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Thank you for standing by, and welcome to the Northern Star March 2021 Quarter Results Conference Call. [Operator Instructions]I would 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 with me today, I have Managing Director, Raleigh Finlayson; Chief Executive Officer, Stuart Tonkin; and Chief Financial Officer, Morgan Ball. The past 3 months have been a pivotal period for Northern Star. The merger with Saracen was approved by Saracen shareholders and the courts in mid-February, opening the door to the integration of the 2 companies, great people and assets. An enormous amount of planning had gone into this integration phase because we are extremely conscious of the fact that merging companies together requires the utmost diligence and concentration for success. I am delighted to report that this process has been smoother than we could have hoped for. Raleigh, Stu and I would like to say a huge public thank you to all our people for the commitment and diligence they have shown throughout the integration. You've all put the interest of the company and its stakeholders ahead of your own. Your approach has been integral to the success of the merger to date. This philosophy will also be key for the success of the merger going forward. Our ability to realize the huge potential offered by the deal depends heavily on a total commitment to making it work as effectively and efficiently as possible at all levels. The time and effort which has been put into this integration in the past 2 quarters has been substantial. We are a company that has succeeded in the transition to one business. The merger is only a few months old, but what we are already seeing confirms our view that there are many significant opportunities to grow value for all stakeholders. From a public reporting perspective, so much of the work in the past quarter has been below the waterline. But despite this high of activity, we remain on track to achieve our full year production and cost guidance. In addition to the integration process, our teams have overcome several one-off events, which have impacted the results, to ensure that we have gone into the final quarter well placed to meet our FY '21 targets. And this quarter is tracking very strongly to be our best for the year. In addition to the integration process and the one-off events, we've also worked furiously on the exploration front in preparation for the reserve and resource update next month that will feed into the new corporate strategy that will be unveiled in late July this year. Again, we are very pleased with what the drilling rigs, all plus 40 of them, have turned up, particularly at KCGM. The exploration and resource reserve push at KCGM is one area where we can already see massive benefits flowing from the merger. It is simply easier, more efficient and far more effective to drive an extensive drilling and exploration campaign of this nature from one company rather than 2. We said at the time of the merger that the upside of -- at KCGM was immense, and everything we have seen so far says we were right and then some. This is truly a stunning, world-class asset. This is just one example of the evidence we are seeing, which shows our strategy is on track. That strategy revolves around our ongoing commitment to being a business first and a mining company second. It is aimed at growing our most profitable production the most, driving financial returns through organic growth and synergies and delivering genuine, profitable production scale based solely on tier 1 assets. I will now pass to Raleigh for the corporate review of the quarter.
Thanks, Bill. This morning, I'll provide a brief update on the merger integration, synergies and our planned Strategy Day in July. Firstly, on integration, or what we refer to internally as consolidation, is pleasingly, effectively complete with some systems and administrative activities ongoing all due for completion this quarter. As a result of the detailed planning stemming back to the merger announcement, we are pleased to report a very smooth transition on day 1, being 15th of February this year, and consolidation over the first 60 days of the merger. It's worth noting, it's effectively been a 3-way integration between Northern Star, Saracen and KCGM, and it's a testament to the professionalism and can-do attitude of our 3,500 strong employees and 3,000 contract partner employees for making this transition as seamless as possible. And on behalf of the Board, and to echo Bill's comments, we'd like to thank everyone involved. On the 15th of February, we also consolidated our corporate office into 1. We all now reside in 1 building and on 1 floor, a unique attribute for an ASX 100 company. On the synergies front, which we refer to as optimization, we have made excellent progress to date. We firmly reiterate our total synergies articulated during the merger announcement of $1.5 billion to $2 billion of NPV. Corporate and tax synergies of circa 50% of the total value remains on track, and Morgan will provide tax planning update shortly. If anything, we see further upside opportunities at both across corporate and operational synergies, including procurement savings tracking ahead of schedule with over 35 supply agreement contracts signed set to deliver over $25 million per annum of savings in