RMLRF (RMLRF) Q4 2026 Earnings Report, Transcript and Summary

Thank you for standing by, and welcome to the Ramelius Resources FY '26 Financial Results Conference Call. [Operator Instructions] I would now like to hand the conference over to Mr. Mark Zeptner, Managing Director and Chief Executive Officer. Please go ahead.

Thank you, Harmony. Good morning, everyone. Thank you for taking the time to dial into our FY '26 results conference call. Alongside me this morning is our General Manager of Finance, Ben Ringrose, who will drill down into the numbers after I've covered off on the highlights. Darren Millman, our CFO; and Tim Hewitt, our COO, are also both in the room for any Q&A that might come up after our initial comments. We have uploaded to the ASX platform along with our website, a number of documents this morning, including our FY '26 financial results summary, our audited statutory financial report and a presentation that we will be speaking to today. So if we start on Slide 3 and look back at the year for Ramelius in which we increased returns to shareholders and also focused on consolidating our asset base to achieve production of plus 500,000 ounces per annum by FY '30. We made a commitment to shareholders in December to maintain our returns through this period of investment into the business. Pleasingly, we were not only able to maintain these returns in FY '26, but grew them with our $250 million share buyback program. I will touch more on our shareholder returns later in the call. From an asset point of view, we continue with our focus on the high-grade, high-margin projects with the acquisition of the Dalgaranga gold mines early in the financial year. We also entered into an agreement for the sale of our noncore Edna May hub for $300 million, which we expect to complete in September. It was a very busy year again in FY '26 with the obvious focus being on the world-class Dalgaranga asset, where we announced a maiden Never Never underground ore reserve of 1.6 million ounces at 7.3 grams per tonne and completed a PFS with an NPV of $3.5 billion at a base case of AUD 4,500. At $6,000 per ounce, closer to today's price, the NPV increases to $6.4 billion. Along with the PFS, we selected a preferred milling option for the Dalgaranga ore with a single processing plant at Mt Magnet with a capacity of up to 5 million tonnes per annum. We look forward to updating the market with a full year production outlook to FY '30, including full FY '27 guidance details in September once we have finalized the EPC contract for Stage 2 of the Mt Magnet mill upgrade and also settled on new life of mines at our Mt Magnet assets. At Rebecca-Roe, we completed the DFS in October 2025, which showed an NPV of $692 million, noting that at $6,000 per ounce gold price, this increases to $2.1 billion. On the back of the DFS and the compelling economics, the Board made an FID on the project, subject only to Roe environmental approvals. Before we get to the financials, I wanted to touch on our track record of delivering on guidance on Slide 4. FY '26 was the sixth consecutive year we have met our production and cost guidance, which is something the team here is very proud of and is front of mind whenever we consider our commitments we make to the market. As I said earlier, we will be providing an updated full year production outlook. At this stage, we are targeting the week commencing 21 September. This outlook will include full production and cost guidance for FY '27. But what we are seeing here, like our peers, is inflationary pressure on costs, higher royalty charges from higher gold prices and higher fuel costs with the ongoing Iran conflict. In addition to this and as a direct result of exploration success during the year, we have extended the life of mine at our Galaxy operation out to 2032, noting that this was previously only out to 2028. And also with the planned production rate looking to increase to 800,000 tonnes per annum compared to 600,000 tonnes per annum in the previous plan. It is expected the additional development required in FY '27 will add approximately $30 million to all-in sustaining cost, which is equivalent to around $130 an ounce. I will note that we have already provided exploration guidance of between $90 million and $110 million for the FY '27 year. With that, I'll now hand over to Ben.

