with that, I'll pass over to Anthony Rechichi, our CFO. Over to you Anthony.

Anthony Rechichi: Thanks Jim. That really covers a lot of it. But I'll focus on some areas a bit further. Looking at slide four now, if you could turn to that. Slide four of the presentation and the numbers show an improvement in several areas since last year. But also out on the right-hand side of that slide, we've shown the dramatic improvement that we have seen half-on-half in FY '24. Across the top few lines there, you can see that we produce 418,000 ounces of gold and we sold 424,000 ounces of gold. As you can see, pre and post hedge closeout with the hedges being closed out in the first half of the year, the realized average gold price received was 27% higher in the second half. And I said this in the June quarterly result call and recapping it now looking back on the hedge book buyout in December, it did in fact turn out to be a beneficial outcome as we'd expected. Taking into account the difference between the average buyout price of those 63,000 ounces we closed out and the average spot gold price we got for selling them into the spot market were about $14 million better off for having closed out the hedge book when we did. We generated a very strong underlying EBITDA of $421 million. Noting that number is the statutory income statement result adjusted for the non-cash impairment charges of $194 million, the $98 million hedge book buyout and $26 million of non-cash inventory net realizable value write downs. Going down the page, as Jim noted, the strong gold price and unhedged nature of the second half sculled sales drove a record FY '24 operating cash flow of $475 million. Going over the page now to slide five. And regarding cash and bullion, we talked about this in the previous June quarterly release, so I won't dwell on this again too much. But what it shows is that the operations generate significant cash flow even when considering their capital expenditure requirements. Regarding CapEx, we spent $230 million on mining capital expenditure and an additional $66 million on exploration and McPhillamys. Now look at the profitability over on slide six, if you turn the page please. This slide reconciles our underlying profitability to our statutory net loss. If we look at FY '24, excluding the impact of hedges and one-offs, we see a very profitable underlying business. From the top down, in FY '24, record gold prices offset lower gold production to generate $1.3 billion of gold sold at spot. Our cost of sales went up as we stated in the quarter release due to the impact of deeper open pits, longer haulage distances and we mined more underground ore which is a bit more expensive on a unit basis. We also saw an impact of wet weather-related interruptions on our costs later in the year, especially at Tropicana due to the lower production. Our depreciation on amortization was down 10% based on lower volumes mined versus the prior year and after corporate and finance costs, the underlying net profit before tax was $106 million, up from $83 million in FY '23. Impressively, post closeout of the hedge book, the business generated a $57 million pretax profit. Then below that line we have the one-offs and hedge impacts to come to our final statutory net loss after tax of $186 million. Moving on to the balance sheet over the page slide seven, I think that the main point to focus on here is that we are at a net debt position of only $5 million. Our balance sheet is strong and while we have corporate debt of $300 million maturing at the end of June '25 and now considered current, we generate sufficient cash to repay this if needed. However, we are currently assessing our debt options in light of the recent McPhillamys outcomes. Well, that's about it from me and I think I can safely reiterate Jim's sentiment. The operating business is in great shape, showing particularly in that second half of the year, with it providing a glimpse of what it's capable of delivering when unhindered by what was a very restrictive hedge book. Thank you all and back to you, Jim.

