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Ramelius Resources Ltd.

View Company Profile

September 16, 2024 at 1:40 PM (MDT)|Broadmoor Hotel & Resort

Mark Zeptner

Managing Director

Mark is a Mining Engineer and is the MD of Ramelius Resources. He was educated at the Western Australian School of Mines in Kalgoorlie and has more than 30 years’ experience including senior operational and management positions with WMC and Gold Fields Limited at their gold and nickel assets in Australia and offshore.

He joined Ramelius as Chief Operating Officer in March 2012, took up the reins as Chief Executive Officer in June 2014 and was appointed Managing Director in July of 2015.

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Thank you Hayden. And thank you also to the Gold Forum team for the invite back again this year. I'm glad to have arrived for after not making it last year. Today, I will talk about the cash machine. Well, the cash generating machine which is Romeus admittedly benefiting from a all time high gold price environment. But I'd like to think that we're doing our part in terms of managing our high grade operations efficiently. Such that we're one of the lowest cost producers in the mid tier gold space. the screens on the front aren't keeping up, but that's a disclaimer. So if I start with the corporate summary, excuse me, I have to turn around because I need to make sure I'm on the right slide. Cos the one that's in front still got your Capricorn presentation on Mark. So if we could start with a corporate overview, focusing on top left market cap currently 2.4 billion. We have over 350 million Aussie in Cash and Gold. And that is after our acquisition, our recent acquisition of 18% of spartan resources, which does form the bulk of our listed investments valued at 100 and 86 million Aussie in July now worth around 260 million today. We do have no drawn debt. We have upsized our facility, a revolving facility with five banks over four years to add financial flexibility should we need it? But our balance sheet which is already in excellent shape, promises to improve even further through Fy 25. NF I 24 we achieved record goal production of 293,000 answers at an all in sustaining cost of 1583 Aussie. An Fy 25 guidance is in a similar ballpark, but I'll come to the more on that shortly. OK. Our project locations are for those who aren't aware but looking around the room, I assume most of you are aware. We have two production centers in Western Australia, Mount Magnet with a plus 10 year mine Life and Edna May which we wind down in Q three of fy 25 and one development project East of Kalgoorlie. the 3.2 million ounce Rebecca road project. As I alluded to earlier, we have made a strategic investment of a bit over 18% in Spartan resources whose primary project is at Dalgaranga only 65 kilometers northeast of Magnet. We were pleased to see that the recent mineral resource estimate that came out from Spartan was in line with our own internal expectations. And we're happy to add this position to our own exciting internal or organic growth opportunities. In terms of how we approach growth opportunities. We take a, a bottom up disciplined value based approach to any growth, be it organic or inorganic. Now, before I look at our assets something a little different. Look at our track record of delivery and value creation. Firstly, we've been able to consistently grow our resource base, which is the, the bars above the line on the chart. growth from around 2 million ounces in 2016 to over 8 million ounces today. Whilst, as you can see below the line, we have produced over 2 million ounces in that same time period. We have 1.1 million ounces in reserve as was pointed out on the previous presentation. and we have been at that level for several years now, but we do look forward to some significant conversion at the 3.2 million ounce Rebecca Rowe project and also the 1.2 million ounce Ioanna project during this financial year. So it's not too hard to imagine that all reserve more than doubling, which will put Romeus on a more competitive footing with our peers on this metric in terms of production versus guidance over a similar time period, we've been able to del deliver consistently to guidance. with the challenging COVID and labor shortage years of 22 and 23 being the only real hiccup. I think we're still within guidance, but on the lower end, but it was a challenge for many miners through that period, our oil and sustaining cost in us dollars on this chart remains very competitive. And as we bring in high grade material, we're able to reverse the trend, which is a feature you don't see on many other gold producers. I mentioned at the outset that Romeus is currently generating significant cash flows. And we think this is really important in this high gold price environment. Generally, there's a lot of noise around production growth, exploration results ESG cost saving initiatives. But at the end of the day, making cash is what it's all about and capitalizing on that high gold price. 315 million free cash flow, Aussie in 24. I'm pretty sure is sector leading on a per ounce basis and it not only leads to a great balance sheet which allows you the flexibility to seize opportunities when they arise. It also potentially allows you to provide decent returns in terms of dividends not normally associated with the mid tier gold space. Now, the reason we're delivering these, these cash flows is because we're expanding our margins, not only relying on the gold price, but also being in the u unique situation where we've been able to reduce our oil and sustaining cost. As we saw a couple of slides back on this chart, you've got the yellow line being the realized gold price up to 24 and obviously using a combination for 25 of a spot at 3500. And our current hedge book which is is running off. The green line is actual all in sustaining cost up to 24 and then the midpoint of guidance for 25 It's the opening of the jaws as as some have described it. Now, we've increased our margins in fy 24 to and 25 to the best ever levels that I've seen in my 12 years at the company. And I'd argue