FY '22 and beyond already identified, plus one-off capital savings of a similar magnitude, both as a direct result of the merger synergies, all identified since that merger announcement only 6 months ago with many more opportunities in the pipeline. Again, operations had no synergies attributed to the $1.5 billion to $2 billion of NPV at merger announcement, albeit optimization where, compared to date, has identified opportunities that will provide meaningful, additional synergies to the growth, and we'll provide more information on this on our Strategy Day in July. We've hit the ground running at our Kalgoorlie operations with initial trials of 24,000- and 28,000-tonne process of milling optimization already conducted in the first quarter of the merger, resulting in improved recoveries, treatment of higher-margin stockpiles and invaluable optimization data that will feed into our life-of-mine plans. I appreciate you may have many more questions on synergies, and we'll happily provide more detail in July when we present our new strategic road map. As Bill mentioned, we are eagerly looking forward to delivering our new consolidated strategic plan at our Strategy Day in late July. The plan will incorporate the latest and most meaningful information on the resource and reserve update coming to market in May, watch this space; key opportunities identified as a result of the synergies and optimization work that remains ongoing but well advanced and the consolidation of our life-of-mine plans. Guidance on the following key strategic pillars, amongst others, will be articulated in July, including production and CapEx outlook; synergies realized and ongoing; and the optimization of capital, equipment and human resource allocation based on financial returns, synergies and portfolio optimization. I will now hand over to Stuart to provide a more detailed review of the quarter.
Thanks, Raleigh. So this morning, we're pleased to report our consolidated March quarter results with 368,000 ounces sold at an all-in sustaining cost of AUD 1,598 an ounce and a strong outlook for quarter 4 to deliver full year production and cost guidance. At KCGM, we continue to see improved mining physicals at Super Pit as we advance the Fimiston South prestrip as well as the OBH cutback. A new PC8000 shovel was commissioned, and our commitment to a new truck haulage fleet will further reduce unit costs once delivery commences in FY '22. Site performed a significant planned 14-day plant shutdown with 900 additional contractors performing works to upgrade control systems and maintenance tasks, which were completed to protect future business continuity. This deferred around 15,000 ounces during the quarter, and we also received very strong mill recoveries that were delivered in the quarter, which were up 5% to 86%. Underground portals were established in the western wall of the Super Pit to establish future drilling platforms. This is an exciting milestone for the mine's future, given it is the first underground activity in decades on the gold mill. Mount Charlotte lower levels were further rehabilitated to facilitate drill access for exploration plans in FY '22. The Kalgoorlie operations of Kanowna, Kundana and South Kalgoorlie maintain steady production but remain higher-cost operations, and actions are now underway to reduce resourcing levels to improve cost bases there. Synergies identified in the merger planning are being executed with trial milling at Kanowna Belle, improving the Mount Charlotte gold recovery by 3%. An excess Kundana material was milled at Carosue Dam instead of utilizing third-party toll milling in the region. At Carosue Dam, we had a strong quarter despite underground mining of lower-grade zones in the mining sequence. Capital upgrades to ventilation and pace capability were completed to meet the future mining schedule, and the million-dollar pit mining physicals increased with new equipment commissioned during the quarter. The mill upgrade to the nameplate 3.2 million tonnes per annum is performing exceptionally well and delivering a record quarterly throughput equivalent to 3.55 million tonnes per annum and 11% above its design. This will enable greater synergies for regional milling options for the Kalgoorlie operations. To Yandal now. Jundee operations maintains the development focus with improved underground mining physicals across development and stoping during the quarter. A record monthly development event was achieved in March with over 2,000 meters achieved, setting up future high-grade production areas in the mine to deliver a strong quarter 4. The underground remains a growing operation with 15 underground diamond drills active drilling within the underground operation. The next open-pit mining activity will be in the Julius Pit, which is planned to start in FY '22, and presently, the mill is drawing supplementary feed from the remain pit low-grade stockpiles to supplement the underground sourcing. The Thunderbox operations continued in investment phase with the D Zone pre-strip progressing well with efficient fleet management. The new underground development and associated infrastructure represents preproduction investment to establish multiple future ore sources. Quarter 4 will see continued capital investment similar to quarter 3, but once D Zone waste is removed, the open-pit ounce contribution