Aurelia Metals Ltd

ASX:AMI

Earnings Call Transcript 2024-Q2

[Operator]

Thank you for standing by, and welcome to the Aurelia Metals Limited December quarter activities report. [Operator Instructions] I would now like to hand the conference over to Mr. Bryan Quinn, CEO and Managing Director. Please go ahead.

[Bryan Quinn, executive]

Hi. It's Bryan Quinn, Aurelia Metals Managing Director and CEO. And on behalf of the team, I would like to provide you with some key points from the quarter just past. I do thank you all for joining the call today. I'm joined by, Aurelia Metals' Chief Financial Officer, Martin Cummings; and our Chief Business Development and Technical Officer, Andrew Graham.

In today's presentation, we'll be referring to the slides released today, and we'll spend some additional time on the illustrations that are within the pack for context.

For December quarter, our business remained on track to execute our strategy, which included Peak increasing volumes and meters relative to previous quarters. Federation project is progressing with development leaders, and many other critical programs are well underway. Noting our Federation first stope ore is still planned for quarter 1 2025.

Our cash position is remaining strong relative to our peers, and our operating discipline and lowering cost to offset inflationary pressures continues to be a priority, which is ongoing both in our project, our operations and in corporate. We're starting to see some of these benefits flow through, and more work is still being targeted in Q3 and Q4 to deliver these outcomes. Through both focused efforts, especially in mining and maintenance and -- I guess, we're intentionally delivering this in a sustainable way by targeting annual step change improvements. And these influence, as I've discussed previously, are building the management KPIs.

Our exploration team continues drilling in the Cobar region with 4 rigs at present and to date delivering excellent results and exciting results for the Aurelia business. In fact, we published some of these results from Chesney North region at the Peak North mine 2 weeks ago. This reinforces our view that the region and leases within Aurelia portfolio have high prospectivity to build on the 9 million tonnes resource in close proximity to Peak Mine, which includes the current 16 million tonnes of copper reported. With these results, we'll continue to transition the Peak Mine from a zinc-led mine to a copper mine in the medium term.

I'll just move to the next slide, which is our group production and costs slide. Our delivery of our guidance at this stage remains within the range provided at the start of the year for gold ounces, which are planned to be at the high end of guidance. Base metals is forecast at the lower end of guidance, and we are resetting our guidance for copper to be outside of the previous guidance issued as pertained in the presentation. I'll discuss the stope sequencing in more detail in coming slides to explain where we are at the end of quarter 2 and how we remain on plan for the rest of FY '24 to achieve these guidance outcomes.

Our all-in sustaining cost guidance remains on track, largely on the back of higher-grade stopes online in quarter 3 and quarter 4, which will also be achieved by focusing on offsetting the lower copper metals production with a tight capital allocation process and lowering our operating costs across the company.

I'll move on to the next slide, which is our safety and environment. Aurelia management is spending significant time improving our safety performance as we have experienced several injuries while executing against our strategy. Our unwavering focus is to ensure everyone working at Aurelia Metals has the right to go home without injury. We've unfortunately had several trips and slips and hand injuries this year-to-date, and Aurelia did have a very strong year with minimum [ reason ] for FY '23. So it demonstrates that we need to keep working diligently on these areas so injuries are prevented and our teams remain focused at all times when at work. This is our highest priority, and we cannot rest until we are not experiencing injuries. Therefore, our focus from our leadership is the following: one, we're spending time in field really discussing safety hazards with our teams and using the appropriate tools before starting work. We're recognizing that both preventing injuries and fatalities needs to be a focus. And to complement this, we've also commenced a supervisor leadership program across our business.

To focus on potential fatalities, we've commenced a detailed scheduled program within 1 fatal risk hazard each month across each site to get the management to really understand what controls need to be in place.

Number three, leadership will also be spending time assessing the higher risk in each of the businesses, making sure controls are adequately working and people nominated as risk and control owners understand their responsibilities. Our priority is to reverse the trend and reduce the number of injuries being experienced by our team members while also stopping anything more serious.