Thank you, Mark, and good morning to you all. For those following on the presentation, I will initially be speaking to Slide 5 and our financial highlights for the year. The business generated an underlying EBITDA of $765 million from the sale of 192,000 ounces at a record 74% margin, which is exceptionally strong in this year of consolidation and transformation. As we've said throughout the year, it's a fantastic time to be a gold miner, and that is evidenced with the EBITDA per ounce of over $4,000. Now whilst we have seen a drop in production with the completion of operations at Edna May in the prior year, what is really pleasing to see is the increase in the EBITDA margin. With further high grade to come from Never Never in the following years, it is going to be exciting to see Mt Magnet fulfill its potential becoming a top 5 production hub in Australia. The underlying NPAT for the year was just shy of $320 million with higher D&A charge being incurred with increased tonnages mined, particularly at Dalgaranga, Penny and Cue, which are mines that have a related acquisition cost being amortized. We have today announced a $0.03 per share fully franked final dividend for FY '26, taking the total for the year to $0.06. Mark will discuss the dividend and shareholder returns in more detail shortly, but what I will highlight is that this paid -- the paid and declared dividend for FY '26, along with our share buybacks, results in $256 million being returned to shareholders for the year. This represents 65% of our underlying free cash flow. Now throughout the documents released today and the presentation itself, we do refer to underlying earnings to give you a better understanding of the operational performance. A reconciliation of the underlying and statutory earnings can be found in the appendix to the presentation. But these adjustments do include, firstly, Spartan acquisition costs of $133 million, of which $131 million relates to stamp duty on the transaction. This stamp duty has now been paid, but was recognized on our balance sheet as a payable at 30 June. Secondly, the Spartan private royalty obligation fair value adjustments of $55 million. This is a noncash adjustment to the current earnings and relates to the fact we expect higher revenue in the future based on our increased confidence in the ore body with the maiden 1.6 million ounce ore reserve and higher consensus gold price forecast. Ultimately, this is a positive. However, we must recognize an expense to earnings with the future royalty payments associated with higher revenues. And lastly, during the year, we closed out our remaining FY '27 gold forward contracts at a cost of $28.4 million. We can see the positive impact this had on cash flows in Q4 when there was no hedging in place. Moving on to Slide 6, and the cash performance and closing position for the year. As you would expect with the completion of Edna May and period of capital investment, the cash metrics, while still exceptionally strong, were down on FY '25. The business generated over $700 million in operating cash flow, which after growth capital and exploration resulted in underlying free cash flow of $393 million or over $2,000 an ounce. After considering the net cash to acquire Spartan, income tax and hedge book management, the overall free cash flow was $149 million. After shareholder returns, the closing cash and gold position was $650 million, which, when coupled with our undrawn credit facility leaves us with liquidity of $1.1 billion. Again, the appendices provide a reconciliation between these cash metrics and the statutory cash flow in the financial report. Still on cash and Slide 7, I want to highlight the cash returned to shareholders in the year. A total of $255 million of cash was returned to shareholders, a 263% increase by way of the final FY '25 dividend, the interim FY '26 dividend and share buyback program. In addition to this, we returned $38 million to shareholders by way of our dividend reinvestment plan in the year. This clearly demonstrates that not only did we maintain shareholder returns in FY '26, we grew them, which in this period of lower production and higher capital is a testament to our balance sheet strength and confidence in our growth plan to in excess of 500,000 ounces per annum by FY '30. Capital investment in the business by way of growth capital, exploration and the acquisition of Spartan grew 19% to $390 million, making up just over 50% of our use of operating cash flow. On the chart on the bottom left of this slide, we show the quarterly cash flow across the year. And what could be seen here is a notable increase in the underlying free cash flow in the second half of the financial year, particularly in Q4 with production from Never Never and no hedge book commitments. Finally, before I hand back to Mark, I want to touch on the balance sheet on Slide 8, which has seen a notable change with the acquisition of Spartan. Our working capital position remains strong after capital investment and shareholder returns at just over $460 million, whilst net assets increased to $3.9 billion. Importantly, our balance sheet and future production cash flow leaves our development pipeline fully funded without drawing on our credit facility. I will now hand proceedings back over to Mark, who will give a recap on our operations and projects before discussing the dividend declared today.