Jim Beyer: Thanks, Anthony. Nice job of going through the numbers there. On the last slide, slide eight is our FY '25 guidance, which should be no surprise to you, considering we presented that a few weeks ago. The only change to our guidance is that we continue to review our spending at McPhillamys. So we've withdrawn that. And that's obviously in light of recent events, and we'll provide further guidance on that in due course. I'd also indicate that we expect the production profile to be reasonably flat over the full year, with a little bit of variation between each quarter. It's not a perfectly flat profile. So, overall, from a cash flow business position, we've got good operations in our portfolio and strong cash generating capacity and a strong cash generating capacity outlook. Finally, I guess I should turn back to the very disappointing Section 10 declaration. Obviously, we're still shattered by the result and frankly, a little bit perplexed on some of the perspectives that are being described. Overnight I read some commentary about how somebody could compare the TSF site in question with Duketon is a little bit confusing, particularly as the area in question has long been cleared for farming, I think in the late 18 hundreds, and has been farmed ever since. Just as concerning is the comment about the approved project destroying the river. I'm not sure how that could be taken as a view, maybe put a little bit of accurate context. The springs at the site in question are ephemeral. Now, that's a technical term, meaning that they don't permanently flow. They're quite seasonal and obviously quite dependent on rain. They're not fed from under. Some of these ephemeral springs have actually long had dams dug up on top of them to trap the water for the farming process, and any photos from the region demonstrate that. And you can see it if you go there. Further, as anyone who's been to site would see in this area, we're talking about a small flowing creek most of the time at the Belubula. And certainly, when I've been there and seen it multiple times. Obviously, that was a little bit different a couple of years ago, when there was some recent flooding in the area, when bridges were over -- all over the place further downstream, and extensive flooding through the region. Of course, that period was different. Perhaps to just sort of give a little bit further context that's data-driven, I could describe the impact of the flows into the Carcoar Dam. Now, the Carcoar Dam is a water reservoir. It's about 10 or 15 kilometers in a rough south direction from the side of the deposit. And over the years, our team's been measuring and modelling and our experts and consultants have been modelling the flows from our site into the creek and then down -- in addition down the river -- in addition to the multitude of tributaries that also feed into the Belubula river, that flow into this dam. Our modeling is telling us that during the period of maximum ground area disturbance, so when we're at our -- when the mine's at full roar and we've got maximum, because it's a zero discharge site, we manage the water or it was. The reduction of flows that actually ran down into the Carcoar Dam were reduced to the tune of 4.1% on average. So with the site running, the flows were reduced into the dam by 4.1% down the Belubula. This is obviously quite low. And as I said before, there's multiple tributaries that actually flow into this river. Further modelling also indicates that after the mine's closed, after all of the rehabilitation is finished, the reduction in water flow into the dam is less than 0.5%. So I'm not sure how that could be considered to be an action that destroys the river. Look -- but I guess on a final note, our biggest concern -- the bigger concern for us is after years of work testing, surveying, surveying the land, surveying for heritage drilling, investigations, expert advice, state and federal approvals, and spending hundreds of millions of dollars, a decision can be made that overturned all of this and we really don't know why. If there's one thing the country needs, it's consistency. So back to our operating business. Regis remains one of Australia's largest 100% unhedged, 100% Australian centric gold producers listed on the ASX. We look forward to a period of strong cash flow generation, particularly in this environment of strong gold prices. So with that, I want to thank you for your ongoing support. Look forward to FY '25 and thrive. Back to you, Ryan, for questions.

Operator: Thank you. [Operator Instructions] Your first question is from the line of Meredith Schwarz with Bank of America. Please go ahead.

Meredith Schwarz: Good morning, Jim and team. Thanks for the call. Just a couple of questions from me. Obviously, McPhillamys has been the dominant talking point of late. But can you perhaps talk through catalyst, you see, for Duketon and Tropicana over the next 12 to 18 months, please? And where there's potentially some upside there, and then I'll come back with the second question.

Jim Beyer: Yeah. Okay, so the catalyst for upside in value at Duketon and Tropicana. So I think at first turn -- first to Tropicana. We certainly see that as it comes out of the very significant impacts of rain that have occurred in the prior quarter and are flowing into this, we'll see that the business will get back to being more stable and for that reason, we expect the production to lift. That's reflected in our numbers. We're also anticipating probably a more longer term value or medium term value. The piece that's going to come out of Tropicana will be the Havana underground, the completion and the messaging of the Havana underground project assessment, which will be a new potential production zone sitting underneath the Havana pit, which will add to underground production. So that's another value catalyst. Of course, there's always exploration in that area as the area starts to dry out and the team can get back out there doing stuff. And I think also the team's working hard there to lift in conjunction with the contractor there, McMahons -- to lift McMahons performance. And what we can see with that is that will also give us a potential improvement over what we're currently seeing. But we'll wait to see how that continuous improvement work looks to deliver. If I turn to Duketon, I think at Duketon we're really sitting on -- bringing the Garden Well mine business into commercial production. We've really just started that. And every new mine is a little bit of a money pit to put some -- you've got to put your cash into it, which is what we're doing there. We're investing in shafts, power reticulation, add its more declines. We'll see some value starting to come out of that once it heads into commercial production, which will be next year, next financial year, I would expect. So -- and then as well, I think if you look at our, the other works that we're looking to do to add to our strategy at Duketon of four to five underground mines, we've got opportunities to identify more additional underground mines from the three that will already be running with Rosemont, Garden Well South and Garden Well mine. You'll see Ben Hur, has got potential to be underground, which we're assessing. You'll see Tooheys Well, and maybe a little bit longer dated would be an area called Merlin, which will take a little bit more work to do. It's got both open pit and underground potential. So that's sort of a bit of a summary of what we see now. And of course, there's always our exploration team working hard to find the big whale of additional value, but that's still in its process of being discovered.