I'll move on to the slides for each of the assets and projects. I'll ask Andrew to talk in more detail through the exploration results and Martin to expand on financial results shortly. But before I do, I'll focus on some specific Q2 highlights and information regarding each of the businesses. At a high level, our operating cash flow was higher than the previous quarter, delivering $23 million compared with quarter 1 of $12.6 million. Our overall cash balance remaining around $108.7 million, supported by strong liquidity, and I'll ask Martin to talk in more detail to the liquidity.

At Peak, the mining production volumes have increased a further 11% from Q1, in line with our plans to continue to fill our mills with quality ore. On the flip side, the all-in sustaining costs were higher in December quarter 2 versus September quarter 1 due to lower base metals production, which is a direct result of the sequencing of stopes, which I'll cover in more detail in our Slide 7.

Development of Peak has continued to increase, which is a key value driver for us. It's basically fourth consecutive quarter increase. It's now achieving 743 meters, which really allows the development to be ahead by more than 1/4 and unlocks our production stopes, which I'll demonstrate also in our Slide 7. This is providing contingency options and helps us de-risk the mining production over the next 6 months.

In quarter 2, an additional production rig was commissioned to de-bottleneck drilling activities also, which further unlocks these stopes and the rest of this financial year's performance. The focus is to get the bottleneck back to the winder over the medium term once improvements in drill and blast and trucking have also been implemented.

The overall cost of mining per tonne continued to decrease at $123 per tonne over the past quarter with further improvements underway planned in the pipeline, not forgetting this was over $143 per tonne several quarters ago. An example of the next step change in efficiency include the future use of our winder for [ people riding ], which will increase utilization of our mining assets underground and improve productivity.

With respect to upgrades of lead zinc, I will use the Illustration 7 for Peak to explain the sequencing and look forward to provide some context of how the sequencing will be achieved in FY '24. So if I just go to the illustration, for the actual Slide 7, you'll see that from a context point of view, our development currently is definitely well ahead of the next -- this quarter and into the next quarter. So if you look at the Upper Chronos and the Lower Chronos and also the Kairos area, we're trying to provide transparency that we have -- over these areas ready to go. And also, if you look at the call-out of the 19,000 tonnes, 29,500 and the 37,000 tonnes, which are all Q3 activity basically, they are the stopes that we've moved from Q2 to Q3. Unfortunately, we had to re-sequence our stopes in Q2 and bring the Q3 stopes forward into Q2 and vice versa, leaving the Q2 stopes in Q3, and hence, the changes in the grade that you will see in our table that we've reported.

So overall, if you look at the remainder of Q3 and Q4 activity, we have our stopes well and truly in front of us. We have high-grade material being produced right now in line with what's in the schedule, and we're sort of on track to deliver what we've put in the guidance table.

Just let me jump a bit more to the illustration just to make sure that we -- for those who can't see the PowerPoint pack, we have got basically 19,000 tonnes this quarter at 16% lead-zinc. We have 29,500 tonnes at 27% lead-zinc, and we have 37,000 tonnes 11.5% lead-zinc with an additional 3.7 grams per tonne gold. So they are the stopes that we would have taken in quarter 2 but are being moved to quarter 3. And obviously, as I said before, we've moved stopes from quarter 3 into quarter 2. Hence, on a total year basis, we feel we're actually in a good position to deliver our numbers that we're reporting in the tables.

This implementation, the other large bit of work we've done in the Cobar region is the implementation of a regional Cobar leadership model. On the previous quarters, I've discussed the implementation of a hub-and-spoke model or a regional Cobar model. We've actually completed that in December quarter, and now we're implementing in the March quarter. This will provide synergies, cost benefits to Aurelia in the region for the medium term by having one leadership team, led by a regional GM, leading the operational activities. This is an opportunity really around standardization, equipment, training, working capital and optimizing the feed into the [ Peak's ] value as we progress with production from Federation towards Peak.

