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Thank you for standing by, and welcome to the SBM Briefing on FY '21 Q1 September quarterly report conference call. [Operator Instructions] I would now like to hand the conference over to Mr. Craig Jetson, CEO. Please go ahead.
Thank you very much for that, Ben, and good morning, everybody. It's great to be here this morning to share our quarter 1 results and some of the great work that has gone on during the quarter and also talk through some of the headwinds that has created, in some areas of our business, a less optimal results, and we'll talk about some of that in detail as we go through the deck. With me on the call this morning, I have Garth Campbell-Cowan, our CFO; Mr. Rowan Cole, our Company Secretary; Val Madisen, our Executive General Manager of People; and David Cotterell, Manager, Investor Relations. I'd also like to take this opportunity and time to recognize the First Nation people where we operate. So that's clearly the First Nation people of Nova Scotia and in PNG and the Gwalia, Leonora region in Western Australia. Also, I'd like to acknowledge the employees and the business partners that support St Barbara in so many ways through our general business and needs. I'd also like to point out, on Slide 2, at this stage, our standard disclaimer, and we'd encourage everybody to take the opportunity to go through that at your leisure. So thank you very much for that. Well, turning to Slide 3 and to start to go through the deck in terms of the context and what I will go through during the content pages, is where we are with safety, and safety always and what that means for -- at St Barbara, and I'll go through these in some detail as we go through the deck. So also, we'll cover quarter 1 FY '21 performance and in particular, in some detail at Atlantic Gold, Gwalia and Simberi. I'll also briefly update everybody on our progress and -- on exploration and where that's, I guess, focusing and how some of that is changing. We'll also talk about our Building Brilliant initiative that we launched across the organization about 4 or 5 weeks ago now and that will continue through the remainder of FY '21 and beyond. And then I'll finish up by describing where to from here and what's next for St Barbara. So moving on to Slide 4, in particular. So, at St Barbara, we're guided by 5 commitments in our value for culture. These commitments were rolled out recently and is something I'm very proud of the organization adopting, and they certainly underpin all of our values in the way that we operate. And let me start with Safety Always. At time, zero harm is our target, and we're clearly striving to achieve that outcome in everything we do in all of our assets. In power, people and diverse teams, and we are an employer of choice and are committed to inclusion and diversity. I'm extremely proud of the way the organization operates in this particular space. We're doing exceptionally well. We certainly have an environment where our talent people are happy that thrive to feel safe and that can fulfill their potential. In the center of this is clearly our strong relationships and the work that we do within our communities. We certainly strive to help our communities thrive, grow and prosper in a meaningful way. We build relationships. We invest time and energy in local communities and certainly try to deliver and work very hard to create legacy programs in all the regions where we operate that exist and will exist beyond the life of mine. At the same time, respecting environment is clearly a commitment that we spend a lot of time, a lot of effort, and we're doing the right thing in this particular space wherever we possibly can. We're committed to caring about the environment. We think differently defined solutions and manage to neutralize our impact wherever we are because we care about the environment and the planet. I'm also pleased to announce that we have set our internal targets to become carbon neutral by 2050. And we have some very exciting programs and projects to address that carbon neutrality in the coming months and years going forward. At the end of our commitment trying, we're growing our sustainability, in terms of growing our business sustainably, makes sense, in particular, with strong governance practice, means that we can add value in everything that we do to our shareholders, for our shareholders, for our people in the community where we work. So if I can now turn to Page 5 in a little bit more detail on Safety Always and what that means. And as I said, zero harm is our goal, and that's certainly our target, and we're striving to achieve that. So let me briefly speak about safety and safety always. It's first of our 5 commitments. I'd have to say our safety performance has been very strong. We know we've got a long way to go in this space to achieve our safety goals. For now, our TRIFR is reasonable and certainly holding quite steady, and we're improving quarter-on-quarter in this space, and will continue to do so with focus on safety leadership and some other initiatives. Our lost time injury frequency rate in comparison to all our West Australian mining peers is very good and certainly below industry average. And that's something that we're very proud