that the margin is the key point here regardless of whether you are hedged or not. Ah The reason we have such good margins then is because more often than not, we've done a creative deals. And here we track our progress both internally and externally by project. We're showing the purchase price in blue, whether it's made up of just cash or cash and shares. Now, the cash generated in yellow and the net cache and the number being the red dot and the number sorry square brackets are actually the cash flows for fy 24 with the 135 million at penny being the obvious stand out there and we do have a trend established for bigger and bigger acquisitions. But I'd like to think that that's gonna see bigger and bigger returns. I did mention earlier meaningful returns for shareholders our sixth consecutive and most recent dividend of five cent per share fully franked represented a payout ratio of 27% of free cash flow slightly below our policy max of 30%. an equivalent to a yield of 2.6%. 100 and 31 million cumulative 50 million this year minus any take up on the DRP which has a 2% discount which is typically around 20% in terms of fy 25 promises to be another strong year. The production mix will change somewhat with mount magnet increasing approximately 50% on fy 24 to 240,000 ounces at the midpoint. And at an all in sustaining cost of $1400 an ounce, Aussie. Well, we will run down the stockpiles at Edna May at an all in sustaining cost of 2600. Also remembering that about $500 an ounce of that is non cash related to the rundown of those stockpiles. So therefore, at Edna May cash generation will still be healthy. In fy 25 it is worth noting that we will be second half weighted those dreaded words. But for us, it's due to our high grade Q project coming into full production in the second half of the financial year. We will be putting Edna May on care and maintenance as I mentioned at the end of processing not proceed with stage three. Simply as we believe there are better returns to be found elsewhere in the portfolio. I'm pending the outcome of studies at Arius which is a mount key mount magnet project. In H two growth capital, we will be limited in H one to development of that Q project and will only be 25 million which compares nicely to the 50 million we spent in fy 24 on capital. And all of that gives us a lot of confidence that Fy 25 will be another very strong cash flow year for the company. Well, let's look quickly at mount magnet mount magnet hub in Fy 25. We've zoomed in to show the bits that makeup mount magnet Aidan and Galaxy are essentially at near the mill itself. Q is 40 ks north. And penny is off the map, approximately 100 and 70 Ks to the Southeast. Our exploration focus not surprisingly be at all of these areas. I'll go into those in a little more detail as we go through our mount magnet mine plan we put out in March features obviously stronger production at the front end rather than chocolates tomorrow. production is stronger due to penny in blue and Q and yellow with the darker green forming the mount magnet base load. What's not included is any upside from the Ioan project which we're working on at the moment. The 1st 3.5 years of this project will generate a billion dollars of free cash at $3000 an ounce. Indeed, the first two quarters are already behind us and we produced 200 million Aussie of free cash flow in those two quarters alone and giving us confidence of delivery of will in excess of that $1 billion over that period. Yeah, the mine plan does include an underground option. A first pass underground option we'd like to call it from fy 26 onwards of about 270,000 ounces at ari anus. Since that point in March, we've continually drilled and updated the mineral resource and what we've seen in the pit has led us to look at a potential cut back of the original pit rather than dive into an underground and potentially sterilize or up on the sides of the original pit. If we do go along the open pit path, then likely there's a mill expansion associated with that. But ideally, and that's not factored into this plan. Ideally, we have production at a higher rate for longer on that basis. And that's also assume when we do not extend penny and Q and our track record of extending projects is pretty good. And I'll point you to our Vivian project that we acquired with 100,000 ounces and end up mining 275,000 ounces. That's a good example of that ah slide on Aidan and the open pit option you can see here. I mentioned the 1.2 million ounce resource that currently sits at Arius. Importantly that resource when we updated it in May, I think it was the grade went from 1.3 to 1.7. It shows that grade improves with depth. What we saw in the pit were these high grade horizontal high grade zones within the broader 80 m wide, Grana Dira. And that was confirmed with drilling. And you can see that basically your body gets better at depth to the point where in the bottom of the current pit, we were mining three and four grand blocks at the bottom of that pit at very low strip ratios, the potential at Arius. As you can see from the optimization, we ran some time back at 2500 an ounce. Aussie produces a 600,000 ounce beer. And we are pulling together additional drilling which is indicated in blue, which is going on at the moment. And racing to get an option study out on a possibly bigger underground, but probably more likely the open pit and mill expansion option by the end of the year. Another view, a planned view of the same open pit on the bottom left is the current pit that we've just finished or just finishing. I on the right, a slightly different angle of view, but the original pit in the middle and the, the cut back on the outside, it's a decent hole in the ground. The current pit is 230 m deep. The cutback will be 350 m but it'll be large enough at 12 million tons to feed our 2 million ton Mount magnet plant for six years by itself. So the potential to have a large open pit at Mount magnet and then a large relatively large underground at Galaxy will simplify operations at mount magnet compared to what historically has been us jumping from deposit deposit. which is something