Gold/Silver Investor Hub: Ramelius ticked a lot of boxes in the September quarter – higher production and lower costs, very significant cash generation, continuing build-out of reserves, and successful exploration. You flagged the “particularly busy” December quarter in progress. What have been the key milestones in the period to date, and what is coming up November and December?

Mark Zeptner: We’ve completed mining and hauling at Kathleen Valley and in fact 95% of the rehab on that site has already taken place as well. We’ve just had the mines inspector up there giving it the once over, so we’re pretty much done and dusted in terms of mining at Kathleen Valley, a little bit ahead of schedule, and we’ve hauled the ore down the road to Mt Magnet.

At Mt Magnet we’ve started our Blackmans openpit. We’d been doing grade control drilling and the access road clearing, [and] drilling and blasting, and mining, started on the weekend. So it’s good to get that underway. And Water Tank Hill, which is the underground project at Mt Magnet, will get going next month. We’ve just got notification from the Mines Department of our mining proposal, and that allows us to actually kick off and probably about mid next month we’ll be entering the portal.

Also at Mt Magnet we’re right in the bottom of the Percy pit and we’d be looking to finish mining that pit by the end of the year.

So there are some projects starting and some finishing. It’s particularly busy when you’re doing start-up and closure activities as opposed to the status quo where there is much less to manage.

Gold/Silver Investor Hub: You mentioned in Colorado Springs at the Denver Gold Forum the circa-156,000ozpa run rate achieved in July and August. What are the real keys to maintaining that rate and, given the way that is being sourced at the moment and the range of options opening up to you, or that you are opening up, how would you ideally expect to see contributions to that annual production level being achieved from your production base going forward?

Mark Zeptner: The 156,000ozpa run rate … you’re obviously extrapolating the July and August [13,000oz per month) numbers in that presentation. One thing I’ll say on that is it assumes 13,000oz a month every month and that doesn’t account for the fact that we have two 4-5-day shutdowns in the year, and obviously with start-up and closure of some projects it’s not exactly smooth. So we’re still looking at 135,000oz-140,000oz this year: 135,000oz is the number that we put out right at the start of the year; 140,000oz I think is achievable. And our production in the September quarter of 36,179oz … is on that 140,000oz [annual rate]. So we’ll probably be levelling off given the head grade through the mill, and the mill throughput rate, has been maximised at the current level.

I think 35,000oz a quarter for this year is readily achievable. The 2018 year we’ve talked about 150,000oz, which is not a big tick up – another 10% - and that will be … facilitated by bringing forward Water Tank Hill, plus continued over-performance at our Vivien project where our grades and our ore widths are generally a bit better than we expected.

There is an option down the track to go to 2.4Mt, it’s about a A$10-11 million upgrade – in fact the plant used to run at that capacity back in 2004. But we believe we would need quite a significant increase in resource position, and reserve position, to justify that, and we’re quite happy with that throughput rate [where it is] at about 1.7Mt.

Gold/Silver Investor Hub: We’ve seen many references within the Australian gold sector in recent times to the value being generated for shareholders/investors from a) superior management of brownfields operations/development, and b) more (bigger spends) and smarter exploration of these fields. And the fact that this value/return on invested capital is generally better than what companies can achieve from investing the money in purely greenfields environments. Firstly, given what you’ve seen/achieved in the past two years, is this what you are seeing confirmed in the Boogardie Basin and Kathleen Valley/Agnew holdings of Ramelius – this superior return on investment versus other options/best measures of that?

Mark Zeptner: The best example I can give you is Kathleen Valley. For a $4 million purchase off Glencore we’re looking at positive cashflow – net of opex and capex of which there was a very small amount of capex, I think about $1.5 million – of plus-$36 million. So those sorts of return are pretty hard to argue with. In terms of brownfields drilling, our Milky Way deposit for which we’ve recently put out an 80,000oz reserve, cost us about $2 million. So that comes to about $25/oz by my calculations, which for reserve ounces is not too bad.

They’re probably two good examples I can give you to support the fact that you can’t really beat your own brownfields, near-mine stuff for value for money in terms of exploration or returns on capital spent.

Gold/Silver Investor Hub: You have A$50 million capex/exploration budgeted for Ramelius’ two flagship areas in FY17. Is this where the main focus of the company’s investment continues this year, and ongoing, and if so, what are the options for advancing Tanami and Yandan?

Mark Zeptner: The $50 million is focussed mainly on Mt Magnet and Vivien, as you say. In terms of exploration we’ve gone from, at one stage probably three years ago 50% of our exploration spend was greenfields and 50% brownfields, to where it is now, where only $1 million out of the $15 million [exploration spend] proposed this year going into greenfields. And that is mainly at Tanami.

