Black Cat Syndicate Limited (BC8) Earnings Call Transcript

Hello, and welcome to MarketOpen Direct Connect. I'm your host, Stuart Walters, and we're joined here today by James Bruce, Managing Director; and Nick Dwyer, Chief Financial Officer of Black Cat Syndicate, ASX code BC8. James and Nick will discuss the company's fourth quarter financial year 2026 quarterly and activities results and participate in a live Q&A post presentation. [Operator Instructions] A copy of this webinar will be available on MarketOpen and Black Cat's communication channels within the next 24 hours. James, Nick, welcome to Direct Connect, and over to you.

Thanks, Stuart, and welcome, everybody. Thanks for joining us today. Black Cat's had a successful year of ramping up production and very pleased to present these results to you. We produced 91,000 ounces in the year. We've got $105 million cash on the balance sheet, no debt and no hedging. The company since we listed has increased in share price 19% per annum. And the -- I'm pleased to -- for those of you who don't know the company, I'll just give a quick snapshot. We've got 2 assets in production at Paulsens and Kal East. These hubs have ramped up well over the last 1.5 years. Kal East is continuing to ramp up. At our Coyote project, we're drilling at the moment. And we've also got the Mt Clement Critical Minerals project, which is near to Paulsens. During the June quarter, some of the highlights were that we processed 428,000 tonnes of ore to produce 20,800 ounces of gold. Paulsens' had a record quarter of 10,600 ounces. And at Kal East, we had our first quarter producing 100% Black Cat ore through the Lakewood mill, and that's the photo that you can see behind me in the picture. That's the first Black Cat ore going into the mill. We're ramping up at Kal East and have $105 million of cash on the balance sheet. I'll pass over to Nick. He'll go through some of the financial aspects of the quarter, and then I'll come back and go through the operational aspects.

Great. Thank you, James, and good morning, everyone. So as James mentioned, this is the first quarter of 100% Black Cat ore through both of our mills, and this resulted in the company ending the financial year in a strong position with $105 million of cash bullion and listed investments. This amount was nearly double the $56 million that we had at the start of the financial year and was an increase of $14 million for the quarter even with the recent decrease in gold price and fluctuations in the fuel prices. So on to the next detailed slide, pull a few key takeaways from this. So firstly, operating cash flow before capital was $77 million for the quarter, which was a record for Black Cat. And this for the full year was $255 million. Secondly, we continue to invest in developing both mines at Kal East with pre-strip at the Fingals open pit and decline advance at Majestic underground, totaling $44 million for the quarter. This investment sets up both mines for future quarters. Next, and as noted in the quarterly, Paulsens generated $27 million of notional cash flow, and that was off the back of the record quarterly production under Black Cat ownership. And finally, while obvious, it's worth noting the increase in cash and liquid assets balance at the end of each of the quarters. So I'll hand you back to James.

Thanks, Nick. As Nick said, we're in a strong financial position. However, the market is volatile. We've seen rising fuel prices. Gold prices have been also volatile. The -- our growth strategy is being reviewed to align our exploration efforts with expanding our near-mine production and ounces. Capital investment is allocated on the basis of quarterly cash generation that's the priority and then allocating capital to near-mine opportunities, and I'll go through some of those opportunities with you today. And I'll start at Paulsens. We've had an excellent quarter at Paulsens. The team there have done a fantastic job. had strong output of 114,000 tonnes with increased grades that produced record production of 10,600 ounces. Importantly, I think we've also recouped the $106 million investment that we made in acquiring and restarting the mine. And I think this is an important milestone. Also importantly, over the quarter, we've had 2 new discoveries, and I'll go through those on this slide here at Regulus and Lynx. These discoveries extend the known mineralization -- they're near surface and they're bleak to the existing ore body. These are structures that were unknown previously and demonstrate the significant opportunity to continue to find more at this fantastic ore body. I'll just go through some of the intercepts that we've had at lengths. We've had 1.5 meters at 54 grams, another intercept 4.8 meters at almost 19 grams. These are very high grade and very near surface, and we can rapidly bring these ounces into development. We developed a drive of 88 meters at a diluted grade of 3 grams, producing 454 ounces through the mill. And so it's this very rapid discovery and then getting development and producing from these deposits that I think is particularly pleasing. At Regulus, we've had intercepts of 5 meters at almost 91 grams, 1 meter at 69 grams. And similarly, we put development drives through 88 meters -- sorry, 76 meters at 9.7 grams diluted, producing almost over 15,000 ounces. And so this demonstrates not only the geological potential of Paulsens in new deposits near surface, but also the ability to generate significant cash flow from these deposits immediately. The -- we're pretty pleased with these results. It gives confidence that this gold system at Paulsens is fertile, large and will provide us significant additional ounces in the near and longer term. I'll turn to Kal East. It's the first quarter of 100% Black Cat feed. We processed 314,000 tonnes. In May and June, it was pleasing to see that Lakewood ran at a 1.3 million tonne run rate. Both mines continue to ramp up. and the ramp-up will continue for the next 6 months. At Fingals, as you can see in the numbers here, we've done a significant amount of waste stripping over the recent quarters and waste stripping will significantly reduce in the next few months. The mine grades during the quarter were lower than we expected in the upper benches of the pit, and we expect this to increase as we ramp up and the pit moves into benches lower down in the ore body. At Majestic, stoping commenced during the quarter. The mined ore increased to 50,000 tonnes, and this is expected to continue to increase over the next 6 months, and Majestic will become 30% roughly of the Lakewood feed. Grades again were lower this quarter in the upper level of the mine, but we -- again, we expect that to increase as we ramp up production. More broadly at Kal East, if I think a little bit longer term, as we start -- we're just in process of ramping up these operations, but I think it's important to show some of the longer-term potential, both at depth and along strike. Our future drilling campaigns at Majestic and the nearby Imperial, I think, have good opportunities to extend the mine life. However, the first priority is to ramp up production over the next 6 months from both Fingals and Majestic. Then we'll look at the opportunities to extend with further drilling these mine lives. I'll turn now to Coyote. We've been drilling there, doing an infill program just below what was the prior operations and also trying to extend the ore body down dip to about 850 meters. The results will be expected in September from this program. And we're also looking at reprioritizing the rigs because of the success that we've had at Regulus and Lynx at Paulsens. We're just considering what -- that we might transfer some of the drilling that we're doing at Coyote to Paulsens. We've also got the Mt Clement project, which is nearby to Paulsens. This is an antimony project. It's very high grade. Metallurgical testing is underway as we speak. And we're also engaging industry participants to determine the scale of this project, what offtake requirements may be and ultimately, that determine the next steps in developing the project. Before we get to Q&A, I'll just go through sort of the opportunities as we see to why invest with us. We've got strong operating cash flow, and we're looking to grow this quarter-on-quarter. We've increased cash. We've got reserves growth and recent underground success at Paulsens. We're growing opportunities across all projects. And we also have the team and the track record of developing these projects and these assets. So we're well placed to consider opportunities as they come about to grow internally no matter what the circumstances of the market prevail. As I said before, we've got volatility in fuel and gold prices, but the business is really well positioned to respond to anything that comes about. We'll provide production guidance at our full year results, and that will include all-in sustaining costs. And then lastly, I'd just like to thank you for the shareholders for their support of the company as we continue to grow. And with that, I'll pass it back to Stuart and open the line for questions.