that we obviously look forward to. Speaking of galaxy, Galaxy is just a collective name for the all bodies that Saturn and Mars, all bodies that sit alongside the historic hill, 50 decline and deposit at depths. We have commenced doping at Mars. We're just getting into development at Saturn, but we have been able to widen the bee resources particularly at Saturn. And we've got a whole lot of confidence that the beef will extend the depth. And what you see there currently is only five years of mine plan. We think Galaxy will be around for a lot longer albeit at lower grades than the historic hill 50 mine. But mining to all bodies side by side will be able to mine at a much higher production rate. Galaxy has been in development for a large amount of fy 24 but it's now into full production. There's no Capex associated with it. We believe it will be around much longer as I said, we have confidence in the vertical continuity of the Biffs. And the the best example we have is right next door at hill 50 jumping over to QE. We, as you can see on the bottom, right, we're about 5 m below surface. We're into some really nice stuff at the break of day pit, specifically mining the Starlight load. You can see the the load on the on the left image where the top 100 m of this pit is gonna be pretty good for us. 7 m wide. There's not many grades on that screen that are less than 15 g. There's a real sweet spot that will come into production and into the mill quarter three and onwards. And that's again the reason for the second half waiting between now and the end of December, we have to actually up or gear up our mill to deal with the amount of gravity that's gonna come from both Q. And what's already coming from? Penny, it's a nice problem to have, as they say, but we'll be adding Aus elect winning circuits and an extra tank to, to deal with that. high grade gravity coming in an extra slide on cue. What I wanted to show here is on the image on the right. You see the break of day operations where we got half a dozen pits lined up. We've actually been able to acquire the JV ground back from evolution for a pretty nominal price. You can see the West Island and Austin North projects that they were focused on. We actually are more excited and more interested in the on trend break a day. targets highlighted in the red circles. In fact, these targets probably ranked at the top of our exploration portfolio, probably new year drilling in the new Year, but the ability to find relatively small but high grade targets like break of day that we already started mining. We're pretty pretty keen to get into that. Penny. I've left the best to last penny produced at an all and sustaining cost below $1000 an ounce last year. But the best is yet to come. We're not into the middle of the Penny, North Albany just yet. This will come in the second half of the year., but it'll also coincide with us putting the decline across to be below the,, Penny West Pit and into the Penny West or body., we are doing drilling, everyone asks us about drilling at Penny for obvious reasons. We have got a drill rig in the bottom of Penny North and we're exploring what happens at the bottom of that,, Penny North or body., But later in the year, we'll be doing some surface drillings, surface drilling to basically explore the down deep extents of both. all bodies as well as follow up some targets, some conductors, sorry, showing up in some down hole geophysics which I might need some time to take you through later. The image on the left there are some sniffs. Are we on the edge of another Penny North? We don't know we've got more work to do there and we'll give that a really good go in the second half of the financial year, just one slide on Rebecca Rowe. Again, it's all coming together end of the year. A PFS update. We did get held up with drilling due to the wet weather in the region, which did affect us here, didn't affect our production thankfully. But we have all that drilling complete into the bomb Bora or the Ro underground areas which are Chura and the North flat loads. We have, updated our models and the engineers are working on what that underground looks like., PFS,, end of the year, as I said, but got a pretty good starting point, probably the two best resources in that sort of part of the world. And how do we stack up against our North American peers? This is something you don't see very often and I won't profess to know the North American names that well. But some basic screening carried out by a new CFO is actually was at Centra for 11 years. shows that Ramirez actually competes at the top and in a in a number of metrics. So underlying free cash flow top left, all in sustaining cost, top right and net net cash bottom right. The chart on the bottom left is just basically gold production. So it's showing that we're punching above our weight on the other metrics given our production level. Ah Here's another one, same set of peers shows from left to right, return on capital last three years, return on invested capital and return on equity. In this case, Romeus sits above the midpoint on all three. But the important additional feature on this slide are the bubbles which are the Fraser Institute rankings, Western Australia is ranked number four as many of you probably know. and all the companies sitting above us on this curve have much lower attractiveness ratings. And therefore you could argue that higher returns are needed in these jurisdictions. So what you have with Romeus, his accent returns in one of the best jurisdictions in the world. So to finish off, summarize why we think we're well placed going forward. We are good operators. We have a very strong balance sheet. We only do a creative acquisitions and we do have plenty of exploration opportunities. And as discussed along the way, we've got a number of catalysts coming up between now and the end of the year including the outcomes on Aan Underground Open Pit and Mill as well as the Rebecca Rowe PFS. Always lots going on. Thanks for listening. We're right out of time, but thanks very much for your presentation.


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