Thanks, Ben. I'll be picking up on Slide 9 at the Mt Magnet hub, starting with a recap on the year. We certainly achieved a lot making solid progress on multiple fronts. From a projects point of view, following the Never Never PFS and integration studies, we focused on both Dalgaranga infrastructure and the Mt Magnet plant upgrade. Work on the Mt Magnet plant upgrade focused on the front-end engineering and design and commencement of Stage 1 of the upgrades, that being the refurbishment of the existing 1.9 million tonne per annum ball mill drivetrain. A major planned shutdown is due to occur in October this year, in which a lot of the new equipment will be installed and modifications made to the existing plant, again, all associated with Stage 1. In conjunction with this, we are close to finalizing the EPC contract for Stage 2 of the mill upgrade, which is the new 3 million tonne per annum circuit, and we'll provide an update to the market with the full year production outlook and FY '27 guidance, as mentioned earlier. At Dalgaranga itself, capital works across the site progressed well with a focus on the paste plant. You can see the picture on the top right and refurbishment of site infrastructure, including the camp offices and workshops. Also by the end of the year, the underground -- main underground pump station was commissioned and in use. In the coming year, we will complete the remaining capital works, including the paste plant, obviously, which is nearing commissioning and other site infrastructure as well as commence road upgrade works on the 65-kilometer strip stretch between Dalgaranga and Mt Magnet. Operationally, for FY '27, we will further increase mining rates at Never Never as we ramp up towards our targeted 1 million tonnes per annum at that mine. At Mt Magnet, we will commence the Eridanus Stage 3 open pit in November, whilst at the same time, increased mining rates at Galaxy and extending its mine life. There's also promising underground potential at Cue, specifically at Break of Day and Lena, which we'll explore further in FY '27. Again, details will follow later this quarter. Just also noting that our 2026 resources and reserve statement will be released next week, which will form the underlying basis or underpin our new Mt Magnet hub life of mine. Moving to Slide 10 on Rebecca-Roe, our next processing hub, we have made great progress in bringing this exciting new project to fruition. In addition to the DFS and FID mentioned, we did reach a native title mining agreement with the Kakarra Part B Native Title Holders. And also late in the financial year, we had confirmation from the EPA that the Roe environmental approval pathway will be streamlined through the established Part V process. Looking forward at Rebecca-Roe, we'll work to obtain the Part V works approvals and relevant licenses, further optimize the mining schedule upon Roe approval, but also continue exploration down deeper the current open pits to extend project life and also commence early works such as access roads, camp, airstrip and borefields. Lastly, before we open up the presentation, we're on Slide 11 now. We have the final dividend for FY '26. We are proud of our track record on dividends and shareholder returns. And today, we are declaring an eighth consecutive final dividend, this time, $0.03 per share fully franked. This, coupled with our interim dividend paid in April, takes total dividends for FY '26 to $0.06 per share. We announced our shareholder returns in FY '26 to increase -- to include, sorry, share buybacks, which for the year totaled $142 million of our $250 million program. With earnings now reported and our resources and reserve statement to follow shortly, our blackout period will soon be lifted, and we'll look to recommence this buyback program. Shareholder returns, including buybacks, interim dividend and declared final dividend, as Ben mentioned, totaled some $256 million or 65% of our underlying free cash flow. The total dividend represents a yield of 2.1% based on the 30 June 2026 share price and a total shareholder return over the last 5 years of 13.1% per annum and over $1,300 per ounce sold, more than 3x the $430 per ounce we noted last year. The final dividend will be paid in October. So in closing, I would like to highlight the investment case for Ramelius on Slide 12, consistently pay dividends and have done so for the past 8 years and have enhanced shareholder returns with the introduction of our $250 million share buyback program. Our focus on high-margin production leaves us with sector-leading cash flows along with now long-life assets at both Mt Magnet and Rebecca-Roe. We have a credible pathway to 170% production growth to plus 500,000 ounces per annum, underpinned by the world-class Never Never underground mine. We have doubled down on exploration, repeating our budget from FY '26 and FY '27 of a midpoint of $100 million, focusing on quality high-grade targets. As mentioned, we are a reliable operator doing what we say we'll do, having met production guidance for the last 6 years. Lastly, we also offer the benefits of both scale and liquidity with inclusion of the key indexes, the ASX 100 and the GDX. That concludes the presentation. I'll now hand back to you, Harmony, if you can open the line for audio questions, please.

[Operator Instructions] Your first question comes from Jonathon Sharp from JPMorgan.

Just the first question, I just want to clear something. When you say the FY '27 costs are trending 8% higher, does that refer to the absolute costs before the benefit of higher production or to just the all-in sustaining cost per ounce?

Absolutely. So that 8% also factors in where we put out the October 2025 5-year outlook using a $4,500 gold price. So it factors in both the step-up. We're probably leaning towards a $5,500 assumption as we go forward into FY '27. We used $1 diesel price in our FY '25 5-year outlook plan. We're now probably trending to $1.25. So those 2 factors also incorporated into that sort of 8% number. And with the other piece, which I'm sure you might touch on the next question was the sustaining capital. Important to flag, this is a real positive. We are looking to extend the Galaxy mine from FY '28 at this stage alone to FY 2032. So we're making this investment in FY '27. And when you think about a $30 million sustaining capital investment in FY '27 and Galaxy alone in FY '26 generated just under $90 million in free cash flow. So real capital intensity is amazing result, I think we will see. And we're not done yet. We think about Galaxy investing another $25 million, $30 million in Galaxy alone given what we're seeing and looking to share those results on exploration next Tuesday is probably what we're targeting on that reserves and resource update. So long-winded answer to your question, but I think it's worth to flag a few of those points.

