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Thank you for standing by, and welcome to Northern Star's March 2020 Quarter Results Conference Call. [Operator Instructions]I'd now like to hand the conference over to Mr. Bill Beament, Executive Chair. Please go ahead.
Good morning, and thanks for joining us. On the call today, we have our Chief Executive Officer, Stuart Tonkin; and CFO, Ryan Gurner.This has been a difficult quarter on many levels. The costs and the challenges associated with the coronavirus measures we introduced have been significant. The majority of these impacts are one-offs though and mostly felt in the March quarter. However, great progress has been made to offset any impacts where possible. A new operating environment is now firmly in place. While it's not a perfect operational platform at the moment, it is manageable and enables us to continue profitable production.There were a number of rapid and essential measures we implemented early, including things such as changing Jundee's mining team to even-time rosters, which means we go from a 3-panel roster to 4, which requires additional skilled personnel to be sourced. We are in short supply. I'm pleased to say strong progress is being made to cover the skill gap.Labor shortages also had a significant effect on our production at Pogo, where the operation relies heavily on specialized skills from the Lower 48 states and Australian expats, with both groups posing many challenges in getting to and from site. There are also little things you might not normally think about. Like at Pogo, indoor space is a luxury item, and it's very cold during the March quarter. So social distancing isn't easy to achieve through shift changes, unlike Australia, where we've been conducting them outside. So we have the staggered shift times, which has reduced the available work hours in the shift by approximately 10%.I'm pleased to say, though, it's coming into spring now and warming up. But be under no illusion about the cost and productivity impacts of all of these measures. I believe that as an industry, the ramifications of the measures we've introduced will become more apparent as this quarter unfolds. The new rosters being applied across WA will reduce productivity. The need to manage fatigue and safety will be crucial and costly. And as an industry, we must also be on red alert for mental health issues.One of our sites recently had more, in the emergency assistance provider, EAP, inquiries in 1 week than it did in the previous 12 months. At Northern Star, we developed an early understanding of the required responses for this virus at Pogo in the United States. We had a sharp learning curve, which required us to enforce a host of changes. These came at a significant cost. But that also meant we were better placed to make changes at our Western Australian operations ahead of the curve, which we did.At Jundee, the mine sequence was such that stope grade was low for the quarter but is expected to increase this quarter, and we're already seeing evidence of this.At the Kalgoorlie operations, gold production was 10% below forecast due to the impact of the additional health and operating protocols and reprioritizing mining areas for future activities, in particular around the Raleigh deposit. Towards the end of the quarter, the mining crew alone lost more than 1,500 shifts, with unplanned leave up 80%. However, the Kalgoorlie operations are poised for a stronger June quarter as the workforce stabilizes and the new Moonbeam deposit production comes online.At Pogo, we've had 6 cases of coronavirus, and I'm glad to say they're all recovered. However, at Pogo, the virus measures took a harsh toll on our performance early on. But despite this, we still continue to make great progress on the transition to bulk mining, which is the core of our business improvement strategy then. Had it not been for the virus, Pogo would have had a very solid quarter, and production would be closing in on our annualized targets.At KCGM, the residential workforce has limited the operations exposure to the virus measures. The measures needed to protect residential workforces were not as extensive as they were in the case of FIFO workforces, where our social license to operate was on the line. The new management team at KCGM has bedded down well and moved quickly to implement operational changes aimed at bringing the joint venture and to align with the systems and methods used at both in Northern Star and Saracen. It quickly became apparent that we needed to develop more mining areas as part of the pit to give us greater operational flexibility in the future.As part of this strategy, we have started development of the Brownhill area Stage 1. Brownhill has 2 potential benefits. First, it is shallow and shovel ready. Second, it could link up to the existing pit. This would occur in the event that we opt for the cutback option to remediate the East Wall. In this scenario, the synergies would be valuable, and therefore, we have commenced a review of that remediation option. The higher gold price also boosts the economics of the cutback option, increasing the return on capital associated with the cutback. We expect to finish this review in the September quarter, and we'll outline more details then.I'm also pleased to announce today Northern Star has established a COVID community fund of up to $10 million. This money will be used to assist local communities to deal with the immediate impacts of the virus and rebuild as they come out the other side. We've already committed $2 million for the purchase of PPE in Alaska and COVID testing facilities in regional locations of Western Australia. We will continue to assess ways in which we can deploy this money during the crisis.I will now pass to Stuart Tonkin for a more detailed assessment of our operations.