of at St Barbara, and we'll continue to maintain that range in safety and safety performance, including efforts around safety leadership. Moving now on to Slide 6, and working, in particular, through our COVID-19 pandemic and the, I guess, the issue that's created, not only for St Barbara, but globally, of course. It's pleasing to say, since joining St Barbara in February, we've developed our COVID-19 management plan, and it's working exceptionally well. St Barbara's priority during the COVID-19 pandemic is a health and well-being with our people, our partners and our suppliers and the communities of where we operate. Today, I'm happy to say there has been no COVID-19 cases detected at our sites. However, the risk remains, and diligence is maintained, and we'll continue to follow our management framework that's been so successful into the future. This will be long lasting in the way that we work. And it certainly will continue on for the foreseeable future, and it's been a very strong plan that's been adopted across the organization and has been very effective for us. And I thank everybody that's participated in that plan, not only in the development and the design of the framework, but also the management and the adherence by all people concerned. Well done so far. So look, I think now turning to Slide 7. I guess, let me begin to talk about some of the highlights, and to be clear, some of the disappointing areas of our business that have underperformed during the first quarter, and we'll talk a bit more detail on those areas, specifically as we go through the deck at each one of our operations. So our operational performance, in particular, has been well below where we'd like it to be. Certainly being down on ounces, which is clearly impacting our all-in sustaining costs in a negative way. We have launched Building Brilliance, which is an integrated company transformation program that will create value in everything we do. Production volume for the group at this point in time due to issues mainly at Gwalia, but we've still been able to maintain guidance going forward, and we'll talk about that later. In terms of the next 2 blocks on this particular page, I'll hand over to Garth to talk about the financial metrics and the capital management. Over to you, Garth.
Thanks, Craig. So if we look at the financial metrics, the contribution for the quarter at $27 million was well down on previous quarters and was impacted by lower gold sales. At the end of September, we had just under 15,000 ounces of gold on hand, which is related essentially to time and gold shipments at Gwalia and Atlantic. Our realized to average realized gold price in the quarter was $2,171 per ounce. We delivered just over 39,000 ounces in the quarter into hedge contracts. So at the end of September, we had just over 25,000 ounces of hedging that will all be delivered by the end of December. And then we've got a further just under 21,000 ounces to be delivered into contracts from Atlantic production, and that will all be delivered by the end of February next year. We finished the quarter with $93 million of cash at bank, and that was after repaying $200 million in Otis indicated facility in July -- at the end of July. We spent $61 million on the acquisition of MRRI. And in the quarter, we paid the final dividend from FY '20, which took $22 million of cash. At the end of the quarter, we finished with $105 million of debt, and that's $105 million of the $300 million facility that we have, and that debt is all related to the Canadian operations. I'll hand back to you, Craig.
Great. Thank you for that, Garth. So just briefly where we're situated from a growth perspective, in particular, the organic growth opportunity, our business is quite exciting. The Simberi sulfide feasibility study is on budget and on plan. And certainly, the FS is due to be completed in December. I will take that with the executive to the March Board for decision -- sorry, to the Board in March for potential investment decision. The environmental impact statement impact study and surveys continuing on. That will be completed by the end of March, which is on plan. And we're allowing up to 12 months for that EIS to be approved. So the company Building Brilliance program and initiative for organic growth opportunities is all about value creation. It will be published later in November of what the opportunities will look like. And things like optimal sequencing of the Atlantic Gold projects will be part of that, where the sulfide project will potentially fit into our business and what Gwalia would look like going forward under our Building Brilliance program. So turning to Slide 8, in particular. I think Garth, I'll hand back to you for this particular slide.
Thanks, Craig. There's probably not a lot to say here. It's a consolidated position for the quarter. As we've discussed, the production, particularly at Gwalia and also at Simberi, was lower this quarter, and that's what's essentially driven the higher unit all-in sustaining costs for the quarter, which I'll talk a bit -- in a bit further detail later in the presentation. But overall, that unit cost is all into the lower production level in the quarter. Perhaps now, Craig, turn you to the more detailed slides on each operation.