If we hit targets, or something that we like, then we’ll push that up next year. One of the factors that we have to deal with at Tanami is really a six-month field season. From about November to start of April you’ve got the wet season and given where we are – we’re off the beaten track a little bit – access is really difficult through those months. We’re only on a six-month cycle. But if you find something that’s worth drilling out, that looks like an orebody, then you’ll establish more permanent infrastructure in terms of roads and so forth.

Yandan is really low level at this stage. I think we’ve got $250,000 in our $15 million total budget [earmarked for Yandan]. It’s really early stage stuff there. Our focus on the greenfields side is really Tanami.

Gold/Silver Investor Hub: Beyond that, how actively are you looking for new opportunities in Australia, and offshore?

Mark Zeptner: We really are Australia and New Zealand focussed. We do keep a watching brief in the US. And then after that we’d be looking at certain parts of Asia – Laos, Vietnam, those types of places. So we’re not that active in terms of South America or Africa or Central Asia. We have got a lot of experience operating in Australia and that is our preference, but we do keep an eye on projects overseas in the areas I just mentioned.

Gold/Silver Investor Hub: Your major capex items this year are Water Tank Hill underground, and the Milky Way openpit. Can you just give a quick snapshot of progress there, and the key upcoming milestones?

Mark Zeptner: Water Tank Hill, yes, we’re just about to start. There’s a $11.5 million forecast expenditure over the next six months. Probably about half of that will come in this quarter, and the second half will be spent in the March quarter next year. We have just put the reserve out not long ago for Milky Way. We’ve seen a minimum time for the permitting process for an openpit project at Mt Magnet of about six months, so the earliest that would be in production is probably the June quarter next year and that’s when you would see the bulk of that $15 million openpit pre-strip.

Gold/Silver Investor Hub: You’ve alluded to the various “initiatives in progress [to] grow the current reserve base strongly in the next 12 months in order to extend the overall life-of-mine out to five years and beyond”. Clearly there is the drilling to the west, and at depth, into the banded iron formation [trend] at Water Tank Hill, extensions at depth at Milky Way, and the potential at depth at Vivien, that has captured attention. But what are the top three of the initiatives you mentioned, and how are you proposing to apply that increased spending and field knowledge to really advance the LOM view?

Mark Zeptner: You’ve touched on the three priority areas, the first one being the Boogardie Basin, which houses the likes of Milky Way and Stellar. So $5 million is going into there [this year]. In the second half of this year the additional $5m we’ve pulled from 2018 [budget] … we’re looking to put that into the BIF-hosted orebodies at Mt Magnet. Water Tank Hill is one of those; the Galaxy area; once we’ve finished the Percy pit we’ll be able to drill underneath those pits looking at underground opportunities. And we’ll also lump the Morning Star area – which is not on that BIF trend exactly – in that category.

And the third one is Vivien’s depth extensions. We won’t be in a position to do that deeper drilling until the end of the year. It’s really that bottom drill cuddy that allows you to have that [deep drilling] position. The [planned] deeper drilling is to about 700m depth. The original mine plan is to about 400m depth, so we’re targeting that additional 300m at this point in time.

Gold/Silver Investor Hub: What is the latest news on the Venus prospect from the RC drilling programme?

Mark Zeptner: Results will be in the quarterly which will be out by the end of the month. Really the bottom-of-hole intersections are what we’re looking for there but it looks like quite a broad area of mineralised porphyry which is sort of what the Boogardie Basin and Venus entails.

Gold/Silver Investor Hub: You’ve mentioned the “orebody exceeding expectations” at Vivien based on early stoping/production. Can you just elaborate on that, and any word on progress on the revised mine plan?

Mark Zeptner: The widths are slightly greater [than plan] in the main part of the orebody and the grades on average are higher. So that’s a nice scenario for us. The overall mine plan grade was 7.6gpt, but it’s not by any means just a homogenous orebody where you get 7.6gpt all the way along. You’ll get two and three gram faces, but you’ll get 30g faces as well. And the overall average is turning out to be a couple of grams better in general. And our feeling is we’re going to get stoping areas that are going to be double-digits, so it just looks like we’ve been a little bit conservative with our modelling and our top cuts, which is probably the better end of the scale to be on.

The revised mine plan is a work in progress. We’ve found with the orebody being closer to 10gpt in a lot of those central zones … we don’t want to be having rib pillars – rock pillars – which is what was in the original mine plan. We’d prefer to have 100% extraction in those areas. So that means a change probably more from a top-down to a bottom-up approach, and also using cemented fill rather than rock fill. Changing that on the run is not a quick process. You’ve got to get it right.

But it’s a good story because it’s more ounces and higher grades at the end of the day. It’s just going to take us two-to-three months to work through all the geotech and filling requirements associated with that. So without rushing the guys, we’d like to think we’ll get that done by the end of the year.