Thanks, Bill. Like at KCGM, the high gold price provides significant opportunities across all of our portfolio. But of course, any gold price is only useful if we maintain gold production. This has been the focus and effort over the past 2 months to ensure we protect the health of our employees, their families and the communities in which we operate whilst maintaining gold production to sustain business activities during the unprecedented COVID-19 threat. In line with the approach to saving lives and livelihoods, I would like to sincerely thank all our employees and contractors for their immediate and continued efforts to mitigate the risks of COVID-19 and establish a more resilient business to manage through this environment.The Pogo operation is now successfully long-hole stoping in 3 of the 5 planned areas, with stoping during the quarter contributing 68% of the total ore tonnes at an impressive 8.4 grams per tonne. We averaged 1,150 meters per month of development, which impacts in the second half of the quarter due to the roster measures that Bill mentioned. We are targeting 1.5 kilometers, 1,500 meters a month, to build more productive production fronts and contingency into the mine plan and continue to upskill the team there.Higher development grades from the Liese, Fun Zone and South Pogo have provided a 14% increase quarter-on-quarter to 7.9 grams per tonne in development ore, which will fare well for future stoping grades. The undeveloped zones of East Deeps and North Veins will contribute to the plan once infrastructure upgrades are complete and development team is fully staffed. Pogo is well positioned to improve quarter-on-quarter with good grades and cost reductions contributing to strong free cash flow. As we grow the stoping volumes, this operation will continue to improve by all key metrics and become a cornerstone asset for the company.I am pleased to report that the 6 positive COVID cases that Pogo had are fully recovered, and the significant measures taken at site reduced the impact of these cases from potentially much greater effect. It's a testament to the team culture at Pogo to manage through a raft of challenges and whilst still improving site performance.To Jundee operations. March quarter production was reduced as we performed a 10-day planned shutdown in the processing plant and lower grade stoping zones were the primary mine feed during the quarter. Jundee remains ahead of the forecast year-to-date with 219,000 ounces delivered over the past 9 months. The expanded mill capacity will be commissioned in the June quarter, enabling 2.7 million tonnes per annum throughput rate at a finer grade, which also assists improved recovery.The management of the shutdown crews and construction crews throughout this quarter has been exceptional. Ramone open pit continues mining and building of stockpiles to provide supplementary feed to the underground primary ore, and we have reduced regional exploration activity across the Yandal operations during current restrictions.To our Kalgoorlie operations. We experienced some different forces during the March quarter, the seismicity of Raleigh restricting activity there and we've redirected mining resources to the Pegasus and Pode mines and the new Falcon access. The increased rehabilitation costs and elevated development meters impacted both grade and unit costs in the quarter.Kalgoorlie owns -- mined 750,000 tonnes at 3.2 grams and milled 890,000 tonnes at 2.9 grams for 75,000 ounces produced, utilizing lower grade stockpiles for the balance of processing. Roster changes and health screening across Kalgoorlie operations had a significant impact to productivity and logistics. Few of the synergies that we typically encourage across these mines were realized as we practiced social distancing and fixed roster teams.Kanowna upper levels continued to yield encouraging drill results, and we plan to stope bulk zones as a further trial in the A block hanging wall. HBJ mine also is providing encouraging drill results plunging to the North in North Ore Zone and Mutooroo zones. And our Moonbeam development mine is turning into production, commencing this June quarter and will contribute to the Kundana field production. But whilst these measures of the COVID protection are in place, the all-in sustaining cost at Kalgoorlie ops remains high.Now Bill has spoken of the KCGM progress and opportunities there, but I would also like to thank and further acknowledge Newmont transitional team that have now left site, and I thank them for the professional manner in which they assisted the handover.I would now like to hand to Ryan for the financials.
