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Ladies and gentlemen, thank you for standing by, and welcome to the Evolution Mining December 2019 Quarter Results Call. [Operator Instructions] Please be advised that today's conference is being recorded. I will now hand the conference over to your first speaker today, Bryan O'Hara. Thank you. Please go ahead.
Thanks, Miles. Good morning, and welcome to the Evolution Mining December 2019 Quarterly Conference Call. This morning on the call, we have Jake Klein, Executive Chairman; Lawrie Conway, CFO and Finance Director; Bob Fulker, COO; and Glen Masterman, VP Discovery and Business Development. As the new year gets underway, it continues to be a great time to be a gold miner. In 2019, U.S. dollar gold price had its best year since 2010, posting a 19% rally, which resulted in global [ general ] investors beginning to wade back into gold stocks. This renewed interest was reflected in the strong performance of the U.S.-listed VanEck Gold Miners Index, which was up around 40% for the year. In addition, the highly anticipated wave of M&A in the gold sector finally materialized, with 7 deals announced in just the final 2 months of last year, and in the process, significantly changing the profile of many of the companies involved, as is the case with Evolution's acquisition of the high-grade long-life Red Lake gold complex in Ontario, Canada. We're looking forward to catching up with investors over the next month with marketing in Sydney and Melbourne post today's results, investor meetings in Sydney post our financials on February 12, a London road show in mid-February and conferences in Sydney, Zurich and Florida in the second half of February. Thank you, and I'll hand you over to Jake.
Thanks, Bryan, and good morning, everyone. And thank you for taking the time to join us on the call today. We do know it's a busy day, and we really appreciate it. It is appropriate to start with an acknowledgment of the devastation the bushfires have caused right across Australia and the recognition of the fantastic work the firefighters are doing, many of whom are volunteers, and I am proud, also includes a number of Evolution employees. To support these efforts, earlier this month, we announced that we have provided $3 million in funding to Rural Aid Australia, the New South Wales Rural Fire Service and Queensland Rural Fire Service to support the bushfire, drought relief and recovery efforts. Our thoughts are with all those impacted by these terrible events. Turning to Evolution on our gold business. Fundamentally and at its core, it is about discovering and producing ounces safely and efficiently and converting gold in the ground into dollars in the bank. On this front, we have done well this quarter. The benefits of having a portfolio of assets is reflected in the fact that despite the headwinds we faced at Mt Carlton, we generated net mine cash flow of $144 million and group free cash flow of $84 million, which remains sector-leading. We ended the quarter with $170 million in the bank and are debt-free. In late November, we announced the acquisition of the Red Lake mine, and we are on track to close the transaction around the end of March. It is a classic turnaround opportunity, a mine that has been undercapitalized over the last several years and is currently operating in a hand-to-mouth fashion. Whilst we think the effort and change required will be significant, and as we said when we announced the transaction, the turnaround could take up to 3 years, we are very confident that this will be a cornerstone asset for Evolution's future. Newmont have been terrific to deal with and have been very engaged and supportive of making the transition of ownership as seamless as possible. Importantly, on the ground at Red Lake, there is a large number of very talented people who are motivated and committed to restoring Red Lake to an efficient, well-capitalized, low-cost mine. Over the last few weeks, we have had a number of people on the ground and their enthusiasm about the potential of the operation is palpable. Red Lake has a significant gold inventory of over 6 million ounces of high-grade gold in resources, and the exploration upside is significant. Cowal continues to go from strength to strength. The exploration results are exceeding our most widely optimistic expectations we had when we acquired this amazing asset in 2015. The Board has approved the commencement of a pre-feasibility study for an underground mine that we expect will result in a maiden reserve being declared in this calendar year. Mungari has had an impressive turnaround and is both operating consistently and has also has encouraging exploration momentum that Glen will detail. The net mine cash flow that Mungari delivered for the first 6 months year-to-date is more than it delivered for the 12 months in each of FY '18 and FY '19. Whilst over the previous 4 years, Mt Carlton has delivered a very impressive $390 million of net mine cash flow, as outlined in our release to the ASX on the 10th of January, it is confronting headwinds due to revisions in our interpretation of the ore body based on more recent drill results and the operation at a per quarter and is now expected to produce between 70,000 and 75,000 ounces this year. The recovery to the Mt Rawdon wall slip is on plan, and Cracow continues to be a reliable producer. Ernest Henry continues to be a powerhouse of cash generation with net mine cash flow of almost $63 million. We are very pleased with the drilling program to test the extensions below the RL 1,200 (sic) [ 1,200RL ] has begun. We, at Evolution, are excited about the future. We welcome Fiona Murfitt as our new General Manager, Sustainability. The exploration and turnaround opportunity at Red Lake is enormous. The commencement of the underground mine design study at Cowal heralds a new chapter at our cornerstone asset. The drilling to extend the mine life at Ernest Henry is underway, and our diversified portfolio continues to generate sector-leading cash flow. With that, I'll hand over to Bob.