increases and restores the all-in cost profile as well as the new underground leading commercial production to supplement the pit ore. During the quarter, production was impacted by an unplanned mill outage reducing quarterly throughput by 10%, which has since been rectified. Now to the U.S. operations. Our Pogo team continued to operate under a restricted environment, whilst COVID vaccines are presently being delivered throughout the state and operation. We maintained quarter-on-quarter mining physicals focused in 3 mining areas of Liese, Fun Zone and South Pogo. The lower mine grade impacted ounce production by about 10,000 ounces in the quarter and as a result of the deficit in development stocks from earlier in the year, which delivered a lower ounce production quarter. We expect a much stronger quarter 4 as forecast in the mining sequence. The 1.3 million tonne per annum mill upgrade will be commissioned in the September quarter, although production remains mine-constrained. Further efforts to address this are continuing with the March development advance of above 1,500 meters, a monthly record achieved. And we need to maintain that 1,500 meters a month to grow production towards the 1.3 million tonnes per annum. So today, I'm excited to report the consolidated company results and highlight the significant effort performed to integrate 2 great companies. Not only did we see a very strong quarter 4 to meet full year group guidance, I look forward to presenting the future value-creation plans during our July Strategy Day, and we continue to invest in our expanded tier 1 portfolio. I would now like to hand to Morgan to discuss the financials.
Thanks, Stu, and good morning to all. Firstly, I'll briefly touch on the ongoing acquisition accounting process. The accountants amongst you will know that we have up to 12 months to finalize the business combination accounting following the merger. Notwithstanding this, we are on track to have the provisional values included in our full year FY '21 accounts, incorporating the outlook from the independent valuation work currently being conducted. You'll see in appendix 2 in the quarterly, we've summarized some of the key aspects of this process. In layman's terms, approximately $5 billion of net assets is bought on to Northern Star's balance sheet from 12th of February, reflecting the Saracen business. This amount is spread over the various assets and liabilities of Saracen at fair value. This independent valuation and allocation process is ongoing, but it will involve a material uplift in the existing book value of the Saracen assets as well as a fair value uplift to Northern Star's preexisting share of the KCGM joint venture. Further to this, in relation to the combined company's income statement for FY '21, you can expect to see earnings, that is revenue and expenses from the Saracen assets, contributing to the consolidated Northern Star Group from the 12th of February; a noncash gain in relation to the required fair value remeasurement of Northern Star's share of KCGM joint venture; an increase in noncash depreciation, amortization and inventory charges from 12th of February, reflecting this fair value uplift in the associated assets. And the company will also be required to recognize the stamp duty charge associated with the transaction, which is currently estimated to be in the order of $230 million to $250 million. I do note, however, that the payment of this final stamp duty amount determined is not expected to be made until calendar '22. In a similar vein, the cash, bullion and investment movements for the quarter, as set out in the waterfall charts on Page 9, are not as straightforward as usual. Given the merger was completed partway through the March quarter, you will note that these charts have been prepared as though Saracen had been part of the Northern Star Group from 1 January, so as to illustrate the total cash, bullion and investment movements of the combined group over the full quarter. You can see a number of one-off items, including Saracen's cash and bullion balance at 12th of February, significant merger transaction costs, the payment of stamp fee by Saracen in relation to its Super Pit acquisition and dividends paid to all shareholders by both companies. The combined entity closed the quarter in a net cash position with cash and bullion of $696 million and corporate bank debt of $658 million. This cash balance is after an investment of $170 million in growth capital and exploration during the quarter. The market will be aware of the growth capital guidance that both companies have previously provided for FY '21. And at 31 March, on a year-to-date basis, we remain on track with this guidance. Lastly, in relation to hedging. As mentioned by Bill during the January quarterly call, our combined approach to hedging is risk-based, subject to the needs of the business, in particular, our growth capital investment profile. Further this, you can see that the hedge book at the end of March stood at 844,309 ounces at an improved average price of AUD 2,203 per ounce. This reflects a hedge book of approximately 15% to 20% of production over 3 years, well in line with Northern Star policy. I'll now pass you back to Harmony for the question-and-answer session.
[Operator Instructions] Your first question comes from Nick Herbert from Crédit Suisse.