Thanks for that, Garth. look, let's turn to Slide 9 now around Atlantic. So Atlanta continues to deliver very strong results and solid results, certainly being very good in terms of cash to our business. It's been slightly down on grade in this quarter, and that's mainly because of sequencing the [indiscernible] and different mine plans that we've had that we weren't prepared to look at earlier in the year. But at the end of the day, the production has been down slightly, but not materially. It's going on exceptionally well. We're maintaining guidance of 100,000 to 115,000 ounces and still maintaining our guidance at all-in sustaining. So although a reasonably slow start to Atlantic, it's certainly a very strong operation. It's certainly considering the growth opportunities in that region. And I think the highlights of the quarter, in particular, was the solid result, good cash performance, great safety performance, but the consolidation of the Touquoy ownership obviously enables our operational efficiencies and the potential for our operation, including exploration upside, which I'll talk about in later slides. The Archibald Lake decision a few weeks ago now, not to be proclaimed at this point as a wilderness area, certainly allows us to continue on with the permitting process and working with all the regulators, the government and the First Nation people about water takeoff in that particular area. And work continues on optimizing the sequence of all the Atlantic projects, and I'll guide on that what that would look like through our Building Brilliance program and released sometime late November, early December. All in all, Atlantic Gold continues to operate very strongly. It will certainly -- has started this quarter exceptionally well. So we look forward to some continued strong safe results and some good cash performance out of that asset as we go forward. Turning now to Page 10. In particular, Gwalia, which is not such a happy story in terms of the headwinds that site's had in the first 3 months of this year, or particularly, all the way through quarter 1. So Gwalia, as a result, was nowhere near where we want it to be at the end of the quarter. This has been driven, first and foremost, by strategy to lower production in quarter 1, increased development and stabilize the mine, set the mining operation up for a life of mine strategy of optimization and better continuity and certainly strong cash positions. So with that downgrade, if you like, why we led the mining to a different era of development in particular. We've had 3 other significant headwinds. One, was a slight overrun in a mill shut that caused us a few delays, but in itself, not that material, but added to the others, it certainly adds up to an average quarter. I think the other significant one was the delay in decommissioning all the equipment underground that was associated to the vent raise, has taken some time. And clearly, the optimization of the ventilation has now commenced, and we're starting to see some good results, but it had been delayed through quarter 1. But the most significant business interruption was the [ fall of ] ground driven by a 1.7 [ ml ] seismic event. Now unfortunately, we did have ground failure in the Hoover decline. It was an area of the decline had been flagged for the next sequencing of ground control upgrade. Unfortunately, we haven't got there at the timing of this particular seismic event, and we had fall of ground as a result. We could have gotten going sooner than we did, but we elected from a safety perspective and good management practices to keep the mine down and rehabilitate that last section of the decline to say all the decline in these areas now have been rehabilitated to take the time to do that, considering we've mobilized all the equipment. It's the right decision strategically, although it's certainly hurt quarter 1 performance. And as you can see on every metric, when you don't produce at Gwalia, it significantly increases our all-in sustaining. Pleasingly, the grades held up and continues to hold up into this quarter, so that's a positive. And for now, knowing what we know with our production plan, what we have broken on the ground, what we need to move to the mill capacity, we're still maintaining our guidance. So although not a good quarter, we certainly have a strong opportunity to build through the second quarter and ramp the best up as we plan to do as well. So I look forward to a very strong second quarter. As we embark in rolling out Building Brilliance on the opportunities, which I'll talk about in the next few slides, that would also be a significant enabler for that site to unleash its full potential. So moving on to Slide 11, I'll pass back over to Garth. But I think clearly, the message in this particular slide is Gwalia's costs, being such a high fixed cost operation, certainly gets affected when we don't produce and particularly all-in sustaining. So Garth, with that, I'll hand over to you.