Thanks, Jake, and good morning, everyone. It's pleasing to start my quarterly comments with a positive from a safety perspective. The behavior safety programs, which are continuing at all sites, are yielding good results with the TRIF decreasing from 9.3 to 8.4 over the quarter. From a production and cost perspective, the December quarter, the group's produced 171,000 ounces at an all-in sustaining cost of $1,069 an ounce. This resulted in a group mine operating cash flow of $233 million and net mine cash flow of $144 million. If we turn to Page 6 for the Cowal and Mungari results. Cowal delivered 65,000 ounces at an all-in sustaining cost of $898 an ounce and a mine operating cash flow of $95.9 million, while net mine cash flow remained solid at $51.9 million. Highlights at Cowal for the quarter were: No recordable injuries; reducing the TRIF to 4.5; Warraga decline completed in the bulk sample extracted for test work; and 22,000 meters of drilling in the GRE46 and the Dalwhinnie zones, which continues to indicate significant potential to grow the 1.4 million underground resource.With the current Stage 3 water restrictions in the region, the Cowal team have been working over the last 12 months on a strategy to eliminate their reliance on surface water. We have made significant progress in the strategy with the following works. Commenced the installation of a second pipeline across Lake Cowal to increase our pumping capacity by 30%. This will allow us to pump 100% of our mine's water requirements from the current and future saline resources, the Bland Creek paleochannel and the freshwater from the Jemalong Weir. This project is well underway with the pipe installation expected to be completed this month and full usage during the March quarter. The commissioning of the additional 3 bores in the Eastern Saline Bore Field is expected in the March quarter, and testing of the second saline bore field will commence in the March quarter. These would be expected to be commissioned in the late September quarter, subject to testing of the water resources' quality and quantity.Our third saline bore field has also been identified for assessment to further derisk the water supply. Of note, less than 20% of Cowal's total water -- daily water requirements is currently reliant on surface water, which is at risk of being impacted by further water restrictions. With the program outlined above, we are confident there is sufficient water supply to meet the Cowal's ongoing water requirements with no material impact on operating cost or recoveries. Mungari delivered just shy of 33,000 ounces at an all-in sustaining cost of $1,344 an ounce and a mine operating cash flow of $30.4 million. Mungari's net mine cash flow increased by $8.6 million against the September quarter with similar levels of production continued -- sorry, similar levels of production and continued its quarter-on-quarter financial improvements. Frog's Leg underground delivered 116,000 tonnes of ore and the Boomer access development continues on schedule, advancing 100 meters towards the mineralized zone. Plant throughput was again above plan with an annualized rate nearing 2 million tonnes per annum. We have commenced work to identify what the Mungari processing plant's natural limits are through the use of data, and further studies have commenced to assist optimizing mining and sustaining processing rates above the 2 million tonnes and assessing our rate up to 2.5 million tonnes. Cutters Ridge road construction also commenced late in the quarter, which will unlock further opportunities in the north. If we turn to Page 7 for the Mt Carlton and Mt Rawdon