Meredith Schwarz: Thanks, Jim. And just kind of a question on the stockpiles left Duketon North. With the high gold price environment, is there any potential for those to come into play for some feed source at Duketon South at all?

Jim Beyer: Yeah, good question. I guess, the short answer to that is, with the improving gold price, there is, and we're assessing that at the moment.

Meredith Schwarz: Great, thanks. And then just one more, if I could. Obviously, now that the McPhillamys CapEx requirements have been taken out of your profile, and with the stronger cash generations, does that influence potential dividends into the future? Or are you looking to potentially preserve that cash for inorganic growth opportunities?

Jim Beyer: Well, I'd certainly say it's a genuine agenda item that the Board has been discussing. Even -- obviously, we met yesterday to approve these accounts. So it is certainly on the agenda for discussion. I would point out a couple of things at the moment. We still have a $300 million in debt that we can't lose sight of. And also, I think we've chewed through for now, all of our franking credits, which is not a key driver, but it's certainly an aspect to be considering. So the answer to your question is it's back on the agenda for discussion. But clearly there's a couple of things, and certainly by no means the debt sitting in front. That's a key factor to consider as well.

Meredith Schwarz: Great. Thanks very much, Jim, and I'll hand it on. Thanks.

Jim Beyer: No worries. Thanks, Meredith.

Operator: Thank you. Our next question is from the line of Alex Papaioanou with Citi. Please go ahead.

Alex Papaioanou: Hi, Jim and team. One of your peers this morning reported that labor tightness has come back a bit. So what is Regis seen around cost pressures, particularly labor in WA?

Jim Beyer: When you say come back a bit, you mean as eased a bit?

Alex Papaioanou: Yes.

Jim Beyer: Yeah. Look, I think generally speaking, there is a bit of that. Probably where we've seen it in the first instance is roles get filled by people who are confident in that role. I think I've mentioned the story a couple of times that within a week of some of our underground, of the -- not our underground mines closing, but the ones in Australia -- in WA, here, the Nickel and Barminco's operations or where they were running, unfortunately -- and we take no glee in the struggles of some of our brother and sister commodities. But that immediately released people. That meant positions that we'd been trying to fill were filled within a week, which is great, naturally, a supply of labor into the market. I mean, it's pure supply and demand. So I wouldn't say I've seen salaries reduce. We'll keep an eye out for that. But I certainly think that there's more availability, particularly in the trade area, Michael's telling me in the trade area. But good experience roles. Finding good talent is still a challenge, but it always is finding the right people. So the short answer to your question is it's certainly easing. It's easy to find people. The trades in particular. We're seeing some softening there. But I wouldn't say that anything's going backwards. Not yet.

Alex Papaioanou: Yeah, that's clear. And just following the ruling around McPhillamys, has your appetite around inorganic growth in Australia changed? And would Regis look at opportunities outside Australia?

