Gold Highway Sources Restricted (OTCPK:ELKMF) Q3 2022 Earnings Convention Name July 28, 2022 8:30 AM ET
Firm Representatives
Duncan Gibbs – Managing Director, Chief Government Officer
John Mullumby – Chief Monetary Officer
Hayden Bartrop – Common Supervisor, Company Growth, Firm Secretary
Duncan Hughes- Supervisor, Company Growth, Investor Relations
Convention Name Individuals
Andrew Bowler – Macquarie
Levi Spry – UBS
Michael Scantlebury – Euroz Hartleys
Paul Kaner – Ord Minnett
Operator
Thanks for standing by, and welcome to the Gold Highway Sources, June 2022 Quarter Outcomes Name. All individuals are in a listen-only mode. There will likely be a presentation adopted by a question-and-answer session. [Operator Instructions].
I’d now like at hand the convention over to Mr. Duncan Hughes, Supervisor, Company Growth and Investor Relations. Please go forward.
Duncan Hughes
Thanks, Concord. Welcome everybody to our June quarterly analyst name. The June quarter was a document quarter. In the course of the quarter Gruyere hit manufacturing head grade, mine grade and throughput recorded. In consequence Gold Highway reported document gold gross sales in the course of the quarter and generated document free money movement ending the quarter with document web money and equivalents. Plenty of data consistent with our steerage for 2022. This was achieved in a time when virtually each sector, not simply the mining sector is experiencing important challenges and value pressures.
The quarter additionally noticed the efficiently completion of the DGO Gold takeover. Gold Highway is happy in regards to the high quality of its exploration funding portfolio. This portfolio has publicity to 2 of the very best West Australian gold discoveries this century.
Within the presentation right this moment we will likely be referring to the quarterly outcome slides that may be seen on the dwell webcast, our web site or the ASX platform. These on the webcast and on the cellphone are capable of submit a query for us to handle on the finish of this name.
On the decision right this moment we have now Duncan Gibbs, Managing Director and CEO; John Mullumby, Chief Monetary Officer; and Hayden Bartrop, Common Supervisor, Company Growth and Firm Secretary.
I will now hand over to Duncan Gibbs to speak via our quarterly ends in slightly extra element.
Duncan Gibbs
Thanks Duncan and thanks all people for becoming a member of us. As Duncan has stated, June quarter noticed a document gold manufacturing results of the upper manufacturing, a wholesome quarter-on-quarter discount in all-in sustaining value per ounce. We produced 85,6761 ounces at Gruyere as pre reported in early July. All-in sustaining prices was $1,250 per ounce in quarter, down from $1,526 within the earlier two quarters.
Our money and equivalents listed $861 million and Gold Highway continues to hold no debt. Report manufacturing in gross sales resulted in document free money movement for the quarter of $43.6 million. The quarter additionally noticed us efficiently full the takeover of DGO Gold. We proceed to make progress on the exploration entrance. We made [ph] 5% delivering and making a full discovery from the expanded exploration portfolio, in-part delivered from the DGO acquisition. Pleasingly we continued to function safely and reported no Misplaced Time Accidents in the course of the quarter and a 12 month misplaced time damage frequency price of additional to 2.6.
Wanting on the quarter in slightly extra element, mining continued to advance within the into increased grade areas in Stage 2 and three pits. This was mirrored within the increased mine head grade of 1.19 grams per ton gold for the quarter. Processing charges and head grads have been at document highs, throughput benefited from a lot increased deliberate availability this quarter resulting from diminished, however scheduled and unscheduled upkeep downtime. Head grade elevated to 1.22 grams per ton.
The whole mining value elevated quarter-over-quarter, actually because of the inflation price value pressures, together with diesel prices. The processing prices have been decrease, principally resulting from decrease upkeep prices within the quarter. Common administration prices elevated quarter-on-quarter, partly resulting from prices related to managing COVID-19. Because of elevated gold manufacturing, our attributable all-in sustaining value per ounce, I imply lowered quarter-on-quarter at $1,215 per ounce.
Our company all-in prices have been $1,600, which I anticipate is without doubt one of the lowest in comparison with the vast majority of our charges. Ounces bought have been at document highs of 44,526 ounces, a mean worth of $2,496 per ounce, which displays a stronger gold manufacturing efficiency and the upper proportion of sale to identify and naturally a reasonably robust gold worth.
The charts on this slide illustrate the persevering with and bettering development as we outlined final quarter with spectacular enchancment in quarterly manufacturing during the last 12 months pushed by bettering grades and bettering throughput. The development for all-in sustaining prices per ounce is shifting down as guided on the again of this improved manufacturing.