results. Mt Carlton delivered just shy of 10,000 ounces at an all-in sustaining cost of $2,182 an ounce due to the issues that we've outlined mainly. The main hydrothermal breccia zone, which makes up the bulk of the mineralization in the V2 pit, has tapered to a series of narrow, high-grade feeder structures at shallow depths than anticipated. The underground Mineral Resource model has also been affected with similar geological interpretations applied to it. Mt Carlton was scheduled to produce significantly higher ounces in the June 2020 quarter from both V2 and the underground, which is why guidance for the Mt Carlton has been adjusted to between 70,000 and 75,000 ounces at an all-in sustaining cost of $1,150 to $1,225 per ounce. On a positive, underground development has progressed well through the quarter, and the East Lode was encountered when expected in early January 2020. Underground development continues, and stoping is planned to begin in the June '20 quarter. Crush Creek drilling is expected also to commence during the June '20 quarter. Mt Rawdon produced just over 20,000 ounces at an all-in sustaining cost of $1,815 an ounce, with a mine operating cash flow of $13.9 million and a net mine cash flow of $9.1 million. Pleasingly, the increased attention on safety is paying off with reduction of TRIF from 12.2 in the September quarter to 8.9 last quarter. The western wall stabilization project outlined in the September quarter report to remediate the area of the pit impacted by the western wall slip is on track, and material movement are in line with plan. Costs are expected to reduce as access to higher grade ore in the pit floor is regained during the June half. If you turn to Page 8 for Cracow and Ernest Henry. Cracow continues its consistent performance, producing just over 20,000 ounces at an all-in sustaining cost of $1,284 an ounce and a mine operating cash flow of $23 million. Improvements in the processing plant have led to a quarterly saving in excess of $120,000, an ongoing increase in recovery. Ernest Henry, again, made a significant contribution to the group producing 23,000 ounces at a negative all-in sustaining cost of $526 an ounce, generating a net mine cash flow of $62.7 million. Drilling commenced below the 1,200RL, with 10 holes completed for 4,400 meters. Good progress is being made at Red Lake from an operation perspective. The interim mine plan to allow us to revitalize the operation and to start the transition to sustainable production includes accelerating capital development to 1,000, or at least 1,000, meters per month, while ceasing development in noncore zones; finalizing plans and ordering new mine equipment to increase capacity and production efficiencies, equipment would be expected to be commissioned in the FY '21 year; the potential to decommission 2 shafts to reduce operating and maintenance cost; and completing major maintenance on the Campbell Mill to improve reliability and utilization. We'll update again when the transition closes. In summary, our focus remains on improving our safety performance whilst delivering to guidance ounce and cost. Looking forward, the building blocks are in place at Cowal, Ernest Henry, Mungari, Cracow for a successful year, and Mt Rawdon is back on track with a material movement in line with our plan to deliver the west ramp cutback in ounces for FY '20. Red Lake is a great acquisition with enormous potential. The workforce are motivated and skilled, and I'm looking forward to working with the site team in the future quarters to deliver another production pillar for Evolution. With that, I'd like to hand it over to Glen.