Yes. Thanks, Craig. So let's try to just give the actual dollar spend across the various quarters. And as Craig just mentioned, the high unit cost is due to that low production. In terms of our OpEx spend, that was in line with our plan, but that higher production then pushed that unit rate up. We did also spend in the September quarter a high level of mine capital development. So mine capital development in the quarter, included in that $59 million was $19 million. So overall, in the quarter, we had OpEx spend of $36 million CapEx at $20 million, and in the corporate allocations, in line with the all-in sustaining cost, calculation was $3 million. So it was really driven by the low production, but also high level of mine capital development in the quarter, which was planned as part of our first half focus on mined of [indiscernible]. I'll hand over to you, Craig, with that.
Thanks, Garth. So turning to Slide 12, and in particular, a little bit more detail about Simberi and the performance in quarter 1. I'd have to say great safety result, but also a solid result from an operation and production perspective. It's a little bit lower than where we wanted it to be, but we have had some headwinds around the liability. And particularly, the mill tonnes are down due to a SAG mill issue that was unplanned and a significant outage on that particular mill. Also, the last section of the Ropecon had sailed. And we had truck reliability issues. So without the Ropecon truck reliability issues certainly slowed the operation down to from where we'd like it to be. Now having said that, this quarter, we've already fixed and finished the rebuild of the last exit at road point, and there's been a significant effort going into reliability around mobile fleet in particular. So the countermeasures we'll put in place, we certainly should not see the reliability issues in the quarter, into quarter 2 and beyond. I think the production, as I said, is slightly down grade has held up to where we thought it would be. So it's good. And we continue to forward fall into FY '21 and maintain guidance on all things at Simberi. So I think with the sulfide project, with the steady operations at Simberi, the way the safety performance, the community, that's a very strong quarter and will continue on for the rest of this year. And just finishing up on Simberi on Slide 13. I'd just like to highlight a couple of very good and positive points on this page. And that, again, is a strong cash contribution from Simberi. I know there are some, I guess, challenges of working in PNG, particularly in the COVID, I guess, frame that we're currently enduring, but the fact of the matter is the site, with extended rosters, with the COVID plan that we have, good management with certainly delivered a strong production result, extremely strong cash results, and that will continue on. The exciting upside, as we talking about, is the sulfides and where that is heading. And as I've said previously, the FS is on budget, on plan to be presented to me during December, which we will take to the Board, hopefully, for the investment decision to be made in the March quarter of next year, and we look forward to a positive outcome on that project as we work with all government agencies, including super, the environmental regulator, the mining department through the mining minister and the local government and provinces and on the success of that project. So looking forward to positive results coming out of that at the end of this year. Moving on to Slide 14 and starting to head off the operations into, I guess, our exploration space of our business now. Starting off with the focus on exploration and where we are in Atlantic Gold, in particular, in Nova Scotia. As you can see, we have a very strong exploration program in Nova Scotia. The 3 main areas of focus, as you can see by the blue shaded areas on this map is the Moose River Corridor, the Northwest region and the Northeast -- sorry, Southwest region and the Northeast region. And we have projects in each of those areas of Nova Scotia. At the same time, we're still drilling around Touquoy and close to the mine and in pit of our Touquoy operation in search of opportunities to extend the life of the mine of Touquoy, and that program is going quite well. In total, we are spending somewhere around the $10 million to $12 million on exploration through Nova Scotia, which is quite an investment. Turning to Slide 15, and again, with a theme of exploration. We are looking at all opportunities close to near mill, close to the operation and in the region to be able to fill the mill. So we're spending around $8 million to $9 million in exploration. We've certainly been drilling in the Gwalia shallows. We're looking at near-mine exploration targets and drilling progressively there as well. And things are starting to deliver some results that we hope to be able to talk about later this year or early next year. Areas of focus, not only on exploration from the obvious, filling the mill of what we already know, but also including with Tower Hill fix and we're doing some feasibility work on Tower Hill as we speak now and be more on that more on that later. But first and foremost, from an operation perspective, we're certainly looking for opportunities in the nearby region to fill the mill. So moving on now to exploration, Simberi on Slide 16. And as I've mentioned before, and I did mention in quarter 4 of last year that we're starting to refocus our drilling programs in PNG. So we've cut back a lot of our drilling programs in the greater group of islands to be more focused on the Simberi arm itself, and more so, in the regions Simberi pits, historical pits, also clearly in the pits that we're operating around now around Sorowar and Pigibo, in particular. And the reason for that is twofold. One is we know there are oxides and potential oxide targets