If I just move to the Dargues slide on Slide 8. At Dargues, we continue to provide strong operational stability and credibility even with some significant weather events. In fact, one rainfall event had 126 millimeters over 48 hours in November, followed by another 3-day event at 87 millimeters in December. And the team have done well focusing on tangible cost-saving initiatives over this period as well. Development has now stopped for the remaining life, and so our development costs have also stopped.

Looking forward for Dargues, importantly, the last stopes will be constructed on retreat out of the mine, if you refer to Slide 8. And we are also in the process of doing some significant planning around what happens post closure, how we reuse equipment at both Peak and Federation, and also look at the process of selling the plant and also a potential mine. Retention programs are fully locked in now while people work at Dargues. And really, the key focus for us is delivering safely the remaining stopes on the job for the next 6 months to the end of the mine.

For Dargues, our focus remains on safely maximizing cash flow for the remaining stopes. And this is what we basically spoke about every quarter so far, and we are delivering that.

At Federation, development at Federation has continued to ramp up from previous quarter after restarting development in August. Some significant weather events actually have occurred in January in the region at Nymagee region, and actions have been implemented underway to provide some protection for these in the future. But notwithstanding the fact, we've actually had to -- we had the pause development for a period of time to do with those heavy rainfall events, acknowledging that construction is still underway up the site and that the site isn't finished and we've got to put these various controls in place as we progress the development of the project.

The concrete collar foundations for raise bore shafts were finished in Q2, and the first raise bore was actually mobilized in Q2. I'm actually happy to report that shaft 1 has been completed in terms of the raise bore, and we've actually allowed us to de-risk the next couple of shafts by understand the geotech conditions much more as well. Actually, latest report is we [ slightly refinished the shock-creating lining ] also in the last 24 hours.

The Burthong Road upgrades has been progressing and on track for completion in Q3 while dealing also with some significant weather impacts recently. Just over 2 kilometers of the 8-kilometer road has been sealed at the end of Q2. And currently, we're working to complete the work by quarter 3 -- end of quarter 3.

Some other key milestones, which are important to call out, is the underground electrical substations being installed in the decline [ in commission ], and we also started the underground infill drill rig. That has been in place and working on the final designs of the stopes for a production sequence.

Lastly, at a strategic level, our growth team continues to work on optimization options of our portfolio in the Cobar region to utilize our infrastructure as we continue to set up our operations to be at full capacity in the future. So lots of work still going on in the region on our optimization work as we discussed in previous quarters as well.

Overall, these results are testament to the Aurelia team delivering, navigating fluctuations in weather events on the Eastern states causing many disruptions, a very tight labor market for talent. And our business has been resilient and delivered the cash to fund our exploration and growth projects and not draw on any debt facilities at this point in time. Federation is still on track for first ore in September quarter 1 of 2025. It's based on the delivery of the Burthong Road upgrades progressing well. Development has been progressing. The first raise bore work has been started in December. And as I said, many other activities are underway to deliver us and be ready for those events.

In terms of cost for the project, we're also continuing to deal with inflationary pressures on many fronts. The management is currently through reviewing the scope of works for all activities to ensure what's required for the project and refining some of these to manage the overall budget. However, at present, we're focused on delivering 1st April in Q1 2025 and delivering the project in line with budget.

Lastly, today, we also released the changes to the Board of Directors. Obviously, we thank Paul and Helen very much for being directors and for the guidance they provide to the management team and support of the rest of the directors on the Board. I personally have learned a lot from both Paul and Helen over their time as directors on the Board, and we wish them all the best.

I'll pass over to Andrew now to talk to the exploration slides, and he'll pass it on to Martin thereafter. Thanks, Andrew.

[Andrew Graham, executive]

Thank you, Bryan. And for those following along, we're just turning to Page 10 at the moment. It's certainly great to be back to running a fully funded exploration program this year. We've said it numerous times over the last year that our ground is very prospective. And when we explore it in a systematic way, we're very sure that we'll have success. And this quarter is certainly evidence of that. Obviously, as Bryan referred to, we had a very successful drill program at Chesney North, where all 6 holes completed in that program hit significant copper as well as gold in some holes. That was the subject of an announcement on the 18th of January, and I'll cover that in a little bit more detail shortly.