Yes. Thanks, Stu. Good morning all. I'll present to you now some of the financial aspects of the company's 2020 March quarterly results.Cash flow waterfall charts on Page 6 provide an overview of cash bullion and investment movements for the March quarter and the generation of $185 million in operating cash flow and $89 million in underlying free cash flow which, of course, adjusts for working capital, M&A, financing cash flows and movements in our equity investments. The $89 million of underlying free cash flow was generated after investing $66 million into organic growth across exploration to set up future production areas and expansionary capital to increase production.Corporately, it was a busy quarter for the company with the successful completion of 50% of KCGM and associated $55 million share purchase plan. To aid our suppliers, Northern Star made early creditor payments in March, totaling $58 million, which would have ordinarily been scheduled in April.As previously announced, the company undertook several capital management initiatives during the quarter to maximize on-hand available liquidity, including drawing $200 million from revolving facilities, extending maturities of our calendar '20 hedge commitments and deferring payment of our interim dividend until the 27th of October. With cash and bullion at $531 million and the only scheduled debt repayment in the next 12 months being the $25 million on 31 December, the company is in great shape to respond to any scenario to protect our people and our business in these dynamic and challenging times.On to costs. During the March quarter, the Australian operations, inclusive of KCGM, sold 182,000 ounces at an all-in sustaining cost per ounce of $1,506. A further 7,600 ounces were sold from the Morrison starter pit at KCGM.Jundee, during the quarter, mined approximately 75,000 ounces but only sold 53,000 ounces at an all-in sustaining cost of $1,389 per ounce sold. At the end of the quarter, Jundee had 76,000 ounces in stockpiles and gold in circuit.Kalgoorlie operations mined and sold 77,000 ounces at a cash cost per ounce of $1,307 and all-in sustaining of $1,619. Lower stoping tonnes were partially offset by development ore focused in the processing of lower-grade stockpiles impacting the all-sustaining metrics for the quarter.Over to Pogo, which during the March quarter, mined 56,500 ounces and sold 49,000 ounces at a cost of USD 1,254 per ounce, a 10% all-in sustaining cost reduction from Q2. Pogo's total site costs, excluding exploration, corporate, ore stock movements and the processing expansion project averaged $21.8 million per month over the March quarter, which was down about USD 800,000 per month from Q2. The operations did incur some additional cost impact from COVID-19 being realized relating to personnel transport, accommodation, additional cleaning, freight and catering. We are expecting no cost savings from supply contract reviews which completed early in the year to begin in Q4.And KCGM had a solid first quarter under our joint ownership with Saracen with a pretax cash flow contribution of $41 million for the quarter, with just over 60,000 ounces sold at an all-in sustaining cost per ounce of $1,452. With the increased leverage from the KCGM acquisition, 160,000 ounces of gold were hedged at completion of the transaction.In addition, during the quarter, the company early delivered approximately 49,000 ounces from future commitments, which will provide greater participation in spot prices in the months and quarters ahead. As at 31 March, Northern Star had approximately 18% of production hedged over the next 3 years. And as previously indicated, the company extended maturities of its undelivered 2020 calendar year hedge commitments to get to calendar year '21 a total of 258,000 ounces, which was taken to reduce the delivery risk associated with COVID-19 disruption. NST retains the flexibility to deliver these hedge commitments at any time up until any extended maturity dates if and when prudent to do so, and we'll look to deliver our commitments as they stand.I'll now hand over to the moderator for questions.
[Operator Instructions] The first question comes from Daniel Morgan with UBS.
Just the first question is on Pogo. It looked like a very good quarter given the context of COVID-19. Wondering if you can just talk or expand a little bit more on what you were seeing during the January and February period up until you saw COVID impact, so things like your productivity of development meters. And I just want a feel for how the operation was feeling -- going on an underlying basis prior to COVID.
Yes. Thanks, Dan. Stuart here. So look, this was planned to be -- yes, it was a reasonable quarter. We're expecting a much stronger quarter in March quarter. So yes, we've come out of the back of December strong month. We've set up lots of stopes online. We're still developing pretty strongly, and we had all our teams on ground to do that. If you recall that back in February coming into March, we basically said to the crews, stay or go. And so we actually had quite a lot of disruption in activity throughout March. So yes, that's really setting us up for a good run rate for the March quarter. Now this is delayed. It's not lost. And obviously, with the stabilized teams there at the moment, we're well positioned for a much -- going for a much further improvement into the June quarter as well as just the easing of the weather, generally, coming of the coldest months, the ability to move, as Bill said, move to the outside, than them sort of holed up in those rooms, trying to have less people standing around, meeting, talking.The shift changes has occurred now with some Lower 48 state people coming up, and we're also planning the next expat shift change. But it's that 1,150 meters that really impact us. On average, we want to be up at minimum circa 1,300 and then obviously 1,500 meters a month to get ahead and build those extra 5 stoping areas. So 3 of the 5 stoping areas are being mined at the moment. Until we get the East Deeps, North Zone/X Veins developed, we really don't have that flexibility in the mine plan, but just take what we've got to take. So look, it was a reasonable month, still generated good cash flow -- or a reasonable quarter, but we were expecting, yes, this second half to be much stronger. So we're not -- we've been pleased with the actions of the team, but yes, where we'll land, we expect to be a bit ahead of that.