for extension of life of mine at Simberi, and we're certainly looking forward to finding out where they are in the pit sequencing. And secondly, to get more ore body knowledge about where the sulfides sits in the pit. And so we can start to deliver a really robust and good mine plan and a transition plan between oxides and sulfides, somewhere between FY '23 and FY '24. Those results will certainly be ongoing through the rest of this quarter and possibly into quarter 3 of this year, but we're optimistic about what the close to mine exploration program in PNG will deliver for us. So just moving away from the core work of the operations for a moment is, as I've mentioned a couple of times through this step already, in July, we launched a company-wide initiative called Building Brilliance. Building Brilliance is an integrated company transformation program where we'll create value in everything that we do, engaging for our people, engaging our communities and shareholders, and it certainly works exceptionally well with our people in our operations. This is the first step towards building a brilliant global mining company that grows sustainably and creates, I guess, future positive impacts and certainly a lot of value. Through Building Brilliance, we're identifying opportunities to lift performance by increasing productivity, reducing costs and ultimately, lifting the value that we deliver in every way. It encompasses all aspects of the operations and capital projects supported by an operating model that prioritize technical expertise and embed business improvement across the organization. This significant frontline engagement to rethink our core processes and capabilities is also a part this program. We are instilling a performance-led culture that continues to prioritize safety, people's well-being, stays true to our values and enable us to operate safely and sustainably. Our entire organization has been empowered to seek out opportunities to solve historical challenges and deliver improvement to achieve success going forward, in particular. On Slide 18, this program that we're calling Building Brilliance is our first step in our global strategy. As a growing gold company with a global outlook, we are focused on creating value in everything we do. Growing our operations and business sustainably is 1 of our 5 company commitments. Each of our 3 assets are transforming and transitioning through unique stages of their life, with Gwalia going deeper, with Simberi and PNG with the upsides and, of course, with the sequencing and the growth potential at Atlantic. Building Brilliance will certainly bring out the best in all of our operations organically and continue to take the organization ready for future growth. Our people will certainly be coached and we will deliver what we're calling an owner's mindset, solving all the challenges from the past, resolving the strengths to take our business to the next level. We're currently identifying and prioritizing a range of productivity improvements, and cost savings is something that we will update in a full strategy of what Building Brilliance will deliver in quarter 2. So what does that mean? So moving to Slide 19. These are areas that we are heavily focused on in the first 5 to 6 weeks of our Building Brilliance launch and our program is disciplined delivery. And certainly, execution discipline in everything that we do is a focus. Short-term enable control and continuous optimization is something that you would have seen the success of quarter 4 last year at Gwalia. That will be embedded in Gwalia as the way we do business and right across all of our operations at Simberi and Atlantic Gold as well. People leadership, high-performing leaders in every area and every space of our leadership program. Coaching development is at forefront, and certainly recruiting high-performance leaders into our business as that business changes. Asset productivity and utilization and maintaining equipment, and clearly, some of the things that have hurt us in quarter 1, in particular, is utilization of equipment, but more so the reliability area, and that certainly hurts the productivity. And we're focusing heavily on all aspects of productivity across our organization, not just in equipment. Technology and innovation is something that we're very active in and certainly doing a lot of work in all of our operations and upgrading current assets to accept recent technology. There's a lot of technology on the market that we can bring in that will help us safely operate our mines more reliably, more efficiently, more cost effectively and certainly with production uplifts. And continuous improvement, changing our focus clearly on a continuing improvement, embedded management operating systems. We will certainly embed through people leadership, short term into control and MOS system. And all in all, all of this strategy around Building Brilliance will unfold and unleash enormous organic growth in, and not just organic, but focusing on organic growth at this point in time.So what's next? Last, but not least, on Page 21. As I've said before, each of our 3 assets clearly have got unique growth opportunities. I'm very excited to see what those opportunities are starting to look like and start to be unleashed in terms of where the Building Brilliance in that bankable plan seems to be heading. Near future term at Gwalia, including regional exploration, very, very strong; delivering the sulfide project feasibility, as I've said before, at Simberi; and optimizing all of the Atlantic Gold projects really does set us up for success for the future. As I said, I'll be back out and talking about our Building Brilliance program in a lot more detail in late November, early December. So all in all, in summary, that's quarter 1 and a snapshot of what the future would bring. So Ben, if I can hand back over to yourself now.