Jim Beyer: Yeah, I guess it's certainly -- the decision has made us a little bit more wary. I mean, the decision's not even a week old, really. So we're still getting our minds around what it means from that type of strategic inorganic perspective. There are areas of the world that we -- I guess as part of the concern, there are areas of the world that we'd long consider to be too much of a sovereign risk, too much uncertainty, too easy for things to look like they're going well and then be flipped for no reason. So we didn't want to go there. Probably didn't think that that would happen to us, but here. So, yes, it does. It does generate a question of what you want to do in Australia. But I think for now we continue to look within Australia, but we've always looked offshore, just not as -- not too hard, I suppose, just for a simple way of describing it. But it definitely means that we need to be considering the sovereign risk that we've considered in other places and the challenges there. It means that local, particularly in some areas, local investment comes with a similar risk profile. So it's pulled the attractiveness back of some parts of Australia.

Alex Papaioanou: Yeah. Thank you. I'll pass it on.

Operator: Thank you. Our next question is from the line of Hugo Nicolaci with Goldman Sachs. Please go ahead.

Hugo Nicolaci: Morning, Jim, Anthony and team. Thanks for the update this morning. Obviously, a few on McPhillamys already, I guess just looking at the broader portfolio. I mean, obviously, from where we are today, taking McPhillamys out of that medium term outlook leaves the portfolio with a bit of production decline on a five-year view. When you previously talked to some medium term production targets, where do you see those resetting to based on where things are now?

Jim Beyer: Well, I think our medium term production expectations and targets for Duketon and Tropicana have not changed. I think if you look at the material that we've indicated, we're anticipating and really driving a strategy for Duketon of producing between 200,000 ounces and 250,000 ounces per annum. And that's off the back of a shift from our current mix of production, which is underground and open pits. And this is notwithstanding the new open pit discovery, of course, because that just changes the game completely for Duketon. But our plan continues to drive to four or five underground mines, which allows us, we feel with -- if they sort of live up to the which they are at the moment, live up to the two years of reserves and will do for the next 10 years, then having four or five mines allows us to be able to sustain that rate out of dukedom. So that's our target that we drive to for Duketon. And for the near term, we see Tropicana in the zone, which is, I think, 120 to 150-ish range, I think. And we see that certainly running out towards the end of this decade. Obviously, as the Havana pit potentially will start to wind down, we'll see the operation fall back to being, again similar in the absence of any large open pit discovery, which we think there's plenty of potential. But in the absence of that, it would settle back into just an underground operation which would be larger, arguably larger than it is at the moment. Because at the moment, it's just Boston Shaker and Tropicana. And we see, as I said, the consideration on the Savannah [ph] underground means that we have three. So they're the sort of ranges that we indicate and feel that those two assets have got the capacity to deliver, at least in the medium term. And we -- the happenings, if you like, of McPhillamys really hasn't changed that view at all.

Hugo Nicolaci: Thanks, Jim, that's good to hear. And then maybe a slightly more niche one for Anthony. I'm just looking at the Duketon South asset base. Looks like after CapEx and D&A, you added about $80 million to the asset base. I was just wondering, is that just from a higher gold price that you test those against, or what might be driving that?

Anthony Rechichi: Which asset base are you referring to there, Hugo?

Hugo Nicolaci: Duketon South. So I think you got an asset base of about $700 million at the end of the period, which implies you've added about $80 million or a bit over 10% after reported D&A and CapEx. So just curious on that one.

Anthony Rechichi: Yeah, I guess a lot of that's come over the course of the year with the development at Russell's Find and Ben Hur as well. There was also some underground development there. We did bring some costs over from exploration and evaluation that also related to the new underground mining areas at Duketon South, Rosemont stage three, the Garden Well mine. So those costs have been brought over and allocated to the mine properties in Duketon South as well. So there's been some growth there for that reason, Hugo.

Hugo Nicolaci: Yeah, thanks for that. I was wondering whether it was gold price or not, but that's clear. Thanks. I'll pass it on. Thank you.

Anthony Rechichi: Thanks, Hugo.

Operator: Our next question comes from the line of David Coates with Bell Potter Securities. Please go ahead.

David Coates: Great. Thanks, Jim. Thanks for the presentation this morning. Just again, I'm surprised, following up on McPhillamys, you've mentioned the legal options to be pursued. And as you said the other day, I understand you don't want to go into those in too much detail. But are you able to give us any indication what the timeline of that might look like, what sort of milestones might be coming up that we should be looking out for?