And then just expanding a little bit on this. What's the status of manning levels and skills at the site at the moment? I imagine the -- I would have thought the COVID impacts that have occurred to date are going to mount during this quarter due to travel restrictions of getting Australian skilled operators into site and out of site. What would you say to that, that the June quarter will have more impact?
We're on reduced numbers, and we spread everyone out because people were sharing -- operating sort of rooms and those things given the amount of activity. You appreciate things like diamond drills, because we've dropped from 11 diamond drills down to 3. We've moved out any nonnecessary immediate activity, all the staff, people are working remotely from Fairbanks, the technical on the computers. So there's a few things there we've just done, thin out, spread out people. And you'll appreciate, we have 6 positive COVID cases throughout the quarter that were managed extremely well and limited any impacts of that sort of snowballing on. So we still have those restricted labor levels. We've got few -- there's a lot of people there doing like 4 weeks straight and some of those have decided to live there 3 to 6 months last year without returning to their home state, which is much appreciated.So all those things at the moment is stabilized, but it's at a reduced total skill level. So as soon as we can start to bring back more of those skills, and to Bill's point earlier, just managing people's fatigue and managing their general outlook through this period is a challenge. So we're well positioned with stability in the asset. We still expect June quarter to be better than March quarter, and we were expecting the full year to take us to that run rate. All the other activity as far as getting the mill improvements underway to get the thickener in place to be able to take that extra volume. But the most impressive fundamentals of this asset, the grades are coming through. You can see the 8 gram plus head grade. So once those stope tonnes come through, it's quite easy to see those metrics improving on all fronts.
And then just shifting to the Australian operations. So you've highlighted that the COVID measures that you've put in place have obviously impacted productivity. But it looks like grades played a big role as well, like your tonnes from both operations were still reasonable, but the grades were much lower. Wondering whether you can talk about grades. And then more crucially into the June quarter, are we going to see a good recovery at both Jundee and Kalgoorlie?
Yes. So there are different issues there. So the grade was lower at Jundee during the quarter, but year-to-date, it's still ahead of the forecast as well as the planned shutdown there in the plant. Now with expanded plans at the back end of the quarter and just normal mining sequence, we expect to still perform pretty well there across Jundee. Kalgoorlie is probably -- we've got all eyes on our Kalgoorlie operations given it's one of our elevated -- high unit costs. That's largely driven by grade, and there's not a lot to do there, other than productivities and general cost outs which -- whilst these measures are in place. Now we accept that those are high unit costs. I mean we had an extra planning for FIFO, people, extra buses, vehicles, the reduced team sizes. There's a point there where I think we had 7 long-hole drillers not report to work and due to the measures we put in for screening, not in a negative sense, just as a proactive measure. We can't drill -- couldn't drill our long-hole plans through the month. So there's those things that are happening on a day-to-day basis we're managing through. And we have restricted the things we typically would do which is move equipment and people from mine to mine as required to fill the hole. At the moment, we've locked that out. They do 14 days on, 14 days off, go nowhere in their breaks, and we don't have the flexibility we normally enjoy.
I see. And just the last question. The mill expansion at Jundee coming through this quarter. How disruptive will that changeover be to the milling rates in the quarter? And when is it occurring in the quarter? And when do you think it will be up to full run rate?
Yes. Look, it's -- they sort of net each other out. The ounces related to shutdown timing for the new ball mill net out any sort of ounces that come through. There's no real material impact in that regard. The old ball mill is still running presently up to when we do that changeover. So there's no real material impact there. What it is, is the open pit. The underground is still -- [ Jundee ] added sort of 2-plus million tonnes. And then obviously, the stockpile depth from Ramone will add future supplemental feed for that mill expansion. So the other added benefit, ideally, once it all gets bedded down, is a finer grind and, therefore, you can get a better recovery. So -- but these will all -- we'll be ready [ to put a team ] in place and get it moving and bedded down. And the team has done a fantastic job there to keep working through this construction phase with those extra labor, whilst trying to put these controls in place.