A few questions from me, please. I might start with South Pogo. Just hoping if you could give a bit more detail there around the workforce and the vaccination program you touched on, Stuart. I'm just trying to get a sense of when you really get a free run at ramping up that mining rate. We can see that you're running around half of what that sort of 1.3 million-tonne capacity would be. So also would be helpful in that if you could give your thinking around sort of what that ramp-up and that bridge sort of looks like in terms of timing to get to that full rate.
Thanks, Nick. Yes. So we're running at about 80% of those volumes. So we're at 800,000 tonnes per annum of the 1 million tonne capacity at the moment. So obviously, we're expanding the mill to 1.3 million tonnes to meet that by FY '23 to deliver the 300,000 ounces per annum. So that's always been the underlying goal of the operation and what we see with the resources, the reserves, the fleet to keep us there. So that still absolutely remains the target. Look, give massive credit to the team and how they're coping and managing through the current constraints. We've had nearly 290 -- sorry, over 290 COVID cases at the operation that's absolutely impacted availability of people at the site. We have been rolling out vaccines from March. I think we've got nearly 60-odd done at site, which we're administering ourselves as well as throughout the states. And I appreciate we've got Alaskans Southern 48 states imports and expats from Australia there, all getting access to those in different levels of priority. So that's still going ahead and being rolled out. It's very difficult to predict when those changes are completely lifted. But what we're seeing is with the achievement of 1,500 meters in March, that just shows that we're capable of doing it. We just need to do that as an average to set up the development stocks to then feed into the production to meet the 1.3 million tonnes. So FY '22 will be a year of continuing to build the mine. The infrastructure, the people, the fleets are there to deliver that growth. It's really just about trying to mitigate and manage the current circumstances for the operation this year.
Okay. Great. And then EKJV, you've spoken to sort of needing to rightsize or sort of reduce sort of costs across those operations. Can you give a bit more detail on that in terms of targets and what that cost base aspiration is and time frame to get to that?
Yes. So there was some rehabilitation activity that was occurring to actually set a level. So you've got extra jumbos doing that ground support but basically reduce jumbo's loaders trucks on that regard in those rehabilitation areas. So it is just about reallocating that staff to operations that, ultimately, will return a greater margin for the business. So you'll see, post quarter, we've established 2 new portals in the Super Pit on the western wall. That team that came out of Kundana went across and got those portals established. They're the first portals in that gold mill for a couple of decades. So that's really setting up for diamond drill rigs heading in the west wall heading north, and there's a lot more plans to basically give us drill platforms to do that. So in total cost for the company, we're moving the labor around. It's part of the synergies of removing joint venture structures and bringing down the fences. The ability to move fleet and people to where it's going to give us the greatest return is how we're doing that. And that's also in light of potentially facing scarcity of labor coming forward in the next year or so. We're making sure that we're applying the labor in the best, highest-margin operation. So East Kundana joint venture and the Kundana belt, really just trying to work to get as much as we can with the resources we have there to reduce the unit costs.
Okay. And then just looking to the June quarter and be clear around there's no planned mill maintenance shuts across the group. Is that correct?
Look, it's not correct because we've got mill shuts at South Kal and at Carosue. But as far as it being material impact, it's all in the plan and the schedule. The only unplanned outage was Thunderbox in the quarter and mill made a value on that. So that's in quarter 3. So going forward, everything is in the plan. We're still obviously maintaining group guidance, which means we need a north of 400,000-ounce per quarter to get inside that band. And obviously, we see great forecast of performance across all the operations.
Okay. Great. I'll save the synergy questions for July, and look forward to that update.
Your next question comes from Sophie Spartalis from Bank of America.
Just a few from me today. Just firstly, on the hedging. Morgan, you touched on this. From my calculations and my forecast, you've gone to around 18% of total production out to 1/2 24. Pre the merger, Northern Star was sitting at 15%. Post the merger, you're sitting at 12%, so certainly at the lower band. And that was a figure that I recall that you were very proud of, reducing that hedging book. Can you just maybe talk through why you have added the hedges to get yourself back up to that 18%, withstanding that you are within the government guidelines?