Thank you, Bob, and good morning, everyone. Significant progress at Cowal was achieved across surface extension on underground infill drilling programs last quarter. Our extensional drilling continued to expand the mineralized footprint in the south of the GRE46 Dalwhinnie complex. Results reported from hole 544B this morning, which includes 7 meters grading at 124.7 grams per tonne, were drilled in and around the 348 zone, as shown in Figure 1 on Page 13 of this morning's report. The identification of this new zone of mineralization on the Dalwhinnie position has revealed wide intervals of impressive grades, which we believe will deliver a significant expansion of the mineral resource when the results are incorporated in reestimation of the underground block model.Extraction of the underground bulk sample occurred from the 985 level drive with ore processed through the Cowal plant as a low percentage blend during the December 2019 quarter. Detailed monitoring of metallurgical performance was completed on the underground ore blend, with no noticeable impact on recoveries when matched against a slight increase in mill head grade. Mapping of underground exposures in the 1057 and 985 level drives has confirmed the strong south to southeast plunging nature of the GRE46 mineralization, which has been previously identified and incorporated in our geological model of the underground mineralization. These observations validate our decision to complete level drives east of the exploration decline to establish the most advantageous drilling positions to the infill program at GRE46 Dalwhinnie. Drilling orientations can now be optimized from southeast to northwest in order to capture data that will more accurately model grade distribution for current and future mineral resource estimates. At Mungari, an access drive was initiated from the Frog's Leg decline and has advanced 100 meters towards the Boomer laminated high-grade vein. We expect to be able to be drilling Boomer from footwall drill cuddies in the June 2020 quarter. Results of a close spaced grade control program will allow us to develop a detailed block model estimate for a small section of the Boomer vein. The purpose of this is to determine how best to model the high-grade nuggety nature of the gold mineralization. We will also evaluate reconciliation of production from the same area against the gold predicted in the grade control model. Results provided this morning continue to confirm our interpretation that the Boomer mineralization will be a small-size resource opportunity. However, the discovery of mineralization in this area has changed our regional understanding of the structural architecture in the Mungari camp. We now interpret the Boomer structure to be a continuation of the Strzelecki shear zone hosting the Raleigh complex on the East Kundana Joint Venture further north. The change in our understanding of the geology means that the Strzelecki structure is in a different position as it tracks south onto our Mungari tenements. As a result, there is a 1 kilometer long gap of untested strike length along this structure that is prospective for high-grade laminated veins. We expect to be drilling to close this data gap over the next couple of quarters. Lastly, I returned from Red Lake following a week on-site and came away very pleased with what I saw and experienced. Firstly, there is a talented team of enthusiastic and high-quality technical explorers who are very keen to get on with things. Along with taking the opportunity to enhance my knowledge of the geology and potential of the Red Lake complex, we spent time developing a plan to restart drilling activities when the transaction closes. Immediate priorities are the completion of infill drilling to increase confidence in resource extension targets across Lower Red Lake and at Cochenour. This drilling program will support the proposed operating strategy in these areas of the mine. Discovery drilling will focus on identifying more continuous ore bodies with potential for large resource additions. We expect to kick off our drilling campaign with up to 5 rigs until the end of June, and following that, ramping up to 8 rigs in FY '21. Overall, the December 29 (sic) [ 2019 ] quarter delivered more pleasing results from our discovery programs across the group. We expect the Cowal underground resource to be upgraded and expanded from the December 2018 1.4 million ounce inferred resource. Details of our model updates will be provided in February when we release our annual Mineral Resource and Ore Reserves statement. The discovery of the small high-grade Boomer vein at Mungari has resulted in a reinterpretation of the position of the Strzelecki shear zone, with untested gaps along strike to the north. And finally, we are looking forward to completing acquisition of the Red Lake gold complex so that we can drive an aggressive drilling strategy in the search for new high-grade resources in one of the most prolific Archean greenstone gold belts on the planet. With that, I'll hand over to Lawrie.