The next question comes from Levi Spry with JPMorgan.
Can I just explore the productivity sort of losses that you're sort of seeing throughout this quarter now? And based on what you saw in late -- late in last quarter, so why are you staying on 4 panels rather than 3 and all that sort of stuff? What's the sustainable productivity loss you're thinking about?
Yes. Look, as we've stated in the quarterly and speech today is we've put all the protocols in place very early on and bedded them down. So we took that in March quarter and we've bedded that one, but we at least have a -- we don't have an ideal operating platform. It's not perfect, but it's definitely manageable. Anyone that's saying out there that it's not, well, I could say it's an easy goal. We already saw that at the back end of our rosters. We implemented longer rosters very quickly in the U.S. and in here. Anyone that works underground, if you do more than 10 days, you're absolutely stuck at the end of it. We're asking people to do longer than that. So it does have an effect. And as we're underground predominantly, we are seeing that. Overall, you're probably looking at up to a 10% drop in productivity levels. It's probably not a bad rule of thumb to look at. But it is early days, and we're going to monitor that and try and improve. But that's sort of our gut feel at the moment, that's sort of the effect across the portfolio.
[Operator Instructions] The next question comes from Sophie Spartalis with Bank of America.
You mentioned that with all the changes, you're now looking at relatively stable operations. So with that in mind, are you able to provide some more clarity in regards to June quarter expectations? And you've said that, across all the operations, grades should recover Q-on-Q but -- not expecting you to put out any particular guidance, but can you just maybe provide, given you've already got 1 month lockdown, how you're seeing the June quarter?
Yes. Look, as we've said is we expect a stronger quarter, as Stu said, in Pogo. We expect a stronger Kalgoorlie and Jundee. So -- and Kalgoorlie's business is [ touched in ] as business as usual. So it will be a stronger quarter in June for sure.
Are you able to provide any quantum of how strong? Not willing to?
No.
Okay. And then just in...
[ We're not giving specific guidance ].
Sorry, what was that, Stu?
With the guidance, Sophie, so we're specifically not giving any guidance. Yes, just to remind you, we had cases at Pogo. The risk remains when you get cases. We see some great improvements across Australia, and you start to see people start relaxing. But any operator who gets a case on their site, they can't guarantee that they can remain operating under that environment. So we still have to be very careful on what we say going forward.
Yes. It's very important, Sophie, to understand, we have had experience at Pogo. When you get a case of COVID, your close contacts get taken out. You lose a big chunk of your workforce very, very quickly. So anyone in Australia that has a case, their close contacts -- you can lose crews. Now you saw that over in New South Wales at [ Welcon ]. And there was shutdown of operations. So you have to be very, very careful. But we haven't experienced it yet, Sophie.
No, for sure, I understand. And then just in terms of your hedging, I understand the flexibility and the deferral of those hedges. But how are you thinking about that hedge profile going forward, just given the risks in the business? Would you look to add to that hedging program?
Now look, we took the early productive thing to roll -- push out hedges, and we're the first to do that. So we actually got it away very easily with the banks. It wasn't that easy with the back-end effort. But our sort of view is we took away delivery risk in case worst-case scenario happened, but we're still planning to delivering those hedges. In fact, we're accelerating. I think last quarter, Ryan, we delivered half of our gold production moving to hedge book in the March quarter, and we're very aggressive this quarter as well because we like the gold price, and we want to deliver into it. So we want to try and clear our hedge book as quick as we can.
Okay. So even though in that table that you've got in the quarterly, you've got no hedges due in June '20 and December '20, you'll still be delivering a good chunk of your production and try to close them out as soon as possible even though you got the flexibility to have them out later.
Yes, correct. We are -- so we pushed our hedges out 12 months, but we're still delivering those hedges that should have been delivered that we pushed out. We are delivering into those hedge commitments.
Okay. So could we expect at 50% of the June quarter production as well then?
Probably 35% to 40%.
The next question comes from Matthew Frydman with Goldman Sachs.
Just wondering if you can please expand on the drivers behind the lower grade at the Kalgoorlie ops during the quarter. Particularly wondering, I guess, what the split was on the stockpiled material in terms of mill feed. I'm wondering what kind of grade that material was. And then looking forward, wondering if you can give any information on the kind of grade benefit you'll expect to see at Moonbeam coming online. Is Moonbeam a higher-grade ore body relative to the rest of the Kundana system? Or should we think about it as broadly similar to the rest of Kundana?