For those looking at the slide, just be aware that the green boxes appear to have shuffled a little bit to the right. So just assume they're a little bit further left, but it won't change your understanding of what we're doing there.

Basically, what we've been doing at Peak is progressing our high-priority targets. And we do a process every year of thinking about where we want to be drilling, prioritizing those methodically, and then working through them. So for Peak, particularly in the last quarter, doing some work around Jubilee North. You can see that just to the Northern end of the North Mine. We have been drilling around Upper Blue Lens, which is back down in the South Mine at Peak North. And also, we've been drilling around Chesney, as I referred to those results earlier.

Excitingly to me, we've also stepped out to drill Mount Pleasant. And it's a bit covered up by the green box in this slide. But if you think about North Mine and track back, we've got obviously the new Cobar ore bodies, you get into Chesney, next one along is Burranbungie and what this takes you now is the next one along, Mount Pleasant. And Mount Pleasant had some drilling in it, which was really quite interesting in 1997, I believe. Again, in 2007, but it really hasn't been methodically tested recently. So it's really exciting to be able to get some holes into that, hoping that we continue to stack up those ore bodies in the North Mine. We are awaiting assays on some drilling there, so we'll let you know once we get those results.

The other interesting piece, which isn't on this slide, but you're all fully aware of what we have. It's what we call the Nymagee district, which covers Federation and Hera and the Nymagee Mine itself in that whole region. The team down there has been extremely busy. So we've been completing soils on Lancelot. You may recall from last year the exciting IP results that we got around there. So the next step in that exploration plan is to do detailed soils. Hopefully, we get good results on that, which then helps us target our exploration work with drilling. So we'll come back to you, obviously, with those results once they come in.

We've been also doing drilling at the historic Nymagee Mine and also drilling for extensions around Federation. And again, we've got results which sort of were along the lines of what we were expecting geologically. Those are in for assay at the moment. And once we have those assays, we'll come back to you with information on that.

Turning then to Slide 11, which is the Chesney -- a summary of Chesney North drilling. This is linked to the announcement that went out on the 18th of January. And if you haven't read that announcement, I'd certainly encourage you to download that and have a look. We were targeting extensions to the Northern end of the resource at Chesney. Chesney is an important place for us from the point of view of copper feed. And you can see what we're trying to do is fill in that hole in the resource to the North.

Excitingly, as I mentioned earlier, all 6 holes in that program delivered very, very good copper. And you can see that in some of the core tray photos we've got there. Some extremely good grades, good meters, 17 meters, 1.8% copper in one of those holes, which included 3.4 meters at 5.3% copper, and similarly 7.6 at 2.2% copper in another hole, so -- and that hole included up to 9.7% copper over 0.8 of a meter. So it's excellent to be able to see good copper results all outside the resource there at Chesney but all within close proximity of where we're expecting to be mining. Hopefully, these add to the very substantial resource we have at Peak on copper at the moment, which as Bryan referred to, 16 million tonnes at 1.8% copper and 0.8 gold. And it does actually create some optionality for us, which we referred to in that release, around how we sequence copper feeds and then when we target Great Cobar. So definitely very exciting drilling for us.

I'll pass over now to Martin, who's going to run through some of the financial results.

[Martin Cummings, executive]

Thanks, Andrew. And I'll just turn to Slide 12, total balance sheet. And again, it's been really pleasing to report that our operations have fully funded our growth at Federation and our regional exploration this quarter, which as Andrew has just highlighted, is delivering excellent results and really justifies that critical investment.

We've maintained our cash balance around $110 million for the quarter. And as -- that has been further bolstered in January with the receipt of the tax refund of $17.8 million. Along with our undrawn USD 24 million or around AUD 36 million loan note, it takes our available liquidity to over $160 million.