James, fantastic presentation. As I said earlier, if you do have a question, please raise your hand, and I will let you to ask. James, whilst we do wait, I will ask one question. The recent Regulus and Lynx discoveries have extended mineralization beyond the historical footprint at Paulsens. How significant could these discoveries become in terms of extending mine life and increasing production from the existing infrastructure?

So it's -- we've had some really encouraging results. It is early days. We think that these structures are significant and have hundreds of meters of strike potential. We will be drilling it over the months ahead and to further define that potential. The fact that it is such high grade and so near surface means that it can quickly come into production. And as we've demonstrated, I think we had about 20% of our production in the last quarter come from developing ounces in those regions. So certainly, as we look ahead, it will become an increasing part of our mill feed over the years ahead.

Excellent. We've got a question here from Richard Knight. I'll just allow him in now.

Congrats on a good quarter in many respects. I suppose the one I wanted to drill down on a little bit was just Fingals. Obviously, slightly lower grades there in the upper benches. Was that a reconciliation issue? Or was that just a function of where you are mining in the pit?

I think it's -- yes, Richard. Look, it's a function of where we're mining in the pit. We are in the upper benches and the ore body steepens up as we get into it. So it was more flat lining in those upper benches. But in the months ahead, that the ore body steepens up. And as it does so, we expect the grade to increase and dilution to reduce.

Okay. And in terms of guidance, I mean, you mentioned you're going to deliver guidance at the financial results. Is that going to be broken down on an asset basis? Or how should we think about how that's going to be delivered?

Yes. I think that's the intention asset-by-asset and to give not only production guidance, but all-in sustaining costs as well.

Okay. And in terms of the strategy document that you're coming out with, can we expect that before the full year results? Or is that -- what's the likely timing on that?

Yes. I think, Richard, the -- I think that just considering those options, we just want to make sure that we phase the opportunities in the right order. We do have a strong intention to grow from internally generated projects. But before that, we've got to ramp up both Majestic and Fingals. And I think there are opportunities as we've shown at Paulsens. There's also Belvedere, which is nearby. But given the current environment, we just need to phase everything that we do to live within our means. So I think there's significant opportunities to grow, but we're just considering the timing of that growth.

Yes. Okay. So I mean, based on that, maybe it's sort of later in the half phenomenon.

Yes. Look, I think we'll come to the market with more definitive plans as those plans are developed. And once we've got the confidence to go ahead with the various opportunities.

Passing over to Paul.

Can you hear me up?

Yes, we've got you, Paul.

A couple of questions from me. Obviously, guidance for the year ahead is still forthcoming. Just wondering on a high-level conceptual toll treatment likelihood through the course of fiscal '27, noting you have remaining parcels from Westgold you're obligated to treat.

Yes. So as you referred to, Paul, there's 2 remaining parcels that we have with Westgold in the current quarter and the final quarter of this calendar year. By the end of the year, they will be completed, and we don't expect any further toll treating in calendar year 2027. So we've got our own material from both Fingals and Majestic that will fill the mill.