Forgent (LSE:FORG) — Phase II Drilling at Peak Hills

0:00 Good afternoon, and welcome to the FORGENT PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged, could be submitted at any time via the Q and A tab situated on the right hand corner of your screen. Please just simply type in your questions and press end. Before we begin, I would like to submit the following poll. And now I'll turn you over to James Parsons, CEO. Good afternoon, sir. Thank you, Charlie, and good afternoon, everybody. Thank you for joining us. As Charlie says, this is James Parsons, Chief Executive Officer, I have on the call with me today Ed Mead, our lead geologist. I've said a number of times over recent months that in exploration, ultimately, the drill bit and the geology do the talking. Well, the talking has begun. And today, I wanna take you through why we're increasingly excited by what we're seeing.

0:50 We completed phase one. We moved quickly into a much larger phase two program. And following my site visits and our subsequent technical review, we've decided to go bigger again. Our current view is that phase two at Peak Hill is expected to comprise around a 142 holes and something like 9,400 meters of drilling. For a company of our scale, that is a substantial program. So today, I want to focus our time together almost entirely on Peak Hill. What we're doing on the ground, what I saw when I was there, and more importantly, why we believe the opportunity is becoming more interesting as the program progresses. Let me start just by reminding everyone what we have here at Peak Hill. This is a very large gold copper exploration project, Western Australia, around a 163 square kilometers, five granted tenements, nine defined prospects, and we've now got 99% of it.

1:48 And, of course, the broader global backdrop here matters. Gold is trading close to record levels, and copper sits right at the center of some of the biggest structural changes taking place in the global economy. Electrification, grid investment, data centers, and that continuing push to secure long term supply. So we're exploring for both commodities at a particularly compelling point in the cycle. Now there's another important part of the Peak Hill story which perhaps doesn't get enough attention, and that is location and infrastructure. Peak Hill is not an isolated exploration project in the middle of nowhere. It sits in an established Western Australia mining district. We have direct access from the Great Northern Highway, and there are three operating gold processing plants within approximately a 100 kilometers.

2:38 Now clearly, we're still at the exploration stage, but if we are successful with the drill bit, location and infrastructure infrastructure matter enormously. Roads, power, people, mining services, and nearby processing infrastructure all influence what you can ultimately do with the discovery. So while geology comes first, we're looking for discoveries in places where if successful, there is a realistic pathway to monetization. And what attracted us to Peak Hills at the beginning was the historic drill results, the scale of the opportunity, the quantity of historic data. We had known shallow gold mineralization. We had known copper mineralization, and we had multiple prospects. And our plan was to bring modern drilling to start building our own geological picture. And that's exactly what we did with phase one.

3:28 So let's recap. 40 holes, approximately 2,700 meters of drilling. And what were we trying to achieve? Well, we were trying to confirm those historic drilling results. We were trying to understand where the mineralized systems sit, and we were trying to establish, really, where to most effectively deploy more capital and more drilling. And phase one did exactly what we needed it to. We did confirm multiple shallow gold systems. We did encounter copper mineralization. And importantly, we did generate the information knee we needed, really, to design a much more ambitious second phase. Now Ed will talk us through those individual assay results, but phase one, it gave us enough evidence to say there is clearly gold. It is clearly shadow. But, of course, there's more to understand. So we wanted to go back quickly and systematically and at a much greater scale, and that's what we're doing with phase two.

4:21 Now when we originally announced the phase two program, we were targeting approximately a 130 holes and 8,700 meters of drilling. Now that was already more than three times the number of holes drilled during phase one. It was already a substantial program. But exploration programs evolve. You drill, you learn, you interpret and adapt. And that brings me to my visit to Peak Hill about a week ago. Because standing on the ground with the geological team led us to make some important decisions about where we go next. And I want to give you a little bit of color on what I saw. Firstly, Peak Hill is a big place, a very big place. It's classic Western Australian bush, red dirt, low scrub, and huge skies.