Sophie, yes, sure. Obviously, it's still a bit of a work in progress. We need to sit down and go through our budgets and our strategy. But essentially, we bought the Saracen book in, which was, as you know, slightly higher on a percentage basis than the Northern Star book. So that's been a contributor to it. In addition to that, as Bill said, we're very cognizant of protecting our capital investments in the business. And we've also seen a softening of the gold price in the last few months as well. So all of that comes into play when we make these decisions. As you would have seen, the book, while slightly up in percentage, is also up in price as well. So we're comfortable with those levels.
And Sophie, just to add on to that, like Morgan said, we've got capital in KCGM with the 3 cutbacks we've got on there and, obviously, our Yandal growth as well, which we articulated is moving up to a 600,000-ounce-a-year operation. So it is protecting those capital investments that are multiyear go out the next 2 or 3 years. So hence, why we elevated that from 15% to 18%.
Okay. And then just the next question, just in terms of the guidance. Can you just -- so there's no confusion here, reiterate your guidance as of the implementation date that we should be looking at come the end of the FY '21 year from a production perspective at a group level?
Yes. So the consolidated businesses of both the range of sum of the parts of the premerger businesses is 1.54 million ounces to 1.7 million ounces for the full year of the combined businesses. And all-in sustaining costs around this combined and again spend that AUD 14 50 is the midpoint of that guidance range. But we've actually split it into Aussie and U.S. for Pogo. So not playing in the FX gains there, still -- Pogo, still USD 1,200 to USD 1,400 an ounce.
Okay. So just to be clear, that 1.54 million to 1.7 million, that's incorporating the Saracen production as at the 12th of Feb.
It's incorporating the full 12 months of both businesses and 100% of KCGM for the full 12 months. So it's not just from merger implementation date. It's the sum of the parts of both Saracen and Northern Star for the full financial year.
Okay. Are you willing to provide what it is on a -- because basically, for your financials as of the 12th of Feb, and so just to eradicate any confusion because you do have a much stronger second half than you did in the first half from a production perspective. Are you willing to provide what that production guidance is from the 12th of Feb as a combined entity, which is reflected in your revenue line?
Look, we've got it there in half, so I might have to loop back to you there. We've got it there in parts because we've kept the visibility by assets as they were reported by the separate businesses. So we're trying to give -- provide people the transparency of the assets' achievement against their original guidance. And what we're maintaining is that group performance of the combined business. It's in a relevant time frame to go from the 15th of Feb. It's more to look at the performance of an asset by asset. And I think the other message there, and we'll deliver this more color in July, is where the growth is coming from the assets is from the higher-margin assets. And so how we improve our cost base is largely due to that efficient growth of production. And so there will be some winners and losers in assets as far as resource reserve updates as well as production growth. But ultimately, our effort in energy is going through the lens of business first, is going to our higher-margin lines. Sophie, at a high level, you could -- you've got the Saracen numbers to December. And you've now got each site number for the March quarter. Saracen was a relatively consistent producer out of Thunderbox and CDO, Thunderbox softening a bit from Q1 into Q2. So you can do some allocation based on days on the March quarter to get a bit of a feel how the revenue will look from 12th Feb.
Yes. No, that's fine. Now just to eradicate any confusion in the market with the consensus numbers as we come into the full year, that's all. Okay. Next question. Just in terms of third-party tolling, you're obviously having to punch out a pretty big 4Q to meet production. You mentioned in the commentary that you didn't utilize any third-party tolling in the 3Q. Do you anticipate that you'll need to use that in the 4Q to meet your guidance? Or you've got sufficient capacity within now the expanded operations?
Yes. That's correct. So we're utilizing our own mills. We'll actually still be performing some toll milling of our joint venture partners or from EKJV. So we're still doing that. But now we've got capacity in our mills, and it's largely grade-driven in the mining sequences across the mines. So we've got good visibility there.
Okay. And then just a final question. Just in terms of the Pogo recovery in grade, you did say that you expected to get a much higher grade in the fourth quarter. Are you still comfortable that you'll meet the Pogo guidance?