[Operator Instructions] Your first question comes from Nick Herbert from Crédit Suisse.
A couple from me, please around Gwalia. Just interested in your latest thinking and learnings, if any, going through that sort of increased development around what mining rates could be achieved there. And then also, just to be clear around the timing of when some of that optimization work and mine plan update will be made available, whether that's due with that Building Brilliance update later this year?
Yes, Nick, look, thanks. It's a really good question. Look, I have to say that to wind the clock back and have another, I guess, era of looking to do things differently at Gwalia, we may have done that. Hindsights are always fantastic. But the fact of the matter is during the delivery of the projects over the last few years, we haven't really been able to come out with a mine set up for consistent delivery, safe delivery of the future, and that's something that we are changing our focus to at this point in time. I think if we haven't had the fall of ground, these things are all in the timing. And poorly for us, this quarter 1, and secondly, the timing of that large seismic event in the bottom of the decline or the decline in particular, was in the last area of rehabilitation. So it hurt us more than more than normal. But what I'd have to say, given some of the short term control and some of the work that we did back in quarter 4, how that's starting to play out now at Gwalia is very, very optimistic. So I'm looking forward to better results. The Building Brilliance program will come out with a different lens on what Gwalia will look like in terms of cost performance, in terms of ounce profile and where we are with things like Tower Hill, things like the Gwalia shallows and some of the more detail around the drilling results of new mine. So it will be integrated. The Building Brilliance program itself will be the integration of all those opportunities, and we will bring that forward in November and December to show where we're going at Gwalia. We've started this quarter quite well, and we'll continue on, on that strategy. I still refer back to lowering the production in quarter 1, increasing the development, decluttering the mine, taking costs out, optimizing the mine now, we're starting to get better ventilation is absolutely the short term, medium term and longer term life of mine, best strategy for that operation, and I'll talk a bit more about that at the end of December.
Okay. Great. Yes, I'll wait for that. I had a second question, just interested around what those new mine opportunities were around Gwalia and what most prospective were and timing for those, but it sounds like I'll probably have to wait for that coming update for details around those. So I'll leave it there.
Yes. Thanks, Nick. Look, I will say that we are doing some significant drilling at 600-, 700-meter mark in what we're calling Gwalia shallows. That looks like having some promising results, and I'll talk about that later. Drilling from the surface into the Gwalia shallows hasn't been as good. But we do have opportunities to understand what the life of province is with the low-grade to medium grade stockpiles we have on the surface, where do they fit into the life of mine strategy, where does Tower Hill fit, and what's the opportunity in Tower Hill, and we're revisiting that as we speak. And part of that will be the integrated plan later this year.
Your next question comes from Levi Spry from JPMorgan.
So I'm still a little bit confused as to doing ingredients at Gwalia. So exactly what will we see in late November, early December? Is it a new life of mine plan? Or it sounds like some of the drilling is only just starting now. So will it actually include ounces from Tower Hill and some of these shallow -- Gwalia Shallows and stuff like that?
Look, Levi, the answer is yes. I mean, we're currently working through what the Tower Hill potential is if the goal has been sitting there for a long time. So we certainly want to integrate that into a mine plan going forward. If it fits, we've got to do the work to understand where that is now. The drilling in the shallows hasn't just started. We're just getting some results back, and some, in particular, had been quite positive. But the Building Brilliance program at Gwalia, just from an operational perspective of the culture and the people side, but just from the operation perspective, will clearly lay out what our organic growth will be, where the life of mine strategy and what that looks like and the ounce profile, what the cash costs and the all-in sustaining costs will be as well. So it's clearly an integrated program for the most organic growth that we have available to us in that operation long term. One of the clear things for me is Gwalia has got so much opportunity to be decluttered, restructured and technically deliver month-on-month, quarter-on-quarter and beyond very significant cash results to the business, the bedrock of our cash performance, and certainly stable ounces year after year if we get the development right, if we get the mine plan right, and if we can execute to strategy, using short-term interval control, driving out all our wastes. So I'm quite excited about what Gwalia will deliver as it will happen in other operations as well, but Gwalia is clearly a focus at the moment because it potentially has been an underperforming asset for way too long, and we're going to turn that around.