You'll note that the tax refund amount is slightly lower than what I highlighted last quarter. The main change of that was in finalizing the return. We picked up some additional adjustments that we put through that reduced the tax loss we recognized for FY '23, and that lowered the refund amount. And that was done as part of our assurance process prior to lodging the return.

As Bryan covered earlier, we're moving to higher-grade stopes at Peak in the second half, and cash flow from the operation is expected to increase further. The re-sequence of the mine plan at Peak means our gold group production is now forecast in the upper half of guidance, zinc and lead in the lower half. And we've made a change to our copper guidance, given our outlook towards -- for it to be below guidance. Our new copper production guidance is 2,000 to 2,300 tonnes for the year. These changes to the production mix, along with a focus on operating costs at both sites, means our cost guidance continues to track to the original guidance of $1,850 to $2,050 per gold ounce.

At Dargues, we're pleased that our focus on cash is generating strong results. This quarter, we did have an additional shipment that was delayed from the September quarter. But it also reflects the ongoing focus from the team on cost management with spend at the operation year-to-date below our plans.

Now that we have completed the hedging program I talked about last quarter, the operation will benefit from high gold prices for the remainder of its life with an average gold price of $3,072 an ounce from here.

Our peak gold production remains unhedged, but we have hedged around 25% of our payable lead and zinc production, which does provide some protection to our all-in sustaining costs. The hedge prices are around the current market.

At Federation, the team have achieved some important milestones this quarter with $18.4 million spend, which was up from $10.6 million in the prior quarter. And this takes our total investment at Federation year-to-date to $29 million. Spend at the project is expected to increase in the March quarter to around $25 million to $30 million, with mine development continuing, completion of the road upgrade and the continued raise boring activity. Spend guidance for Federation remains within the $70 million to $80 million guided.

And finally, exploration spend was higher this quarter as the team ramped up their drilling programs. We're maintaining guidance of $10 million to $15 million for exploration this year, which as mentioned earlier, has delivered fantastic results to date.

So in closing, another really pleasing quarter where our strong cash generation was able to fund our growth. We remain focused on delivering the higher planned production from Peak in the second half and continuing our focus on cost reductions at both operations.

Thanks for your time today. I'll hand the call back to Bryan now.

[Bryan Quinn, executive]

Thanks, Martin. Just to wrap up, I wanted to discuss at a high level, reinforcing our messages. We are really focused on safely delivering the FY '24 guidance in our growth outcomes. Once again, on Slide 13, we really much have a focus on delivering mining sequence and lowering cost at Peak as per the previous quarters, maximizing our cash generation at Dargues, the remaining life of Dargues. As we've discussed in the previous quarters, our sort of real focus is on making sure that we can deliver first stope ore at Federation in quarter 1 in FY '25. We're continuing to work on optimization of the Cobar region, and that's looking at how we fill our mills with the right sort of renewals from each of the operations. And exploration to deliver growth options is obviously a very high priority to enable us to have a very clear path for growth, as Andrew discussed. And importantly, it's obviously continuing to attract and retain talent in the Cobar region as well.

As I mentioned, we've set up a Cobar regional model, where we have a regional general manager. We are obviously actively looking for management to be part of that -- for some of the roles to be part of the leadership team. And that leadership team will oversee both Peak and Federation and any other future projects we put in the mine as well. It's a very important change to how the organization is going to work. And as I said, for attraction and retention, but also from a efficiencies, productivity and a cost point of view as well.

I'd like to just wrap up by really thanking the Board of Directors and obviously, the outgoing 2 directors, for their support and wish them all the best.

I'd like to also reinforce the importance and the focus that the leadership team at ELT has put in so far in line with our strategy and vision. They're doing a great job of continuing to focus on these key deliverables. And lastly, I really want to just make sure I reinforce, thanks to our teams at our sites and also our contracting partners, who are sort of really working hard to enable us to deliver this plan for FY '24.

With that, I'll pass over to Darcy to take -- just open up for questions and answers.