Yes. Absolutely. And look, when I say grade, it was 7.3 for the quarter, obviously, since development ore contributed to that reduced -- below reserve grade performance. But the first 2 quarters were 9 grams. So what we're saying is mining at 8 -- above 8 is our reserve grade. Where we were stuck in the sequence was just due to areas of stopes online. So getting that meters in front is really -- the metric of success is the leading indicator is getting that development of 1,500 meters a month to open up multiple fronts. Ultimately, if we're not getting those meters, we're having to triage, and where we go, where we get squashed down into fewer areas and take the grade we have in front of us.
Okay. And then you mentioned that the mill expansion is September. So we'll see that increased throughput coming through pretty immediately?
Look, it will be done. And I think what I'm saying that is that the teams, it takes a lot of workforce on site in our camp, in restricted space to complete that work. So the relief will come to site when we can actually move those construction crews out, allows us to increase our production staff. So yes, we're carrying forward with that because it is a bottleneck to get to 300,000 ounces. So we want that work completed, remembering we commenced that at the start of last year. So it's -- that needs to be just done and completed and the teams moved off site. And then it's around us having free space in the camp to bring in production staff to keep the mining physicals to see that mill. So we will not be meeting 1.3 million tonnes per annum in the September quarter run rate. It's more to feed into FY '23. In FY '22, we'll be building out, growing from our current rate at 800 up to 1.3.
Your next question comes from Al Harvey from JPMorgan.
Just flicking over to Jundee. So you mentioned that Julius will be coming in from FY '22. I was just wondering if you could perhaps give us potentially what quarter that might come in and if you'll be keeping the mill full with stockpiles until that time and maybe an approximate grade of the stockpiles if you've got it handy.
Yes. So it's a pretty low strip ratio at Julius. So we'll commence it in quarter 1, but ore will come quarter 2 forward. It's better grade than the current stockpiles, so it will sort of displace some lower-grade stocks and just gradually build these better ounces across the full mine. But it's just important that we kind of give a lead. We're not sinking too much capital too early and building big stockpiles for the sake of it. It's more about balancing enough buffer of stockpile. The underground will run at about that 2 million tonnes per annum. And obviously, an extra 1 million tonnes will be coming from open pit sources. So as we see us depleting down the remaining stockpile, it's important we start the next pit and get that feed into the plan. And you'll start to see us just daisy chain those pits that continually supplement the underground over time, and Julius is the next ones off the cards. And then we could also utilize the fleet by moving around from pit to pit.
Sure. And a quick one on the Super Pit. So what drove the higher recoveries this quarter? And can we expect that to continue going forward?
Look, we enjoyed it. We're still getting to the basis of the ore zones and things. There was nothing material in the plant that structurally changed that. But from the final part of the shutdown, what we did do in the shutdown was modernize all the control systems. So we have a lot more visibility on all the settings, and we have some ability to put more autonomous changes rather than very manual reactions and responses to logging data. So there are things there that just managing reagents, managing all the inputs into the plant will ultimately get us a more stabilized, better recovery result. So it's a significant uplift from where we were. But the beauty is we get to see what it can do, and the idea is to maintain at that. And so that's -- yes, at this stage, it's great news, and it's a lot of gold coming in on that site's profile.
Your next question comes from [ Andrew Balla ] from Macquarie.
Actually, all my questions on Pogo are answered and we can save this question, so nothing from me.
Your next question comes from Kate McCutcheon from Citi.
Just at Kalgoorlie, so commentary before was that you were going to play a volume game around that 3 million, 3.2 million-tonne per annum rate. Is that still the plan, and are you still confident on meeting guidance at Kal?
Yes. So let's just go premerger, we were mill-constrained. So we were working hard to prioritize grade, and you're talking about volume, we were utilizing third-party mills. I guess the synergies that were identified mean that we look at the whole business now and say what -- where are the better sources to go. So one significant asset that's probably under-recognized is the low-grade stockpiles at KCGM. And ability to fast track or bring that through gives us significant cash flow at a very low sustaining cost on that stockpile. So we're just making sure at the group that we're utilizing the mills the best they can be, and it's not just about trying to fill Kanowna with Northern Star mine sites. You've seen movements of Mount Charlotte ore to Kanowna plants, Kundana ores to Carosue Dam plants in the quarter as trials. And we're just making sure we're getting the metrics back on all the benefit of that before we come with the forward plan. So to roughly answer that question, no, we do not see Kalgoorlie falling short. We -- and it's not a mill issue. We have ample milling capacity to meet that guidance.