Gruyere yr 2022 manufacturing steerage stays unchanged at 300,000 to 340,000 ounces or 150,000 to 170,000 ounces attributable, and our all-in sustaining prices stays as guided between $1,270 and $1,470 per ounce.
COVID after all stays a risked operational efficiency. Like a lot of the sector we have now seen important impacts on the supply of our work power with COVID case numbers, however pleasingly there’s been no materials affect on our gold manufacturing.
I’ll now hand over to John to take you thru the monetary outcomes.
John Mullumby
Thanks Duncan. It’s a deal with to be on the decision with you right this moment to speak to you about our monetary outcomes. They have been significantly robust for the quarter and consequently the important thing final result you’ll is that our money and money equivalents has risen to simply over $161 million as at 30th of June.
You will note on the display screen the standard money movement waterfall; some are rising, some are the important thing actions in our money flows throughout the quarter. Duncan has simply taken you thru the operational drives and final result, so I gained’t return over that once more, however just a few key factors of word.
Our free money movement for the quarter was just below $44 million, its rotating. I’d prefer to carry to your consideration in that quarterly outcome; we flagged on the decision final quarter for the Q1 that we’d seen an irregular build-up in our working capital ranges throughout the quarter of $10 million and that was forecast to unwind beneficially on this quarter. That got here right this moment as we noticed by 30th of June that our working capital had returned to regular ranges.
There was additionally a dividend fee of below $4 million within the quarter, after which specifically towards the top of this quarter there was simply over $12 million price money outflows related to the DGO transaction. It’s going to repay a debt facility that had been positioned at the moment and likewise another transaction prices.
So, ending the quarter and ending the half yr with a really robust stability sheet and a really robust place of liquidity, and consequently we made the decision on the 8th of July to retire our Tranche A revolver. We had $100 million that was out there to us on the time that was undrawn. So going ahead we nonetheless have Tranche B in place to the tune of $150 million and that’s in place and places us on the finish of 2024 in the intervening time.
After which final however not the least, our hedge e book is without doubt one of the final legs with just below 16,000 ounces to be delivered throughout the following few months to the top of November or roughly 20% of that forecasted manufacturing, after which from December onwards the hedge e book is gone and we’re absolutely uncovered to those spot gold worth going ahead.
Thanks for that, and I’m going at hand again to you Duncan to take us via the exploration outcomes for the quarter.
Duncan Gibbs
Sure, thanks John, and I’ll word that Andrew Tyrrell who often joins us on the decision is definitely out and about a few of the DGO properties. And naturally in the course of the quarter Gold Highway has efficiently accomplished the takeover of DGO Gold. Which means Gold Highway now owns a portfolio of belongings which features a 14.4% shareholding in De Gray Mining. After all De Gray is the proprietor of the ten.6 million ounce Mallina gold challenge in WA, and that place strengthens that enterprise alignment for prime quality [old quarries] [ph] within the low danger jurisdiction in Western Australia.
And we additionally maintain a 6.1% curiosity in Dacian Gold, who owns the Mt Morgans gold operation, and naturally Dacian presently are below a takeover supply from Genesis Minerals. We’ve got a 20% curiosity in Yandal Sources and a mining – an exploration up within the Yandal Greenstone belt and we have now fairly a various exploration portfolio now spanning the Yilgarn – the Pilbara, Yilgarn, Bryah-Yerrida and Stuart Shelf provinces. As acknowledged beforehand, we view that this acquisition is on technique.
If we transfer to subsequent slide, it provides an summary of what our exploration portfolio now seems like, and clearly we’re integrating the DGO a part of that. However we’ve additionally received some fairly important functions up in Northeast Queensland; that’s the properties we name Greenvale and Galloway, and naturally the quantity of tasks stays an thrilling alternative for us, however the brand new tenement give us extra optionality on making discoveries throughout the expanded portfolio.
After all the settlement and technique actually stays unchanged. We’re very a lot centered on discovering mine 2 to rework the enterprise. And our exercise, our attrition crew [ph], after all we’ll work via that prolonged portfolio and we’ll take a look at what we prioritize out of that very giant land holding, and as I famous, Andrew Tyrrell is presently out on the bottom on the Stuart Shelf property the place we’re drilling in the intervening time.
At Yamarna and the Golden Freeway three way partnership developments, we presently have 4 rigs working, which incorporates two RC rigs, one Diamond rig, one Aircore rig, and in June we accomplished a shallow-RC program up on the newly acquired Mallina challenge. It was acquired via the DGO transaction and I’ll discuss it slightly later within the presentation.