Thank you, Glen, and good morning, everyone. Today, I'll briefly cover off on the financial performance for the December quarter, with more detailed analysis of our half year financial performance provided when we release our results next month. A summary of the financials is on Pages 10 and 11 of the report. While the operational performance for the quarter was not as good as we would wanted to deliver, the quality of the assets and benefits of a diversified portfolio approach was again demonstrated with sustained high levels of cash generation. Some assets delivered lower operating cash, while other assets were continuing their investment in major projects, while others experienced some operational difficulties. A standout was Cowal where in excess of $50 million of net mine cash flow was delivered from essentially processing stockpile material and after investing over $40 million in major projects. Ernest Henry delivered another exceptional quarter at over $60 million. Mungari delivered a third consecutive quarter of increasing cash flow at around $25 million. These assets offset the lower performance at Mt Carlton and Mt Rawdon. Overall, we've delivered just under $145 million in net mine cash flow, which was the equivalent of $830 per ounce sold, and this allowed for us to invest over $70 million of major capital investment for future production. Major capital investment was up $24 million in the quarter. Net cash generated before any M&A or debt servicing was $83.6 million, while net cash increased by just under $80 million for the quarter. This is the equivalent of approximately $480 per ounce banked in the quarter. This level of cash flow was generated at an achieved gold price of $2,090 per ounce, which is $225 per ounce below the spot price. On the back of a sustained cash generation of the business, we repaid the term loan outstanding balance of $275 million, moving us to a debt-free position. Turning to our cost position and outlook for the year. For the first half, our AISC was $1,041 per ounce. This performance is slightly behind plan, but we are on track to meet our guidance of $940 to $990 per ounce. The main drivers to achieving the cost guidance are the production mix, sustaining capital and operating cost profile. Our production in the second half of the year is expected to be similar to the first half, but with a different mix and different grades. Cowal will be around 20,000 ounces lower in the second half as they continue to process stockpiles while waste stripping at Stage H is ongoing. These lower grades will be partially offset by higher tonnes and recovery. Mungari will have slightly higher production due to higher expected grades. The stockpile buildup from mined tonnes being higher than processed tonnes and lower costs. Mining costs will also be impacted as the development of Cutters Ridge mine commences and those mining costs are capitalized as major project investment. Grade at Mungari is expected to be around 5% higher. Mt Carlton and Mt Rawdon are expected to have higher production and lower costs, especially in the June quarter as Mt Carlton accesses the underground ore and Mt Rawdon displaces stockpile material with higher-grade ore from the pit. Cracow and Ernest Henry are expected to deliver a second half outcome similar to their first half. Sustaining capital will be $10 million lower in the second half of the year, which should reduce our AISC by $25 to $30 per ounce for the second half. Major capital in the March and June quarters will be similar to the December quarter. All commitments remain in place for the completion of the Red Lake transaction, which will comprise an AUD 600 million 5-year term loan facility and a new CAD 125 million 3-year performance bond facility. Existing facilities of a $360 million 3-year revolver and $175 million 3-year performance bond facility will also be renewed. Lastly, a couple of items which will be incorporated into our half year financial results include: Our exploration costs of $17 million to $22 million will be expensed, with the majority of this expense relating to Tennant Creek; and in repaying our debt facility during the quarter, approximately $5 million to $7 million of noncash facility cost will be expensed. I look forward to updating you next month on the half year financial results. With that, I now ask Miles to open the lines for questions.
[Operator Instructions] And your first question today comes from Levi Spry from JPMorgan.
Just a couple of questions on time lines on some of the studies and reserve and resource updates that you're working on, particularly at Mungari and Mt Carlton. So can you just give us an idea of when those pieces of work are due to be finished?
So for Mt Carlton, the updates, Levi, will be in February when we release our Mineral Resource and Reserves statement, and likewise for Mungari.
Okay. So -- and at Mungari, will that -- so what about the studies on the -- feeding the plant, increasing the plant capacity that Bobby outlined there and the drilling that you're only really just starting at Boomer and Dalwhinnie, as I understand it?
Dalwhinnie is at Cowal, but Boomer's at Mungari. But yes, that will be in the next 12 months in the next MROR update. We're doing the study to look as to whether we can increase. We've already got this plant operating at a sustained rate of 2 million tonnes per annum, and we're looking to see whether it makes sense to move it to 2.5 million tonnes per annum. And also the drilling, which Glen's doing, is certainly giving us enthusiasm and encouragement about the potential of that district.
Your next question comes from the line of David Radclyffe from Global Mining Research.
So a couple of follow-up ones just on Mungari. The comment about transitioning to Cutters Ridge, is there any read through there to the decision on the White Foil underground?