Yes. Okay. So it's still comping in that 270 to 300 range?
Look, it's tight for the Kalgoorlie mine operations. There's plans there to demonstrate that it's there, but it is a difficult stretch to get the Kalgoorlie operations. And obviously, they are at our highest all-in sustaining cost operations. So yes, on a group, what we're maintaining is group company guidance. Individual assets like Kalgoorlie operations may be a challenge to achieve that on a full year basis, but it will be amply offset by the performance at other higher-margin, better assets.
Okay. Got it. And then just strategy-wise, is there anything that you're doing differently or changing from the premerger model, now you've got the Saracen team on board, that you kind of want to comment on? I know you've mentioned a few things, but interested in if there's anything you wanted to call out.
Yes. Kate, it's Raleigh here. I think a really good example is what you just touched on, bringing the walls down around Kalgoorlie. Stu talked about KCGM and being able to access that lower-grade stockpile that delivers, obviously, lower production profile but far better margins. So that's about a 65% increase on margins relative to the other stockpiles we're putting through the mill premerger. So that's a really good example of optimizing the portfolio. What was going to come out is a lot of information as we continue to work up all these synergies. And as I mentioned, there's probably a lot more that we're seeing early days relative to premerger and that's just with time, starting to pull each other's business apart in more detail. So you'll see a lot more of that. I think the other thing that you'll see coming through is really taking advantage of the complementary skill set that we spoke about a little bit premerger, but that's been a massive opportunity. So Northern Star coming in, a really good example, bringing in Northern Star mining services, particularly last quarter, into Mount Charlotte really see the benefits of that coming through moving forward and then also the Saracen open pit mindset around certain portfolios. And I won't give too much away, but some pretty exciting developments around some of the assets that we can see, which, again, we'll give you more detail in July.
Your next question comes from Mitch Ryan from Jefferies.
Really quick question here. You started to see some initial parcels from Mount Charlotte and Kundana created through Kanowna Bell and Carosue Dam. Just wondering if you could comment on sort of what improved recovery, is it all you saw, and what that was and whether that offset the cost of tracking.
Yes. Good. So look, the parcel we put through -- with the Mount Charlotte parcel we put through Kanowna, it's a free milling ore source. So we actually -- we put it through the free milling circuit of Kanowna, and we achieved an extra, a bit over 3% gold recovery. So that stuff that would have got lost through the refractory circuit, through the Fimiston plant. Now they're not massive volumes that Mount Charlotte contribution is, but it's absolutely not from going at the back end just because of the -- it's all going through a refractory plant. So that was pretty -- very promising. And look, the other ore keep going to Carosue Dam. Given that the ground size is favorable, we ended up getting better recoveries. It's hard to really put a hand on exactly what that was, 1% or so on that. But what we do say is given away toll margin for third parties, and obviously, even with the haulage and the lower unit cost on that impressive 3.5 million-tonne per annum upgrade. It's saving us cash on costs as well as giving us more gold in revenue. So they are things that are really promising for us. Yes, and we'll just keep getting some of those plans across the rest of the group to lock in what the FY '22 and strategy is going forward.
Your next question comes from Nick Evans from The Australian.
Yes. One for Stu and Raleigh, I think. Have you seen -- we saw both Rio and MinRes this week, although the last week talked about sort of labor shortages and cost inflation coming from it. Are you guys seeing that much in your business? And if so, where is it really killing you, guys?
Yes. Thanks, Nick. It's Stuart. So look, we are -- we're probably sitting close to 10% vacancy, which on a growing company is a challenge to meet that. So really, what we've been able to do is just prioritize where we put our resources. And it's no particular discipline across tech staff or blue collar. Probably where we're seeing -- we're not reliant on FIFO interstate or international necessarily. But because of the state, the demand then comes from us -- for those that are reliant on that, so potential poaching in that regard. And then look, we're trying to encourage people to relocate to Kalgoorlie and feed the growth of KCGM. So that is extra truck drivers and extra labor in the plant and growing all the projects, exploration, all of that activity so that we're not reliant on fly in, fly out to Kalgoorlie to support [ Kalgoorlie.] So they are real things. I think what happens next is either costs drive up due to that labor pressure or relaxation of borders and labors relocate. So it hasn't materially come through, but we are still expecting pressure in that regard.