5:08 You see significantly more kangaroos than people. You can look at the maps, magnetic surveys, geological models from afar, but standing there with curlies in one direction and junction in the other, it gives you a very different appreciation of the scale of what we're testing here. I spent time with the team, watched the rig operating, spoke with the rig owner, and saw firsthand how the samples are being collected. And what struck me is just how lean and flexible this operation is. The rig is deliberately modest in scale, but it's very well put together, highly cost effective, and exactly suited to the program we're running. We're accessing as a consequence great rig rates about 40 Aussie dollars per meter. And importantly, it gives us real flexibility on the ground. We can switch between AC and RC drilling as conditions and the geology require without having to change rigs or materially disrupt the program.

6:03 And that ability to adapt in real time is exactly how we want to be exploring an asset like Peak Hill. Now the team and I spent quite a bit of time talking through what we'd learned from phase one, what we'd seen in phase two so far, and where we wanted the rig to go next. And we came to a pretty clear conclusion that we wanted to do more at Curley's. So as you will have seen, we've increased phase two from a planned one thirty holes to approximately a 142 with those additional holes focused on Curley's. And the reason is simple. Curley's gave us one of the standout gold results from phase one. What we now want to understand is whether that intersection is isolated or whether it's part of something bigger. I have to say seeing those samples firsthand and seeing the reaction of the geologist to that particular intersection really brought home why we needed to go back and test it much more tightly than the original phase two program had planned.

6:59 Now, of course, the samples themselves don't answer the question, the drilling on the assays do. Many of you will remember at that stage, had already drilled 18 phase two holes at Curley's, and then we moved the rig across to Cathedral where we've now completed another 26 holes. So we decided to take the rig back. It's only about a thirty minute drive, so operationally, that's pretty straightforward. We've now drilled, as announced today, another 12 holes around that key phase one intersection, but this time on a much, much tighter 20 meter step out. And really, we're trying to answer one question. How far does that gold mineralization go? Now importantly, returning to Curley's doesn't mean our work at Cathedral has stopped. Quite the opposite.

7:46 Cathedral is a very different exploration proposition. You remember this is a large previously largely undrilled area between the existing junction and Kearly's prospects. And what makes Cathedral particularly interesting for us was really the combination of signals we were seeing. The structural setting, the magnetic features, elevated gold at surface, a historic surface sampling grading 26 grams per ton gold, and more recently, gold nuggets recovered in that area. Now none of those things individually guarantee that you'll find anything beneath the surface, but put them together in an area sitting with a well known mineralized district where nobody had systematically drilled before and it became a very obvious target for us to test.

8:34 And as you know, we finished the first 26 holes there. That's about 1,400 meters of drilling. And standing there on the ground reinforced for me why we wanted to test cathedral at scale. As I've said before, it's a very large target. This is something you drive around, not walk around. There are very obvious signs of historic surface prospecting with metal detectors and mechanical scraping, and I mean a lot of scraping. As you know, Curleys and Junction effectively bookend Cathedral. And since the scale of the structural setting is this huge, putting five or 10 holes into it was never really going to answer the question. So our plan at Cathedral is and remains a 112 holes across six broad North South traverses, and we already completed the first 26.

9:26 That should give us the density of information we need to start building a proper geological picture and hopefully some really exciting assay results. Now let me talk about what happens to all these samples once they come out of the ground. So far, we have two tranches of samples, one already in the lab and one in transit to the lab. Further samples will be submitted progressively. Based on current laboratory turnaround times, we expect assays to be returned in batches approximately four weeks after submission. There will be some variation here depending on how busy the labs are and where we sit in the queue. And there's one important point here about timing. These early assay results should start coming back while the rig is still active at Peak Hill. So we we don't have to drill the entire program and wait and see what we've learned. If the early assays give us something that warrants immediate follow-up, we have the ability to react while the rig is still there.

10:23 So before I hand over to Ed, let me just recap. Phase two is really trying to answer two quite different questions. At Curley's, can we demonstrate continuity and scale around what we've already found? And at Cathedral, can we discover an entirely new mineralized system? One is about building out an existing discovery, the other is about testing for something entirely new. Now, Ed, let me hand over to you, please, to explain your perspective on the program so far. Yes. Thanks, James. Outlook has been going extremely well. I'm very, very happy with, how how things have been progressing on-site. You know, going back to Kerley's and closing up the the drill spacing after the the site visit really comes is gonna help us work out the the the way for there.