Yes, that's great. And you answered a few things there that I had to follow up with. Just one other one there on the cost. What are you assuming for diesel in FY '27?

At the moment, we're probably landing -- we were landing at around $1.25 a few weeks ago. That was sort of more factoring in a higher cost for the first 6 months and then a lower cost in the preceding 6 months. But I guess we'll see what Mr. Trump does next week to see where that lands, but that was sort of the basis of that 8% within there.

Yes. I understand. It makes it hard with what's going on. And then just second question, should we think just with Never Never production, is that materially second half weighted in FY '27?

Jon, yes, that is. Yes, the back half of the year, we really start to see the decline that we're driving down really expand those production areas. So it will have further weighting towards the back half of the year.

Yes. Okay. Any ratios there you can give us?

Not at the top of my head.

Your next question comes from Adam Baker from Macquarie.

Just a follow-up on Dalgaranga. And I know you've got the 5-year plan coming out next month. So I don't want to jump the gun too much here. But now that the paste plant is nearing commissioning, and I know you still got the upgrades to go, but are we seeing any upside to that 0.6 million tonne number that you had in last year's outlook, potentially getting to that 1.1 million tonne run rate quicker?

I'll grab that one, Tim. Sorry, it's a little bit hard to hear you, Adam, but your question was around whether we see upside on the 600,000 tonne ramp-up at Dalgaranga. Look, I think we'd be looking to be in line with the ounce profile. Remembering we're going from 0 in March to sort of -- and completing FY '26 with 200,000 tonnes, around 600,000 tonnes in '27 and getting to 1 million tonnes. So I think that's a pretty aggressive ramp-up, and I'd like to think that we're in line with that. I don't think there's a lot of upside that we could be putting on the table at this point in time.

Yes, that's clear. And it's actually just a follow-up to John's. But on that 8% higher cost year-on-year, just to clear this up, it's 8% higher on everything. Or is it just 8% higher on cash operating costs? And then if we're looking at an AISC basis, it could potentially be a bit higher than that number given the uplift at Galaxy.

Yes. We'll try to keep it simple. As I said earlier on that one, we're sort of -- if you look at the 2025 guidance we had for FY '27, sort of looking in ballpark of the 8% on top of that plus the sustaining capital we're talking about on Galaxy. Within that 8%, we're factoring in employees sort of wages increasing around that sort of 6% to 7% range, obviously, explosives and different elements as well. So that's the whole [indiscernible] per se within that 8%. And as I said earlier, gold price do so. So I think we've maintained it pretty well. We're always looking for that competitive process when we enter tenders. And I think probably the thing that we will obviously get into when we issue in September the outlook, we do see that creep moving into the capital element, if not at a higher level than that. So just be mindful of that.

Your next question comes from Levi Spry from UBS.

I guess looking forward to these updates in the next couple of weeks. Just ahead of that, I just want to make sure I got the cash number right. So can you just confirm the stamp duty being paid for Spartan and then what your sort of expectations are around the net proceeds after some tax on Edna May, I think you said completes in September.

Levi, it's Ben here. So the first question on the stamp duty, yes, that has been paid in July. And the second question on the net Edna May proceeds. So $210 million is the cash component of that, as you would have noticed. We're expecting the tax on Edna May to be $40 million to $45 million. We'll settle that in around December this year. That's also -- it's reflected in our balance sheet as well, that tax payable. So you'll see it there.

[Operator Instructions] Your next question comes from Hugo Nicolaci from Goldman Sachs.

Congrats on a cracking year. Look, firstly, just the Mt Magnet mill expansion. Again, I appreciate you give that guidance next month. But if I look back at the last outlook, I think your mill expansion spend was about $220 million, including the water pipeline. You've touched on your operating costs going up about 8% year-on-year. With the final tenders for that EPC work for the mill in hand, what level of cost escalation are you seeing on that mill CapEx?