Yes. Okay. So we should be able to model all that up as well in a couple of weeks. So just thinking through the processing of third-party ores, how does that fit in? What sort of [ volumes ] are these contracts for? How are you getting paid? How do we model that up?
Look, I'll let Garth talk about the financials because I think we're quite guided on some of those agreements, given that it's a third-party agreement, we don't want to disclose, I guess, the commercial terms we have with them. But from a St Barbara perspective, and Gwalia, in particular, we certainly have entered into more tolling agents this year. The reason is because, clearly, we have the capacity in the mill. Our processing, their processing efficiencies and recoveries and costs certainly put us in the money. It's not the best outcome. If we own the gold, it would be even a little bit better, but we don't. But we can buy it in, and we can buy production in and we can make significant cash for the business. But overall, lowers our cash and cash cost. So it's a good outcome. Longer term, I'm certainly looking and working with, I guess, with a lens of JV potential, growth potential in the region from some of the [ journeys ], whatever that looks like, including our own exploration program. So Garth, do you want to comment further on the tolling, but for me now, in summary, it makes us cash. While we've got the capacity, and we don't have the mill field ourselves, it's a good business outcome. So I'll just pass back to Garth for any further comments.
Yes. I think because you've got a fixed a fairly fixed component of the cost in the mill, if you can -- the more ore you can get into the mill, you spread the fixed cost across more tonnes. So in the tolling agreement we get, as part of the fee we charge, we get all of our variable costs of treating that ore plus an amount well above that to defray some of our own fixed costs. That's a good -- good outcome for us because we're -- we do make a reasonable margin over and above the variable cost for processing that ore. And that's all negotiated as part of the tolling agreement. But that's been our objective is to try and give as much additional ore to cover those periods where we don't have the mill full.
Yes. But just so -- I mean, how material is it? How will you report it? Is it in your production guidance?
No. So the -- we don't [indiscernible] the ounces. So it just comes as a credit to our processing costs.
Okay. And so this runs into FY '22 and beyond?
Well, at the moment, we've got agreements that cover this current financial year. And as we refine our mine plan, we'll look at further agreements. But there are other ore sources. As Craig mentioned, we prefer to own the ore ourselves. So as we don't want to lock ourselves into agreements that then prevent us from processing all that we might find through Tower Hill or any other opportunities.
Okay. And just sticking to Slide 20. So Atlantic, what can we expect? What are the deliverables there, I guess, in late November for us in terms of modeling?
Yes. So Levi, I think the November discussion and what it will unfold is the sequencing of all the projects. And because we have some optionality, and particularly now that we've successfully purchased a 40% that of MRRI gives us more optionality. So at the moment, we are doing a lot of work on sequencing the projects, working out how to extend the life at Touquoy and what the timing of bringing on 15 Australian Beaver Dam, all those sorts of options. So I think what we will see is an integrated plan of the sequencing of all the available options that we have and a recommendation that -- of what we will take to the market, I guess, in terms of sequence of all the projects, and the timing of that sequencing line online. And I guess, the broad aspirational targets and numbers that will set ourselves.
Yes. Okay. And just last one, just maybe a little bit more strategically, but so you listed investments in at least 3 or 4 little companies, you've got 15%. I imagine they were mostly acquired pre Atlantic. How do they fit into your pipeline? Or what's the update on strategically what you're trying to do there.