One other former DGO prospect that I’ve talked about is the Pernatty challenge in South Australia and we’re presently wanting there for IOCG signal like copper-gold [ph] techniques just like a Carrapateena or you recognize [inaudible] that type of fashion of mineralization with that in a 80% earn-in three way partnership. As I stated, Andrew is on the market on the bottom in the intervening time.
The slide lets me discuss drastically to the North Japanese Queensland properties which have been beforehand drilled by Northern Normandy mining and native prospectors, a few of that work relationship again to the late 80’s and early 90’s. We expect the challenge represents a walk-up drill check alternative focusing on intrusion-related gold mineralize techniques in an space that’s actually seen no exploration for a considerable time period.
The grant of the tenure is anticipated to happen within the subsequent quarter after which we’d comply with it up by land entry negotiations with [inaudible] and the like. We’ll be aiming to drilling there subsequent yr. And assuming our drilling validates historic exploration work, we anticipate the property to return previous $50,000 main intersections.
Should you transfer onto the following slide at Yamarna, which after all is the key space there of our focus. We’re persevering with to focus on plenty of potential right here, notable applications for the quarter which have occurred and plenty of of those are nonetheless awaiting outcomes to return via. So Abydos we’ve accomplished a second section of RC drilling focusing on extensions to the bedrock mineralization that we’ve reported in earlier quarters, and like as we’ve received a few of these outcomes via to-date, that are usually in step with these earlier intersections.
On the Kingston prospect, we’ve been Aircore drilling to additional strengthen and delineate the prevailing gold-in-regolith anomaly and we’ve been getting slim excessive grade mineralization related to the quartz diorite domestically hosted throughout the Smokebush Shear zone.
At Waffler, we’re doing infill Aircore drilling and that’s been accomplished over a number of targets and aiming to delineate particular owns to comply with up the diamond ore fleet drilling. The Aircore outcomes that we’ve acquired have highlighted a number of areas that work.
At Earls, we’ve executed a second Aircore section, a second Aircore program to the north of the beforehand recognized anomaly and that can recall our comply with up with RC and diamond drilling. The outcomes for all that work are nonetheless pending.
At Rattlepod we’ve executed RC drilling throughout two targets there that have been beforehand recognized from Aircore RC drilling and the outcomes of that program are pending.
After which lastly at Gilmour South, we’ve executed an RC program with a part of the outcomes on that program acquired and the drilling in the intervening time gives indication at the least that the mineralization extending alongside the shear hall additional 100 meters – sorry, 800 meters to the south. So you recognize we’ve received loads of outcomes to return via there, however you recognize some lately promising indications I assume is all we are able to say for the beginning.
We take a look at Mallina, so this core property after all to exit via DGO and been out on the bottom there, so this system was already being labored up by the DGO geologists and we continued with that. And as you may see, the property right here is contiguous with the De Gray’s land holding and we’ve seen very a lot in a structurally or geologically analogues place, so related intrusions that we imagine the [inaudible] intrusions, however De Gray has and I assume the grade in diamond there or rig fashion there signifies that’s a form of central order of the place we’ve been doing the drill program there. So we drilled 92 shallow-RC holes and we anticipate these outcomes to return via by the following quarter.
Okay, in order that brings to a detailed our exploration updates and hopefully subsequent quarter we have now received some outcomes and issues like that that we’re wanting ahead to and I’ll now hand again to Duncan Hughes.
Duncan Hughes
Thanks Duncan. In order that brings our outcomes presentation to a detailed. We’re now very completely happy to reply any questions you may need and I’ll hand the decision again to Concord.
Query-and-Reply Session
Operator
Thanks. [Operator Instructions] Your first query comes from Andrew Bowler from Macquarie. Please go forward.
Andrew Bowler
Good day gents! Clearly simply noting the document quarters at Gruyere throughout – sorry, for the final quarter. The brand new throughput is getting as much as that form of 9 million ton throughput proper now or be on that I ought to say. How is it monitoring in comparison with the unique plan? You introduced some time again of that getting out to, you recognize near 10 million tons every year over the following couple of years? Cheers!
Duncan Gibbs
Yeah, I feel it’s fairly effectively on course with that Andrew. I imply, I feel we hit availability plus 90% on this quarter, so there’s nonetheless a little bit of house for us to get that as much as some business main requirements and you recognize nonetheless some alternatives simply within the throughput price, and naturally itemizing grade is a vital a part of us getting as much as what we see as a sustainable, some 350,000 ounce every year run price out of Gruyere.
Andrew Bowler
No worries. That’s all for me gents. Thanks.
Operator
Thanks. [Operator Instructions] There are not any additional cellphone questions at the moment. I’ll now hand again to the audio system to handle any webcast questions.