11:15 And we hope that from what we can see in the drill chips that we do get the extension east west mineralization, which is how we think that that's running, which then gives us the ability to then do further step outs. So, you know, that's that that's been that's been great. The cathedral drilling, as James said, it's, you know, pretty much a brand new area. There is, you know, we know we've got, gold mineralization down one end of junction. We know we've got, off our licenses. There are some prospector shafts that that mined fairly high grade gold. We as James said, we're we're booking it on either end by by gold mineralization. And so this first phase program, which we will be able to adapt based on, when results come back, is an exciting area.

12:10 And, you know, I I I do truly look forward to seeing the assays when they come in. Thanks, Ed. Let's, let's get some questions going here. We have had quite a few pre submitted, and and they're coming through fast and and furious as we speak. I think the first one, just a very sort of factual question, how deep are you going at Peak Hills? You know, broadly, we were targeting sort of 60 meters rough numbers. If you look at the last 12 holes on curlies, those have an average depth of 58. The depth does sort of vary depending on ground conditions. So, you know, it varies as we go. But broadly, we're looking to to max out to sixty, sixty five. Ed, anything you you'd add to that?

12:58 I mean, I and I suppose a bit of it comes down to as well about the profile of oxidization. We're finding that in some some areas, we'll go slightly deeper than 65 as the oxidized profile is or the weather profile, should I say, which is the rock that's still hot can host gold but is effectively clay. So, you know, the the more the more oxide we drill, effect effectively, the cheaper it is for us to drill. But yeah. That's that's I think that's about all I've got to add on that. Yep. And there are few questions, Ed, that probably are more for for you to answer. One here, perhaps you could take this one. What would constitute success at Cathedral?

13:50 Our drilling is still quite broad spaced at Cathedral. It's 400 by 80. So I would be look looking at any any mineralization as a two to four meters or two to just sort of like two to four grams would be, would be very exciting. I mean, we can see the the result that we're wanting to follow-up at Kelly's, which is, you know, two meters and 3.68. And then and then this this environment, those those grades are extremely economic. So, yeah, if we can repeat, that type of tenor, that would be a great result. And then a further question for you here at Kerley's, what geometry do you interpret around our current successful discovery there? So for Curley's, the, I think I after, like, site visit, and, you know, we we think that the orientation is east west, and that's one of the reasons also for, you know, obviously, the discussions about closing up the drilling around that first hit just to confirm that, which, you know, if we we hit mineralization on either side, starts to grow the strike and we say and then it's open, we can step out again.

15:01 So, you know, that's about where we're at with, with that one at the moment. Yeah. Thanks. Now there's a question here on the timeline for monetization on on Peak Hill. And I think the honest answer there is it it very much depends on what we find. So if we were making a sufficiently large discovery, then the obvious route to monetization is probably that someone buys it offers in whole or in part. And that could be potentially the simplest and quickest route to realizing value. If we decide to take a discovery forward ourselves, well, yes, we've got that that infrastructure all around us, which has capacity. You know, we've checked and and those conversations are ongoing.

15:48 And and we believe we would get a relatively quick path to development and production and monetization through using that infrastructure on a sort of profit share basis, which means we don't need too much capital. But, you know, there are permits to consider, although that's very tried and tested in in Western Australia. So, you know, right now, we're an exploration company. Our focus is on the drill bit, but, we we think that timeline to monetization is is is fairly fairly easy and and quick for a for a company like ourselves. Ed, anything you'd add to that? I think you touched on it before is is that, Peak Hills and the McThera, Murchison area is a thriving gold sector area. And, you know, so there are a number of, toll treatment plants that are around the area.

16:35 There are a few companies that have, got varying strategies for for monetizing, gold assets. So, you know, it's like if if something, you know, if we make a discovery, get a resource, there there is a there is a pathway as as you've as you've highlighted. Yeah. Okay. Just reading some of the extra questions coming in here. One is on the cost of the program. We we've we've r n s the the cost of the original plan. We're running at about 40 Aussie dollars per meter, so you'll be able to do the math there on those additional holes. They don't add very much cost, which is which is great, so no material increase there.