Yes. Thanks, Matt. It's Stuart here. So we mined 750,000 tonnes, and that was at 3.2, which is about the average grade we've been achieving across Kalgoorlie ops. I would say the mills, the milled grade was at 2.9. We milled another -- there's 887,000 tonnes milled, so we're basically pulling out those low grade stockpiles to blend down to that 2.9 grams. So more tonnes, more throughput. Obviously, that also flowed through into the all-in sustaining cost to see the processing cost per ounce elevated for the quarter as we drew that down on stockpile. So look, the main thing is Raleigh. Raleigh used to be a quite high-grade mine, albeit low volumes. We're pretty well rehabilitating and ceased production out of that and moved our focus across -- into a bulk zone known as Pode, but it's a lower grade than Raleigh. So that displacement there has flowed through.Look, all the grade across those mines, they're fairly -- or let's just say, average. They're not -- you don't have hotspots of high grades, like we have the variability of Pogo and/or Jundee, so there's no cherry picking. You're taking the mine schedule as it's planned. You're adhering to the regime through your seismic sequencing and you're taking that throughout the whole plan. So we're looking at, obviously, sustaining those operations over the long term, but it is at those lower grades. So we have to just be really prudent on productivities, unit costs and all the other cost inputs at the moment because of those constraints there. It's all denominated by gold sold, which is obviously ultimately grade-driven. So look, it's not ideal, but the gold price at the moment is allowing us to take that material.Kanowna Belle has been reasonable grade and performing well in cash flow. We're going to revisit the A block hanging wall bulk zones, we're getting some really impressive development grades coming through some of that. But as it gets bulked out, we're still trying to see if we can solve the bigger picture at Kanowna. And then HBJ as well showing some higher grades down. When I say higher grades, mid-3s and 4s is impressive in that vein, where obviously, we're double that at Pogo. So it's around that mid-3s is probably where the average grades can be sitting around Kalgoorlie.
Sure. That's very helpful. Just maybe secondly, wondering where you guys are currently sitting in terms of your contracted third-party processing for 2020, whether you've still got some capacity there and whether that's something that you'll be looking to take advantage of if the situation arises in the June quarter or I guess whether that's dependent on the productivity you can achieve out of the mines at this stage.
Yes. Well, you'll see that we utilized third-party mills during the quarter as well as some of those low grade stockpiles, so there's just that balance there. Ultimately, we have milling capacity for the quantities that we mine, with the balance being our joint venture partners or at East Kundana joint venture and separating -- completely separating KCGM where there's no interactional movement of materials between our Kal ops and KCGM at all. Yes. So look, at the moment, we've got secured the milling capacity we require. It's not an issue. It's not necessarily an opportunity or a risk. We're just trying to obviously plan out quarter-by-quarter what our volumes would be.Moonbeam, I think you asked on the previous part as well, it's about the same average grade for Kundana belt. Those increased volumes potentially will knock out lower grade of other mines or just take that on. But we're also thinking forward, for the Paradigm, Carbine area, it's obviously an open pit and an underground potential there that we need fundamentally a solution for. But that's probably 12 to 18 months of thinking and planning at the moment.
Sure. That, I guess, is going to be my last question as to whether you guys had any kind of update on your plans around Bronzewing and Yandal. But it sounds like the response is that you're still working through that, and it's probably 12 to 18 months later, fair?
It's probably more so from just bringing in employees under the current climate. We'll revisit that, the thinking, the planning, the desktop works continuing. Ramone will be the extra feed for Jundee in the short term. Obviously, the Julius deposit also supplements that in time, but there's still restrictions across that Yandal Belt as far as getting on the ground in regard to heritage surveys and those types of things that potentially push some of that out, so we're just conscious of that. We don't need it, but just would be ready until the desktop works, so when things relax and ease, see if we can accelerate the work over at Bronzewing.
[Operator Instructions] The next question comes from David Radclyffe with Global Mining Research.
So the first question for me is if there's any update on the option to acquire the Newmont power business. I saw that you've had the 30-day extension. Has that actually lapsed? I'm just wondering if lower energy product prices sort of impacts your thoughts on the value here.
Yes, David, it's Bill. Thanks for the question. No, it hasn't lapsed. We got an extension of Newmont and an offer has been presented, and we're waiting for feedback.