Duncan Hughes
Thanks. The primary one comes from Daniel Morgan from Barrenjoey. The pick-up in grade this quarter was slightly sooner than I had thought. Are you able to focus on what grade the expectations are over the following few quarters? Any upkeep outages scheduled?
Duncan Gibbs
Perhaps I’ll take these in reverse order. So upkeep, you recognize as we replicate usually we’re doing a SAG mill price line roughly each three to 4 months and usually that bodes effectively for the quarter, after which the ball mill is on a annual – roughly annual price line. So which means we double up with two price strains generally within the quarter and that’s more likely to be the primary or second quarter of subsequent yr simply relying on how we’re and type of the place in proper there. So nothing uncommon, however that’s type of regular, enterprise as ordinary.
De Gray, effectively I feel from our standpoint its monitoring consistent with what we form of budgeted internally and anticipated and naturally in case you take a look at a few of these sections and all of the collateral we’ve put out, very a lot we began within the form of 1 gram a part of the previous quarry that was close to floor. Should you search for at future pit levels and CapEx and what have you ever, you recognize we’re usually moving into 1.3 grade mining areas. So we anticipate you recognize that confirmed grade development to proceed from right here till we type of get to that common form of run price.
Duncan Hughes
The subsequent query comes from Donald Payne [ph]. What’s taking place in Galloway, Queensland?
A – Duncan Gibbs
Galloway, in order I discussed that’s very a lot early sized properties. We picked the bottom on the market, so they’re below utility. These tenements might want to come via to grant. As soon as they’re granted to the Queensland system, we are able to negotiate entry agreements. So in the intervening time you recognize we’re doing the work that we are able to do with out getting on the property and focusing on [inaudible] fairly – I assume we received some company knowledge units to construct direct targets and you recognize the intention is we will likely be up on the bottom there within the form of first half of subsequent yr, hopefully after the North Queensland moist season has completed.
Duncan Hughes
Subsequent query comes from Ryan Bodman. Can we see a progress within the dividend within the coming years?
Duncan Gibbs
Effectively, I assume we received a reasonably clear dividend coverage and clearly you recognize a powerful money movement you recognize fades into that, so you recognize I assume as a company we have now to be a bit cautious in preempting what dividend payouts will likely be. The regulator is such as you known as it, plus curiosity on that, and naturally it’s topic to you recognize board choices reasonably than simply that each one of administration.
Duncan Hughes
The subsequent query comes from Larry Hugh. Are you able to clarify the explanation for cancelling the Tranche A facility at the moment? Does this affect your considering across the dividend?
Duncan Gibbs
Yeah, so do you wish to take that one up John?
John Mullumby
Yeah, positive I’ll remark. At this stage Trench A was resulting from expire early subsequent yr. As you’ll see on the outcomes on the finish of the half yr, $161 million in web money reserves. We’re going to see that factor touchdown on the horizon that may require us to make use of both our Trench A or Trench B. So within the curiosity of including some financing value, we made the decision to terminate Trench A. It was fairly a easy one and there needs to be no affect sooner or later round dividends or different – or money necessities going ahead on account of that call.
Duncan Gibbs
That appears prefer it for questions. I’ll hand again to Duncan.
Duncan Hughes
Yeah, thanks. Hey, then look, I’ll simply hand again to Concord to see if there’s any extra questions from the cellphone.
Operator
Thanks. You have got a query from Levi Spry from UBS. Please go forward.
Levi Spry
Good day guys! Thanks for the decision. The query I assume was simply on, now with the DGO transactions full, in case you may share something on how you intend to interact De Gray and what which may appear like? Is that serving to add worth to the following day and perhaps remind me what that’s. Is {that a} pre-feasibility research? Are you anticipating having together with to that. What can we anticipate from you so as to add worth to that stake you will have?
Hayden Bartrop
Thanks Levi. Hey, that is Bartrop, Common Supervisor of Company Growth. I feel it’s inappropriate for us to touch upon any particular enterprise growth or company growth alternatives as I feel most corporations do, so we gained’t remark additional on that. I feel as we’ve talked about, we see the strategic stake as one thing beneficial. We’ll assist out the place we are able to by way of the noise that we’ve had from Gruyere and hopefully move these leanings on, which is able to assist in the end optimize our holding in De Grey, and we’ll present no matter different learnings or help we are able to do. I feel that’s type of it with the place that we have now at the moment.
Levi Spry
Roger, okay, thanks. Thanks quite a bit.
Operator
Thanks. Your subsequent query comes from Michael Scantlebury from Euroz Hartleys. Please go forward.