[Operator]

[Operator Instructions] Your first question comes from Paul Kaner from Ord Minnett.

[Paul Kaner, analyst]

Just a couple here for me. Firstly, on Peak, those 2 stopes that have been delayed, can you maybe just comment in a bit more detail about what sort of happened there with the drill and blast?

[Bryan Quinn, executive]

Yes, sure. Thanks for that question. Look, basically, we had some delays due to drilling activities. And thankfully, due to the development [ being addition it was ], we were able to move on to other stopes to extract those instead. We didn't lose those stopes or anything else. They're just delayed due to some drilling activities that slowed us down. So it just pushed into the next quarter. So we've obviously gone and actually got a third drill now, a stope production drill, so we have 2 that we're currently contracting with Redpath, and we've got a third now with our Aurelia team as well. So we've sort of moved that off the bottleneck, if you want to call it, by having the additional rig in there and have more of a focus on less hole clean-outs and making sure we've got a proper good standard in place for drilling activities.

[Paul Kaner, analyst]

So more a sort of a drill rig availability rather than labor availability issues there.

[Bryan Quinn, executive]

Actually, a bit of both, to be honest. So a bit of both and also a bit of a redrill hole clean-out performance as well. So I guess, there's several things which have slowed our drilling performance down. We've also had some delays with some of the [ bathing ] activities, but we've rectified that -- both of those now actually by putting additional resources in, bringing additional equipment in and a very clear focus on those things and additional technical people in as well into the team to focus on this. And part of the regional model we've put in place, we've actually put a tech services manager, an acting tech services manager in place, now overseeing both Federation and Peak to really ensure that we have these sort of things well and truly planned and done well.

[Paul Kaner, analyst]

Yes. No, that's great. And then just secondly, maybe a question for Andrew. But just on Great Cobar, a nice little sort of resource just sitting there, probably not being valued properly by the market. I mean have you thought about the ways to potentially realize value from that asset, given your capital is currently tied up with Federation?

[Bryan Quinn, executive]

Andrew?

[Andrew Graham, executive]

Yes, Paul -- yes. Thanks, Bryan. Just a couple of things on that. So as Bryan alluded to, our focus for us is getting filled -- basically filling our mills. And we will do that once Federation starts to come on.

The thing that we are looking at though is which ores go to where and when you're bringing Hera back on, for example, on the Hera mill, and also what do you feed into the Peak mill. In particular also, what's possible with the Peak mill, it has a bunch of latent capacity within that mill that you can unlock with some very targeted spend.

The other bit, and I sort of alluded to it, we looked at the Chesney drilling, is the sequence and the timing of when you do Great Cobar. So if we have excellent competitive NSR or the Peak Mine, then we can get out in the quantities we need without Great Cobar, then we'll think about when we need to target Great Cobar to bring those tonnes on -- become 100% sure Great Cobar will be mined. So it's an excellent ore body, great grade, good gold credits. The thing for us is around when do you optimize that mining. Is it worth getting across there and starting to mine sooner? You would only do that if you have -- don't have the ores to otherwise feed at that sort of value.

The other bit we're looking at is just timing of Great Cobar and sort of accessing it and whether it is worth getting across there sooner to be able to drill it from underground. So a whole lot of work going on in that space. And once we have some definitive answers, we'll obviously bring that to investors.

[Bryan Quinn, executive]

And just to cover that, so the [ dot ] point around progressing optimization in the Cobar region on Slide 13, that's what I was referring to, Paul. It's really around getting all the information that Andrew is working on and then taking it to the Board of this is how we think going forwards we might sequence. And then obviously, we will consider what options are available to move forward, whether we accelerate it or keep it moving at the same pace, that will all be a investment decision we bring forward to the Board.

[Operator]

[Operator Instructions] Your next question comes from [ Bill Murray ], private investor.

[Unknown Attendee]

The Federation project is about 6 months away. Have you given any thought to the stope sequencing? What I'm really after is, would you be thinking of going for the gold ore or the lead-zinc ore initially?