David, it's Bob speaking. We're doing the drilling in the bottom of the pit for the White Foil, and we're just still working through those studies. The transfer or the movement over to Cutters Ridge is actually a planned move just as the White Foil pit comes to the bottom of the natural limit. Glen, do you want to add anything to that or...?
No. I think as you pointed out, Bob, the -- we're doing some more infill drilling to close just a few gaps in the underground resource block model for White Foil, and along with a fair bit of drilling over at the Boomer target to continue delineating the Boomer zone as another alternate underground type.
Okay. And then I mean just following up then on Boomer, do you think you're already at the stage there that keep putting underground infrastructure in place while the drilling continues? Or do you sort of wait for results? And I'm assuming here you're still sort of thinking about this as an underground. I'm just trying to think about how quickly it could potentially come into the mill.
David, we're sufficiently encouraged by the results in the drilling to date that we've decided to push a level drive out towards Boomer for a couple of reasons. The first is actually to get into a sort of closer position from the footwall from which we can drill a pretty detailed grade-controlled program. And then as we're drilling that, the ramp will continue to advance design itself to open it up. The plan really is, I mean as you can imagine, with these high-grade laminated veins, they are very nuggety in nature and modeling these can be quite challenging at times. So our intention is to drill a close-spaced pattern of grade control, and then compare that with what we extract from when we open up the -- a section of the Boomer vein to understand how it's going to reconcile. So that's the intention at this point in time. And we feel that we've got , as I said, sufficient encouragement to get out there and do this body of work at the moment.
Okay. Then the last bit would be then just with the new interpretation there and the fact that you're seeing a kilometer zone in terms of the strike potential of Boomer from the Strzelecki, is this literally an area where there's been no historical drilling? Or is there some historical drilling that maybe gives you some insight and some immediate targets to follow up on?
There's some shallow drilling in this area, but the previous interpretation of the position of the Strzelecki was that it sort of tracked more closely to just sort of down along the side of the White Foil pit. Not quite in the White Foil pit, but pretty close to it. With this, I guess the development on the Boomer vein itself, what we've understood is that that Strzelecki shear zone has changed direction. So there's some shallow drilling in that area across it. We feel that that drilling's ineffective, and we need to test a deeper on where we're interpreting the structure to be in order to really understand whether or not we can sort of open up some additional strike length. And I think that's probably, for us, the most exciting piece to this sort of Boomer development over the last 12 months or so.
Your next question comes from Michael Slifirski from Crédit Suisse.
I've got 2 quickies. First of all, with respect to Red Lake, the -- want to understand what you see as the greatest challenges, given -- you've given yourself a fairly long runway to get things in order. So what are the greatest challenges? Is it just sort of industrial relations and getting rid of people? Is it some environmental stuff? Or is it simply the sort of lack of investment development and the capital that has to be overcome?
Thanks, Michael. Just before I answer the question, I just want to check that you're okay because it's the first time on a call -- conference call that you haven't been first off the ranks. So everything okay with you?
Well, struggling today with 4 quarterlies. So thanks for scheduling it that way to keep us busy.
Pleasure. It's just -- that's some performance. On Red Lake, I think the biggest challenge has been the underinvestments, and the fact that it's a big mine and it really hasn't had the exploration spent on it for some time. It hasn't had the development spent on it some time -- for some time, so it's being reset effectively with exploration and we're starting to develop this interim plan that will focus on drilling bigger areas that allow us better sources of production without being as spread out as they are and starting to get a sustainable business. The resource is there. It really requires recapitalization. And there's a very strong recognition on site that changes need to be made and that the current basis of operating over the last few years is not sustainable. So there's an engaged workforce. The geology is exciting, and the opportunity is there. I don't know. Glen or Bob, do you want to add anything?