At least sort of 10% to 15% is sort of where the numbers are landing. Obviously, we're going through a competitive FEED process. So we have different numbers. So I can't be any more definitive than that. And we're working through not only the cost side of it, the time and the quality of the design. There's obviously more than one factor there. But if you look at what everyone else has done in terms of updating their CapEx numbers, I probably see us being not too dissimilar to that, even though the idea of having a competitive FEED process is to try to keep a lid on that as much as possible, Hugo.

Yes. No, it makes sense, impacting everyone with a number of projects going on. And so essentially, that's the next couple of weeks or sort of early to mid-September, we should expect that update then?

Yes. I said 21 December (sic) [ 21 September ] for the full cake, if you like, the full year plan and FY '27 guidance. But obviously, ahead of that, we'll be looking to finalize the EPC, and that's a key part of obviously that plan.

Your next question comes from Richard Knights from Barrenjoey.

I just wanted to follow up on something you said earlier on the call, just around the sort of potential ramp-up in volumes at Galaxy towards 800,000 tonnes per annum. I mean, again, understanding that you have the mine plan coming out in a month. I mean, can you give us any indication of what the timing of that looks like?

Yes. Just on Galaxy, it's -- we're ramping up and we should sort of hit that sustaining level around FY '29. So there's a couple of ventilation upgrades we need to do and also that capital investment that Darren talked about earlier just to open up some more levels. That's probably the key thing there.

Yes. And just one more just on the dividend. In terms of the mix of base dividend versus the buyback. Looking into next year, should we think of that base dividend as you'd like to have that as a sort of progressive -- a base for a progressive dividend? I mean is that fair to think? Obviously, we have to make forecasts around dividends for next year, and there's a lot of moving parts, and it depends on what the year looks like at the end of the year. But yes, how should we think about that in terms of sustainability that $0.06 per share?

I think -- it's Darren. Richard, the maintain and grow was the philosophy that the Board put to us back in December. We established a $250 million buyback. We set that minimum $0.02 per share per year. And obviously, we're now at $6. I would put forward come September, October, we'll revisit sort of what that looks like. But I think your working assumption should be $0.02 is the minimum. We will -- as you know, we can pivot or the Board can pivot between what we use that $250 million, if not more, on between dividends and buybacks. So we will react accordingly on best use in our view for our shareholders. So -- we saw the opportunity. We set that $250 million based on AUD 4,500. And a lot of that upside we saw in the dividend, we've decided to push towards -- in the gold price, we pushed towards the dividend. So that's how we saw that. We'll make another call once we see the gold price is at AUD 5,500 over the next 4 years, and that will also dictate where we go with the dividend policy. But at the moment, I think your working assumption still should be at that $0.02 minimum.

[Operator Instructions] Your next question comes from [ Ashley Cheng ], a shareholder.

Excellent result. I just got a question more for the longer term. If we look back the last 10 years, see Ramelius has a very good capital turn, at least going up 8x, so that's about 22.5% per annum. So looking forward, do you see that there are -- in your current assets, you've got enough options there to take advantage of -- if gold prices were to significantly move higher, do you have enough indicated and inferred resources to bring into production? Do you have enough spare capacity at your existing plant or potential to expand plant? And can you call on additional labor easily to ramp up production from indicated and inferred resources if gold prices were to be significantly higher?

I'll take that one. I will attempt to. You'll see next week our resources and reserve statement, and that underpins obviously a very long life. The last I saw was at Mt Magnet out to 2043. The other thing with capacity to process more tonnes at a higher gold price, at this stage, high gold price just essentially means we'll make more cash flow. We're one of the lower-cost producers. But in terms of flexibility on processing, we're purposely talking about whilst it will be targeted initially at a 4.3 million tonne per annum plant at Mt Magnet, we have got the capacity to go up to 5 million tonnes. And whilst we will be taking some bits and pieces from the Dalgaranga plant, we still have an approved footprint tails dam and a large proportion of that plant in place if we are to have ongoing exploration success at Dalgaranga. So I think we do have options to increase production over what we've called our base case, and we'll see some of that come through. It will be flagged in the resources and reserves. But obviously, the rubber will hit the road with the full year plan 21 September.

There are no further questions at this time. I'll now hand the conference back to your speakers.

Thanks, Harmony. I'm not sure if it's working or not, but I don't see any questions on the webcast. We have had half a dozen questions. So it doesn't sound like there's any more. I just want to thank everyone for their time. Have a great Friday.

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