17:22 And and, you know, we're we're fully funded for this program, which is which is great. And it will another question here. You know, when do we expect the assay results? We've sort of said already they're approximately four weeks from when when they arrive. The first batch arrived a week, maybe a week and a half ago. So, you know, we're the clock is ticking on those. And, you know, obviously, we need to receive them and and look at them before we start making announcements, but we're conscious that, you know, we have both regulatory requirements, the announcement side, but also shareholders that are keen to see the outcome as we are. So that's very much a a work in progress. Another question here on on Mount Shoal, which is a very legitimate question. You know, we've had a lot of inbound there around the dilemmas here between building out the portfolio and, you know, the the dilution that comes alongside it. So, you know, happy to take that, and play that with a straight back.

18:18 I think the first thing I'd emphasize is that what we've got on Mount Shoal is an option. It's not an obligation. But we do really like this asset. You know? It's got a substantial jolt resource, as you know, and it's also got a huge exploration upside on top. So this is very, very interesting for us, and it also gives us a different commodity exposure with nickel, copper, and PGEs. So it really complements what we're doing and builds out the portfolio. So there's a lot to like here, and and we do want to get on and do it, but timing matters. Whilst, you know, we obviously have to use the RNS channels for for any announcements on that matter, What I'd say is, you know, we're consciously balancing the pros and cons here as we go. And I hear what some shareholders have written to us and and said, look, can we can we think about the timing of that? So, look, we got a bit of a plan. We're working on it. Leave it with us. We're very conscious of the issues that are implicit in in the dilemma there of building out the great asset versus versus solutions. So I think that's probably all I can say on that. But do you want to just say a few words about the technical side of Mount Shoal, Ed?

19:30 Yeah. I suppose I I did I did work on Mount Shoal, in the early mid nautics. And so since that point in time, with SQM coming into a another area just not far from this, Geological models changed. Geophysics has improved out of sight. And back at the time when I was there, the the actual Mount Shoal was fragmented into several different holdings. So the the project is the, you know, now is essentially one project. And there's with a a geological or a new proven geological model and geophysics, which will is ideally suited for looking for nickel and copper. I think, you know, exploration upside for it is is really, really significant.

20:21 Good. Thanks for that, Ed. We we one other question here on on Greenrock and, you know, just to say we haven't forgotten about Greenrock. We we we still very much like this, like the earlier stage exploration potential. It's it's copper gold, extremely strong surface results from our sampling earlier in the year. We're just heads down focused on Peak Hill at the moment. You know, it's it's a combination of managing the activity and and also the the budget. So we are, at the moment, really focused on Peak Hill, and and Green Rock will will be subsequent to that. And and we're very focused on, you know, what needs to be done here in terms of the the the permitting to get ourselves drilling is is, I think, the immediate sort of priority there. So, you know, not not much to add there other than it's not been forgotten. Rest assured, we see huge opportunity there, but we are head down on the on the PQL program at the moment.

21:13 Ed, anything you'd add anything you'd No. I don't have to add. Okay. Good. Well, thank you all for your questions. Me finish just where I started. We've said for some time that ultimately, we need to let the drill bit here do the talking. At the beginning of the year, FORGENT didn't even own Peak Hill. Today, we own 99%. We've completed phase one. We're deep into phase two. We now have multiple batches of samples moving through the laboratory. The additional drilling at Curley's is complete, and drilling will continue across Cathedral, and the first assays should begin to come back over the coming weeks. So over these coming weeks, we should start to get a much clearer picture of what we've actually got here. Drill, learn, interpret, adapt.

22:00 The talking has begun. Thank you very much for your time. Perfect. Thank you, James Head, for updating investors today. Could we ask investors not to close the session as you now be automatically redirected to provide your feedback? On behalf of the management team of FORGENT PLC, we would like to thank you for joining today's presentation, and good afternoon.