Before I hand it over to the Glen, Michael, from our perspective, everything Jake said, with a couple of -- further on a couple of them; development, we need to get developed stocks ahead of us. But before we can actually get those developed stocks ahead of us, Glen needs to actually properly delineate them and get that grade control drilling to fully develop the mining plan. And to me, it's about getting that consistency of geology with mine planning and metallurgy and getting it all working in Cowal to get a -- to bring a consolidated plan together. Focusing the mining into areas where we know we can get nice improvements from an effective and efficiency perspective of material movement, focusing the guys on clean mining of the ore body, they're all going to come with a little bit of time to get there. But really getting that drilled stock that -- the developed stock and then that stoping stock really to be mined is why it's going to take a little bit of time because that's been underinvested, and we need to get back to be able to deliver consistency.
Thanks, Bob. Yes, and Michael, really, the drilling program is really focused to support the mining priorities at Red Lake. And we've identified the Lower Red Lake and Cochenour as areas where we really want to get ahead of the grade control drilling. So that's an area that's been underinvested at Red Lake for a period. The other piece to that is even just some basic resource definition drilling along strike at known mining areas where the ore bodies have not been closed off. So these are focus areas just in the initial instance that we want to start to kind of commence developing our knowledge base in those areas of the mine. In parallel, what we'd like to achieve is really to identify larger and more continuous, and I guess mining-friendly geometries on these shear zones. And so there are a number of targets in the Lower Red Lake and extensions along strike. And even up and down, near the Cochenour, we will be stepping out and initiating some extensional drilling in parallel with all that grade control and res def.
Terrific. That's very, very helpful. Second question. And I guess, it's to Bob. On Cowal, the move to saline water, I think in the past, you've said that reagent consumption is low, maintenance is low because of the high-quality water that the plant has always operated on. So I know in your commentary earlier, you said that you don't anticipate any significant change in OpEx. But having previously articulated grade condition of the plant and low consumable costs because of good quality water, how do you see the medium term for the plant with a lesser quality water?
Thanks, Michael. The -- to put it in context, we're talking TDSs in the range of 8,000 to 10,000. So it's not what you'd call the same you'd be mining with West Australian or Central Australia from a total dissolved solids' perspective. I don't expect us to have significant increases in reagent or costs. Somewhere up above 20,000 to 30,000, you start to see deterioration. But at that sort of 8,000 to 10,000, which is what the saline level is that we're talking about, we don't really expect to see much difference than where we are now.
[Operator Instructions] And your next question today comes from Daniel Morgan from UBS.
Just a quick follow-up on the water at Cowal. You've just completed a pushback, and you're going to be moving towards using stockpiles this year. Just wondering what proportion of the throughput of the stockpile is going to be oxide ore in nature?
Dan, off the top of my head, I haven't got the number.
Can we get back to you on that one? I mean all our forecasts are obviously based on the stockpiles and what we know of them, but we can get back to you on that.
Yes. I guess maybe taking it more high level, it just comes down to the water consumption. I think there's a water study that Cowal has out over a couple of years or so vintage where the oxide ore has greater consumption when it goes through the plant. So just wondering if you can talk on that on how you expect water consumption over the next 12 months to look versus what you've experienced.
So from a high-level perspective, we have been seeing increased oxides in the last 3 to 6 months from the stockpiles. The model that we have now in the simulation for the water model, actually, taking into consideration the additional water that's required from an oxide's feed perspective. It also takes into consideration that when you put oxides through the mill, you get lower returns from the TSF because of the fineness of the oxide when it goes through the processing plant. So the -- all the modeling actually is taking those things into consideration, and the return water is probably where you get a bigger hit than the actual consumption water. But when you add those 2 together, they're being considered. But we don't have a percentage, sorry. It's...
There are no further questions at this time. I'll hand the conference back to the Evolution Mining team for any closing remarks.
Thanks. Thanks, everyone. I recognize it is busy, and there are probably lots of calls and reports you need to write, so thanks for your time. Appreciate it. Look forward to having another call on February 12 when we release our half year accounts. Thanks for attending.
Ladies and gentlemen, that does conclude today's conference call. Thank you for participating. You may now all disconnect.