Okay. Then the second one would then be in terms of the opportunity you're considering for the KCGM remediation study. Could you give us a little bit more color about what the options actually are? And then assuming that current gold price is maintained, is the cutback the obvious thing to do? And then what sort of lead times should we be thinking on that? And do you have enough equipment to do it? Or do you need to get in additional equipment and fleet, et cetera?
Yes. Look, as we stated in the quarterly and as I said in my spiel is we're looking at those options at the moment. It's looking attractive, and we're doing that evaluation work now, and we're going to finish that in the September quarter and communicate those details then. Thanks.
The next question comes from Nick Herbert with Crédit Suisse.
Just a couple of simple ones [ from me ], please. Apologies if you've covered these already, I missed part of your presentation. But just the comment in your quarterly on accessing some new mining fronts in the pit. Can you just provide some detail on what the extraction rate you're expecting from those in the June quarter and any implications for average grade versus what you reported in the March quarter? And then also, just any planned maintenance there for the June quarter, so the big one that you've had in your March quarter? And also any plan over the second half of this year?
Yes. Thanks, Nick. Now look, we won't get down into exact details of the quantities and sums coming out of the volumes per pit, but look just as per our guidance we've put it out there for this half, and we'll update that for FY 2021 in July/August.
Okay, sure. And on the plant shutdowns, anything major planned there?
No. No, it was just a big shutdown that was planned at that point of time. So it was a long shot and it obviously affected production because you don't [ all go well with prediction ]. I think the next major shut, I think, is in the September quarter.
The next question comes from Nick Evans with The Australian.
Just on the -- have you guys seen any, I guess, supply chain interruptions in terms of having people who are getting sort of spare parts, reagents, that kind of thing out of China or elsewhere as part of the coronavirus impact along your own supply chain?
Nick, Ryan here. Look, we haven't. Obviously, we've managed it and we've kept close to all of our suppliers, all of our supply chains. So not at this stage.
Just to add to that, one thing that I think needed -- one thing the industry I think is doing very well is suppliers in the industry are keeping very close communications about anyone that tries to do the toilet roll scenario. And suppliers are making sure that we all are sort of only ordering what we need and not going over and above and trying to hoard. So I think we're doing a fantastic job with our own suppliers on that and not doing the toilet roll scenario.
The last question comes from Stuart McKinnon with the West Australian.
You mentioned earlier, Bill, that you've had to look at hiring some more people because of the roster changes necessitated by the coronavirus. Can you just give us an idea as to how many extra jobs you're putting on, how many of those jobs are being filled and are asked about further?
Yes. Thanks, Stuart. Look, fundamentally, it adds an extra 33% if you did it [ literally ]. So we can take the 2 and 1 roster, change it to a 2 and 2 roster. You need a 4-panel. It hasn't been that dramatic, but it's been important that we've added those skills to basically supplement our fly-in, fly-out operations. We've got more flexibility in Kalgoorlie that's probably added about 5% to 10% of those. Now we have brought on some temporary skills and labor hire to fill that gap, and our contractors have worked hard to fill those gaps. And potentially, we have to ensure that we've tried to maintain all the jobs that we currently have. The offset to that is some of the nonessential activity has been stood down to reduce the risks of multiple people on sites, so some of that exploration expenditure. So ultimately, in time, we want to rebalance back to the norm and keep all the activities there, proactively working people with jobs done. But yes, there's been a lot of focus on China, obviously, protection of lives and livelihoods, particularly in regional communities to support all the people we have employed as we have them with remuneration through the quarantine periods and standbys and having the flexibility in those teams that are there to keep us operating.
Thank you. That does conclude the question-and-answer session. I'll now hand back for closing remarks.
As you can see, we've had our challenges in the past quarter, but thanks to the huge efforts of our team, we have emerged from what I believe is some of the best corona-related health and safety measures in the global mining industry. And we put them in place very early. From that perspective, it was an outstanding result by all the team. There was undeniably an impact on our production and financial performance, but that was minor compared to the cost of having to stop production because of the virus. We have our new systems in place, and we have offset the costs where possible. We are now set for a better June quarter both in terms of reduced costs and productivity impacts relating to the virus and from a more conventional operations perspective. But we'll always put the health and safety first, and if that means we have to implement further measures to deal with things, we will do that. Thanks for joining us today.