Michael Scantlebury
Hello guys! Nice quarter. My query is round throughput already being type of requested, however as an alternative of 1 – on the [inaudible] I used to be simply questioning how the operation aspect of the solo facility there was monitoring.
Duncan Gibbs
Yeah, so I assume we’re within the form of remaining levels of fee that. I assume the present indications is it is going to be up and in accordance with plan. We’re going to get just a few extra check and issues executed on it to believe in that. However after all that’s fairly well timed with the massive step up in vitality prices in the intervening time. So as soon as it’s coming alongside its producing about 10% of the ability provide for Gruyere.
Michael Scantlebury
All proper then, yeah nice quarter guys. Cheers!
Operator
Thanks. Your subsequent query comes from Paul Kaner from Ord Minnett. Please go forward.
Paul Kaner
Yeah, Hello gents! Thanks for taking my query. Simply within the quarterly you talked about your accelerating mining to ship ore to the plant and mitigate form of ore provide dangers. May you perhaps discuss to the magnitude of this and the way lengthy you’ll form of anticipate this to proceed ahead simply to get a effectively inventory maintain supply there.
Duncan Gibbs
Yeah, thanks Paul. So what we have now been doing is mainly there’s a price deal with fleet, so that offers us a bit of additional capability. Usually that’s used you recognize in managing ROM stockpiles to the suitable crusher. So we’ve been utilizing that opportunistically to offer us a bit extra throughput or a bit extra mining price. I assume the final couple of quarters are reflective of doubtless volumes that we are able to obtain and what we try to do is handle a few of the headwinds that we’re already seeing with COVID.
We’ve had case numbers on the aspect just like inhabitants on the statistics in WA as an entire. So I feel it’s about 40% of the inhabitants there had COVID, and naturally you recognize you will have the impacts of individuals being away for carers depart and isolation necessities, and so on. So all people has had these issues, so actually what we try to do strategically is to guarantee that we maintain the ROM pack full and that’s very a lot the place we’re and its labored fairly effectively for us to-date.
Clearly you recognize the place we find yourself via the yr relies on if we’re struggling any manufacturing loss time on account of COVID or from different components. However what it does imply is we’re in fairly a strong place at Gruyere to handle the ore provide to the plant. That’s to not say that there’s no COVID danger. After all we received to workers up all of it and that form of issues as effectively.
Paul Kaner
Yeah, no dramas, understood. Thanks for that. Cheers!
Operator
Thanks. There are not any additional cellphone questions at the moment. I’ll now hand the convention again to your audio system.
Duncan Gibbs
Thanks Concord. We’ve simply had one webcast query are available from Brad from Bell Potter. So we would simply tackle that in a short time.
Duncan Hughes
No drawback. So Bradley’s query is with the expansion in exploration tenure, what are your ideas on the course of the exploration finances?
John Mullumby
Yeah, we’ll clearly work that via in accordance with you recognize our high quality of targets and stuff like that. I don’t assume the overall mindset that we’ve received is maintain exploration expenditure at related ranges, so you recognize with the economic system in that fleet by $30 million vary lately. So you recognize clearly that in opposition to the standard of targets we received at Yamarna versus elsewhere and you recognize we’ve received a really giant land package deal. So with the DGO acquisition, we’re virtually definitely going to take a look at alternatives. We’ll be founding a few of that out or bringing in companions and what have you ever, and we’re working via that in the intervening time.
So I assume most likely the underside line is, simply because we received an enormous land package deal and I don’t see us you recognize stepping up the extent of exploration spend in totality. You recognize to take drive of the place we take a look at operating at a excessive price for exploration will likely be pushed by our ends in clearly having our form of outcomes dry out and must speed up.
Duncan Gibbs
Thanks in your query Brad and thanks everybody for his or her questions. That brings a near our quarterly name. The June quarter was an excellent quarter for us, clearly document manufacturing, low all-in maintain prices, and the all importation company all-in prices was $1,600 an oz and as Duncan prompt, most likely one of many lowest in our peer group.
With the quarter clearly effectively on observe, we’re rising to a sustainable 350,000 ounces in 2023. The quarter noticed us efficiently full the DGO Gold takeover and we’re fairly enthusiastic about our portfolio of investments and exploration belongings. Because of the nice manufacturing, we noticed document free money movement, document money positions and we’ve felt comfy to cut back our undrawn debt place.
Thanks once more in your curiosity and persevering with to comply with the corporate and I stay up for speaking once more in in opposition to quarter. Thanks.
Operator
Thanks. That does conclude our convention for right this moment. Thanks for collaborating. You could now disconnect.