And just to follow that up. I mean have you seen, I guess, an increase in staff? And turnover, can you just quantify what that is? And are you doing things like as I said a couple of other companies, contractors over the last week, talking about having to pay retention bonuses or recruitment bonuses to get new staff on?
Yes. So look, turnovers probably moved from low teens up to high teens, so not quite 20% turnover. But it's the difficulty replacing. So the turnover is not the issue. It's the availability of staff to fill those roles. But one thing we've always done and we will continue to do and increase is the investment in training, whether it's apprentices, graduates, entry-level operators. We keep doing that because, ultimately, that's the way to solve this upskill, reskill to add that to the pool as opposed to just competing and driving up costs and trying to steal other people's staff. So look, the other side of things is underground is currently at roughly 75%, 80% of our total revenue, and a lot of those staff, highly skilled staff are very sticky to our business and preference gold above other commodities in that space. So I think we're not getting attacked so much by some of the bulk commodities that drive to that labor, but I'm not saying it's not there.
[Operator Instructions] Your next question comes from Jason Mennell from Kalgoorlie Miner.
Congratulations on our solid quarter. I'm just expanding a little bit on Nick's question there. Stuart touched on the labor shortage earlier and again a moment ago. The skills crunch in Kalgoorlie and the wider gold fields is well known. It's a long-term problem. Is the labor shortage blunting production at all? I mean if you have another 500 staff come in and get on board, would you be able to churn out some more ounces?
Yes. So we've -- volumes -- total volume movements out of KCGM Super Pit, we've been up sort of 65 million tonnes. We lifted that from a bit over 30 million tonnes that we inherited, and we want to build that up to 90 million to 100 million tonnes per annum. And with that, you need a lot of people. We've invested in a new fleet, $250 million of new trucks over that investment. And so we are expecting and need extra people to drive that business growth. And we're working on all those creative things to attract and retain and bring people to the city. So they're all real things. There's no single way to solve it. But there's lots of -- as you would know, there's lots of other challenges with accommodation in Kalgoorlie. We need to overcome working on all of those things to feed the business. So yes, they're real, working on all of them, and we don't want to see FIFO dominate in the gold field. We want to see people relocate and see the longevity of that asset and the significance of KCGM in our business going forward.
But Stuart, it's a long-term problem. It's not new. Is there a temptation for Northern Star to perhaps start considering FIFO, particularly at operations like KCGM, and given we do have an accommodation squeeze in Kalgoorlie at the moment?
Look, not at all. You'll often rely on the small parcels of contract work where it's very stop-start-type activity. But what we want to demonstrate is the multi-decade operation gives people the confidence to up and relocate and establish themselves there because they've got that longevity. I think that comes down to people's personal decisions. As soon as we can demonstrate strong mine life, people start making longer-term decisions and their confidence is there. So I think that's what you're seeing the combined business is doing Kalgoorlie in the last sort of 18 months, is demonstrate that KCGM has a bright future. And people can start making their own personal decisions around that in longevity.
Do you think you hold an advantage over the bulk commodities like iron ore then?
It's clean. I like gold that come in dirty.
There are no further questions at this time. I'll now hand back to Mr. Beament for closing remarks.
Northern Star is a company in positive transition that requires us to meet our short-term guidance while, at the same time, unlocking the massive medium and longer-term potential of our outstanding assets and people and realizing the full benefits of our merger. It's an unquestionably an ambitious multipronged strategy, but its execution is going to plan. And the rewards for getting right are enormous for all employees, business partners and stakeholders and shareholders. It will make Northern Star a very rare, if not unique, company in the global gold industry, characterized by strong growth profile, outstanding free cash flow generation and an asset based in tier 1 locations. This is my last call, so thanks so much for supporting the company and myself over the past 14 years, and thanks for joining us today.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.