Jim Beyer: In short, not at this point in time. The team's on it now, and we're obviously engaged in the process. How long and what the timeframe for that is, is probably less clear.

David Coates: Sure. You mentioned receiving or requesting a statement of reasoning from the department. Is that to be forthcoming?

Jim Beyer: Yeah. Look, all of that is part of the process. And what I prefer to do and think is probably appropriate is just to step back from that a little bit and not make too much more comment on it. Dave.

David Coates: Sure thing.

Jim Beyer: Probably the best thing.

David Coates: Cool.

Jim Beyer: Importance of your questions, but I just think it's -- we got to let it run its course.

David Coates: Yeah, completely understand. And just for leaving this alone, any sort of feedback from locals, local community or industry peers on the decision, what its implications, wider implications might be?

Jim Beyer: Probably safe. Yes, quite extensive. And I think it's -- there's some -- there's been some articles. In fact, there's another article this morning in the press about how some of the locals feel. The mine at Blaney was -- there was 70% of the population supported it or strongly supported the mine and that's the local population. 15% were undecided and 15% were against. As you probably just get those. There's always people that take an anti-development stance. So you understand that. And so I think everybody in the local community there and the council and the local businesses, they all see that this has got a significant impact on their livelihood. I think multiple groups both across the board, all types and styles. It's the whole idea of the opportunities that minds bring. Training, education for some and a future -- in the future you get training and you get an education, you get support and get a job. It's not just positions people for long-term, not just while the mines there. And I've heard some great stories from people that have had the opportunity to enjoy the benefits of mines that have opened outside the communities, elsewhere. And I think a lot of people were anticipating that was going to be the case here and they've just seen it disappear. So it is quite stressful for a lot of people and I could imagine. So our sympathies and empathy goes out to them. So yes, there is -- in answer to your question, there's a lot of commentary comes in that supports us and encourages us and we appreciate that. At the end of the day, we just have to knuckle down, get on with -- trying to deal with the decision and working out, as you sort of asked, working out what our legal options are, but also what next? What can we possibly do?

David Coates: Indeed. And just a couple more technical questions and probably for Anthony, just quickly. Any more color on the debt refinancing? And secondly, just flipping the earlier question around about inventories, the write downs this year, but should we expect any in FY '25?

Anthony Rechichi: Yeah. Look, to deal with your debt. Question first then, David, look, the McPhillamys outcomes mixes up the plans and strategies a little, as you can imagine, on what we planned on doing with the debt, whether that was going to become part of a bigger piece or not. So, although that's up in the air, as we're saying, the two obvious options for us at the moment is we go ahead and make those repayments. We've got cash and we expect to generate plenty of cash, more cash this year. The other option -- well, we don't have an option to extend as it currently stands, but depending on what else comes up, we may seek to go and see if we can do an extension. So there are a couple of options there. The good part about it is we've got the cash flow to be able to handle that without any stress or duress. And that's the key thing on the debt front. Your question on the inventory and the NRV situation. Look, we wrote down another 26 this year, wrote down 30 last year. Looking in a nutshell, the 26th this year comes off the last of what was at Duketon North now. And that's really the full value of the 26. Predicting NRV movements is almost impossible. There's a few market factors that go into those valuations and calculations. So I'd like to say that the worst is behind us, but you can never predict that with the effect of gold price, cost inflation movements, when you look at future processing costs and that sort of stuff. But as we sit there at the 30 June '24, we've got it squared up again. And like I say, the $26 million this time was for the end of what was left of stockpiles at Duketon North.

David Coates: Excellent. Thanks very much, gents. I'll pass it on.

Operator: Thank you. Our next question is from the line of Alex Barkley with RBC Capital Markets. Please go ahead.

Alex Barkley: Hi, Jim and Anthony. Just on McPhillamys impairment, does that loss contribute to any offset in upcoming cash tax payments or should we expect roughly 30% going forward? Thanks.

Anthony Rechichi: Yeah. Thanks, Alex. Good question. No, look, this is an accounting timing thing. It's not going to -- it doesn't affect future cash flows. It doesn't affect our tax cash flow positions either. So going forward, we've typically been. The nature of our business is that typically our profit has always been, or our tax has always been 30% of the pretax position. And it still looks to be that way at the moment. So, we're not -- there's no tax cash implication there.