Yes. Look, I think they still remain solid. They still remain exactly in the portfolio for the reasons that they required on our buying at the levels that we did for now. Like all things, with the external view of what's happening in the world and where M&A potentially may or may not go and how we could grow in that space if the timing or the project or whatever came up, we would review all those options. But for now, strategically, they did quite well. But we are looking at this entire organic growth program and what's in the tank, first and foremost. Outside of that, I'm certainly keeping an eye with a very active business development team led by [ Merrell ] on what's happening and what our opportunities to grow once we get pretty much our license to grow, and that will be only a few months away, depending on what's available. So strategically, they still fit, but they fit into our M&A and our business development portfolio quite nicely still.
Your next question comes from Alexander Barkley from Morgan Stanley.
A couple of questions for me. First one, just a follow-up on the Gwalia optimization, particularly on filling the mill. It looks like a good opportunity there, but it's probably one that's been around for a while. Is there something that's changed to allow you to look at that now, maybe a higher gold prices has lifted the economics of neighboring deposits? Or is it positive exploration at those and what you've seen in the Gwalia shallows? Just is it on your thoughts on why this has now become such an upside opportunity?
Yes. Look, I think there's -- it's probably timing. Everybody has an opportunity when you come into these sorts of new roles. You've got a different lens, probably a different way of operating, look at things a bit differently. So that's number one. I've certainly got a different technical overview of how we need to run the business for success going forward to be able to extract maximum value out of all of our operations, and we haven't been doing that for a lot of reasons. And again, not for anything other than strategic and timing reasons, you're right, I think the gold price certainly brings some of the history back into play, and we need to reassess that and have a look at it. I think there's significant upside at Gwalia we had with the stockpiles that today, with the recovery of those being near the mine, Tower Hill that sits -- just rerunning all those models in today's climate, using a different deconstrained level of thinking of what we can do to fill that mill ourselves before we look at JVs or tolling agreements or acquisitions. But when I look at it on paper, I'm thinking opportunity, and I'm thinking is huge. Building Brilliance will bring that together sequentially to make sense of the value creation. So I just think it's a changing of St Barbara's technical view of how we're running the -- and we'll run the operations into the future.
Yes. Okay. That makes sense. And just a quick one on Simberi oxide and the life heading out to FY '24. Is part of that going to be maybe some transitional material? Should we be expecting a similar blend in recovery to what you've been getting right now?
Look, the FS will give me the more accurate numbers to talk about that in detail. But I think it's -- the transition material starts to come online, I believe, in around FY '24. I think we have enough oxides -- so we'll be processing oxides at a rate of about 1 million, 1.1 million tonnes in the first part of FY '24, then we'll go through the transition into the oxides of around 2 million tonnes in that year. So processing around 3 million tonnes. So say, 1 million of oxides, 2 million of sulfides in 2024. And that's the year that we're calling the transition year.
Yes. And so just the sulfide, hypothetically, if the project is not approved, just -- and you're just mining from current oxide pit shells, would you be expecting similar sort of recoveries going out to FY '24 and you would still have access to that ore out to that period?
The answer is, yes, optimistically. I'm validating that with the concentrated drilling effort that's going on at Simberi as we speak, as I alluded to in my presentation. One of the things that we are finding in early drilling is, as we're looking for firming up the oxide so more opportunity to design effectively the new pits going forward for sulfide, we're finding oxides on the way through. So selective mining for the future may even give us more upside in the oxide world than what we currently know today. And I believe by the end of this year, I certainly have a better view on whether we can select it mine, whether we're better off swapping over and backing ourselves into the sulfides, like we intended to in the time line that we've got. I still think it's a combination of both. Interestingly enough, we have been hitting some of our recoveries have dropped off a little bit this quarter because we're getting a lot of sulfide material come through. And they are always sulfide in the ore at Simberi coming out of those pits every day. It's just the amount. And I think our recoveries will stay about the same all the way through to the transition period. But the feasibility that will be tabled in December for me will give me more of a scientific view given the metallurgy will be completed and the CSR assessments will be done at that stage to give me a better window on what that would look like.
And there are no further questions at this time. And that does conclude our conference for today. Thank you for participating. You may now all disconnect. Thank you.