[Bryan Quinn, executive]

Andrew, do you want to answer that question? And then I'll follow it up.

[Andrew Graham, executive]

Yes. No problem, Bryan. Look, I think the reality is as we ramp up Federation, we will just be taking ore, full stop. And we won't be referencing targeting gold ore or lead-zinc ore in the first instance. And if you look at the section of Federation, it starts out a little bit skinny on a sort of tonnes per vertical meter basis, and it grows as you go deeper. So our target then will be getting those stopes in a good sequence but also getting multiple mining areas open as well to allow us to ramp up towards that 600. One of the things we chatted about previously on calls, in understanding that gold, it is quite variable across the ore body. And certainly, now that we're underground drilling, infill drilling, it will really help us understand that a lot better and then allow us to think about what are we going to target and when. Just as an aside, our general manager in tech service is actually down at the site this week, working with the team around sequencing of stopes coming out of Federation. And that will all be absolutely informed and improved as we get that drilling from underground.

[Unknown Attendee]

Just another question then. What tax losses do you have carried forward? When Federation comes on stream, hopefully, it will be a very profitable operation. Are there -- what sort of quantum of tax losses have you got to offset against the profits?

[Martin Cummings, executive]

Bill, it's Martin here. So I guess the main tax shield that we carry at the moment relates to Dargues. So when we impaired the asset in June '22, we impaired it in the accounts, but we don't take that impairment through the tax books. So as we finish up at Dargues, that will generate tax losses that we'll then be using to apply to tax profits elsewhere in the group. So we don't have the tax payable in the foreseeable future given that tax shield.

[Unknown Attendee]

Could you put a ballpark number on that?

[Martin Cummings, executive]

Let me work through. We're doing our half year accounts at the moment. So I don't really want to put a number out while we're still working through our -- that tax position as of 31 December. But I'll look to put some color on the half year results in end of February.

[Unknown Attendee]

Just one final one. The regional strategy, the Peel assets spring to mind. Without sort of nominating them as such, is that the sort of thing that you would be looking at? Maybe joint venturing with the operation with Peel? And there's a number of mines here that look quite interesting.

[Bryan Quinn, executive]

Andrew, do you want to speak to that first?

[Andrew Graham, executive]

Yes. Happy to, Bryan. As I mentioned, Bill, the target for us is filling our own mills. At the moment, we've got a very large resource base, particularly at Peak. We've got, as Bryan mentioned earlier, 19 million tonnes of resource sitting there at Peak. So the real target for us is to look at how we exploit our own ore bodies and fill those mills. Obviously, if we find ourselves at a point in time unable to fill the mill with our own ores, it may make sense for some of those regional tons to come in. And I have spent a bit of time in the last few months getting to know our neighbors and understanding what they've got, thinking about what we might be able to do synergistically. But really, our priority and the work we're doing at the moment is thinking about what we can do with our own mills and our own ore bodies, which are substantial.

[Bryan Quinn, executive]

Yes, I think it's important, Bill, we have got the infrastructure, and we have got a really nice piece of resource between Great Cobar down to Federation. So we need to make sure we optimize what we have first before we look over the fence to see if we can add into that mix as well. But it's going to be all commercial and all very much what's maximum value for our shareholders.

[Operator]

[Operator Instructions] There are no further questions at this time. I'll now hand back to Mr. Quinn for closing remarks.

[Bryan Quinn, executive]

Thanks, everyone, for joining today and for the questions that we've been asked. Obviously, we'll be coming out with our half year results at the end of February, which we look forward to presenting to you guys. And as I said, we've got a lot of work to do to deliver our vision and our strategy as a company. I believe we've got the right sort of infrastructure, resource and people to deliver this. And we look forward to continuing the journey to get to where we want to get to, to fill our mills at the right value for everyone who supports the company.

So once again, thanks to all of our employees and investors for their support so far. Look forward to speaking to you guys in about a month's time. Thank you very much.

[Operator]

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