Alex Barkley: Yeah, okay. Sure. I didn't see much change in the deferred tax asset. Okay, thanks very much, guys.

Anthony Rechichi: Thanks, Alex.

Operator: Thank you. Our next question is from the line of Daniel Morgan with Barrenjoey. Please go ahead.

Daniel Morgan: Hi, Jim and Tim. Can I circle back to operations and specifically Tropicana, a longer term, sort of holistic outlook? When is the latest expectation, your expectation of the pit being finished? And in the longer term, fullness of time, how many undergrounds would you hope if everything goes right? From a development perspective, how many undergrounds do you think you'd be running sort of tonnage might you be pulling out just thinking about, how much you fill the mill? Or would it have to be down rated in the very long-term? Thank you.

Jim Beyer: Yeah. There's some pretty, pretty big questions you're asking there, Dan, so I'll do my best to answer them. Tropicana, the open pits, really the Havana pit, will be starting its end journey in probably FY '28, '29 by the end of the decade. Well and truly, it's done in the absence of making any other kind of more cutback decisions or something like that. But there's nothing immediately being considered on that front. In terms of the underground, that's a big ask. The mill -- maybe, to put a bit of perspective, the mill is 9 million tons circa. There's -- I don't think there's an underground mine in Australia that runs at 9 million tons. I think Olympic dam has a crack at it, so that's possible, but not likely. I think, in terms of areas underground, what we know at the moment, as I said, there's Boston Shaker, and you can see that continues down into the bowels of the earth with the diagrams that we've provided in the past. There's the Tropicana area and then there's the Havana South. What is intriguing, and we think has got some real potential value, are some of these holes. And if you have a look at any of the releases that we put out, I think the last one, you can see that there's some. As a result of some opportunistic drilling that was done, some deep hole drilling, the team there went chasing the concept that there was some offset faulting of some of the existing mineralization and came up with a few winners where they put holes in and found some pretty good intercepts. There's things like the Cobbler [ph], I think it's called Cobbler underground area. A couple of meters at nearly 30 grams, 13 meters a gram. And there's other Havana offset faults that have been drilled and holes in them. I mean, they've only got one or two holes in them, so I don't know whether that's a new production zone at all. I'd like to think it is, but I can't. It'd be just entirely inappropriate to pin anything additional on that. But I guess my view on that is I'd much rather have a hole that's a couple of meters at 29 grams than have a hole that's barren, because that's -- and it's all the same geology. So what does that all mean? That means that we think that the underground has certainly got significantly more potential than we currently have it producing. But how much, I'm not sure. Wouldn't be prepared at all to put an indication on it, apart from saying, I just don't think you could keep that mill full at 9 million tons per annum, not without an open pit.

Daniel Morgan: So maybe talking about what is in plans and execution, what is the tonnage that you think you could pull out of the undergrounds in plans, that is in execution?

Jim Beyer: Yeah. Look, we've given a high-level indication of what the guidance is. We can really talk to that where it stays at its current level out towards the end of this decade and then drops down. And you can see that in any more detail as to what that means for tonnages from underground or otherwise. We're just not in a position to provide that level of granularity at this point in time. But we continue just to indicate that its current production profile can run out towards the end of, as I said, FY '28, '29, then you'll see it step down. You can see how much production is coming from the underground at the moment from two zones. High-level kitchen chemistry will tell you what you think you might be able to do with three, but there's no detail around that that we're in a position to provide.

Daniel Morgan: That's all. Fair enough. Maybe circling back to, I guess, some of the other questions that have been asked by analysts, but just tying it together. I mean, your guidance, the gold price, would all seem to think you're going to make a meaningful amount of free cash flow in this year. You've got a question on your $300 mil debt facility, on whether you extend or pay it off. What are your plans to do with this free cash flow? And I guess, does debt belong in your business or not? Thanks.

Jim Beyer: Well, I think it's reasonable to say that debt has a role in businesses. That's how you leverage value, as long as you're not putting your business at risk by taking extreme positions. We've always been comfortable with the debt that we've currently got. As we look forward, what are our options? Pay the debt, invest in. There's clearly -- there's some investment. We're not talking hundreds of millions, but each underground mine requires, I don't know if, depending on its complexity, $40 million to $60 million, $70 million to set it up. We've got another one or two of those we'd like to do. But beyond that, I mean, we see ourselves being much capable of generating significant cash above that. Yep, it's the debt. I think Meredith asked a question about the dividends. That's certainly an option as well. And then there's other growth opportunities as well. And in the meantime, in the distant background, we hopefully tick away and see what in the blazes we can do with McPhillamys. But we have to certainly redirect our near-term growth at other project opportunities or growth through corporate, which is code for M&A.

Daniel Morgan: Thanks very much, Jim, for your perspective.

Jim Beyer: Thanks, Dan. Thanks for your question.

Operator: Thank you. The next question is from the line of Andrew Bowler with Macquarie. Please go ahead.

Andrew Bowler: Good morning, Jim and team. This is probably a question for Anthony, just noting that you've had fully impaired McPhillamys today in terms of exploration and evaluation. I'm just wondering if you can share your thoughts on the base case residual value for McPhillamys. I mean, obviously you've got some freehold farmland there, you've got some water rights. I mean, this is under the worst-case scenario that the gold resource is worth nothing, which is up for debate. But what's the sort of water rights worth and what's the farmland worth roughly? Could we expect any sort of value from this in the next six months or so? Or is that something that's a bit longer term than that? Cheers.

Jim Beyer: Yeah. Andrew, it's Jim here. Maybe just to give the high-level answer on that, we definitely -- I mean, it's still too early for us. We definitely have land holding values, 50 plus million bucks in land, I think, is sitting there, 60. That we didn't write off for obvious reasons. Although, we're still trying to understand what the impact of the value on that freehold land might be from this Section 10 declaration, because it does impact -- it does appear to impact the usability of that land. But that's a separate question. It's a bit too early for us to go anywhere as to how hard or soft and what we do with that at the moment. This decision is days old. We're still trying to figure out and understand really what our approach should be. At the end of the day, we've said that our approvals are gone. It's almost basically back to square one in terms of our approvals. We'll look for alternative solutions to the TSF. We think that could take between five and 10 years without any certainty, but that doesn't mean that it's still not attractive to try and do. We've just got to figure out how that looks and how long that takes and therefore, yeah, that sort of leads into how much we plan to spend there going forward. But what we do with those assets that have got real value is, is really dependent on where we land on that plan of what to do with that deposit and with McPhillamys in the future.

Andrew Bowler: Okay, thanks. I mean, it sounds like, approvals aside, there is certainly some value still left in that part of the world for Regis. Thanks very much for your answer.

Jim Beyer: Yeah. That's right. There is. But beware and understand.

Andrew Bowler: No worries. Thanks Jim.

Operator: Thank you. [Operator Instructions] As there are no further questions, I will now hand back the conference to Mr. Jim Beyer for his closing remarks. Jim?

End of Q&A:

Jim Beyer: Yeah. Thanks, Ryan and thanks everybody for your questions. We do appreciate it. And also, I take the opportunity again to thank the team over at McPhillamys and recognize that the challenges that they're going through, and I guess in some respect, the heartbreak that they're going through in that as the news came through, certainly we're doing what we can to support them. And I just wanted to make this public. Thank you for them and for everybody else that has supported the project to this point. So I take that opportunity, and I also take the opportunity to thank those people that have been contacting us directly and offering their words of support. We do appreciate that as well. So -- but fundamentally, look at our business beyond, we're not just McPhillamys. We are not a one project company. At a basic level, our Duketon and Tropicana are great assets, and they will be, as we've demonstrated and will continue to demonstrate, they are good, solid cash generators. So, this is -- there are options that sit in front of -- Regis is not just McPhillamys. And our business and our strength of our business tells us that we've got more that we can offer and more that we can do and more that we can certainly deliver to our shareholders. So thanks everybody for the call. Have a good day. And as always, if anybody's got any questions, please feel free.

Operator: Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may now disconnect your lines.