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Thank you for standing by, and welcome to the St Barbara FY '23 Q2 December Quarterly Report and Presentation. [Operator Instructions]. I would now like to hand the conference over to Mr. Dan Lougher, Managing Director and CEO. Please go ahead.
Good morning, everyone, and thank you for joining us for St Barbara's Q2 FY '23 quarterly report briefing. This is my first quarterly at St Barbara, and I'm pleased to join you on this call from Perth, landed of the Whadjuk or the Noongar people. With me today to help us are Lucas Welsh, our CFO, from Melbourne; and Andrew Strelein, our Chief Development Officer, also joining us to -- if there's any queries regarding the proposed merger and demerger.
We've got a deck preso on platform. I'll talk through the safety performance, the highlights of the quarterly. And then I'll dive into the actual assets and finish off with the conversation around the planned merger with Genesis and the demerger of the Simberi and Atlantic operations. I'll ask Lucas to talk us through the cash flow waterfall and any queries around that.
Moving on to the disclaimer. I will let you read that in your own time. And now on to the -- I would like to begin the meeting by recognizing the traditional owners, the First Nations people of the lands on which St Barbara operates in Australia, Canada and Papua New Guinea and pay my respects to the elders past, present and emerging.
So now we've got the safety slide. And look, we have safety as our #1 commitment as with any company and especially with mining companies with 2 open pit mines and Gwalia being an underground mine. So it is disappointing to see that the total recordable incident frequency rate is sort of flattening and going flat. And I would think that we will be doing a lot of work across the sites moving forward to reduce this. We have had some positive site initiatives.
And we have had an improvement on our recordable injuries from quarter-on-quarter from 11 in Q1 to just 1 in Q2. So there are improvements. And with the company, there are very strong initiatives which are being put through all of the sites, obviously, bearing in mind that we have a site in Nova Scotia and a site in Papua New Guinea. So there's a lot of effort and there's a lot of hard work, which I'm very happy to report on the ground at the various sites. We're now on Slide 5, the Q2 FY 23 highlights. Look, the second quarter was very challenging. We produced 61,000 ounces of gold at an all-in sustaining cost of $2666 an ounce, which obviously is tough. And -- but as I talked through the preso, you'll see that there are some green shoots and some improvements coming down through the operations. Once again, I guess, COVID-19 and whilst I don't want to belabor on that point because it's in everybody's backyard, not just ours, and we're trying to move forward and -- but it is still there. And over, specifically, the Christmas period, we did have quite a lot of absenteeism, and we did have some delays in getting into some of the, I guess, the largest stopes and the better grade stopes.
But I don't want to dwell on COVID. As I said, it's throughout the industry, and we are not alone in that. As I mentioned, when I started, that part of my portfolio would be to have a very good, deep look at Gwalia in Leonora and to review where we were heading and how things were being done at the site. And to that effect, we appointed a very experienced General Manager, Andrew Lindsay, who's even older than I am. So there's a lot of gray hair going around. But I'll talk a bit more about that a bit later on, but he's done some very strong, great work at the site.
On a very positive note, Simberi actually started to perform well and is actually, I think, produced cash first time in about 5 quarters. So we'll have a look at that. But on the downside, we had some wall failure issues related to Hurricane Fiona at Nova Scotia, Atlantic. I visited Atlantic Operations early January, January 3. And it just happens that they have the warmest winter start on record. So -- which was quite surprising for Welshman. It was colder in Wales than it was in Nova Scotia.
But we have got stockpiles, and I'll talk a bit about how things will progress going forward at Atlantic. We landed up with $38 million in the bank at the end of the quarter. And as I said earlier on, Lucas will talk us through that. I guess on a very important note on the 12th of December, we announced our deal with Genesis Minerals, which, if approved, will see the merger of our Leonora portfolio with Genesis and the demerger of Simberi and Atlantic to form Phoenician Metals, then we'll talk a bit about that.
The -- on one of the areas in the Leonora area and the feeds to the mill at Gwalia, we did look at the Zoroastrian mine coming online, and we've basically suspended that in light of an ore source that will come through the Genesis camp being Ulysses, but also there will be some more sources from other assets that they have. And I'll talk a bit about that. At Simberi, the strategy has been built off the back of the strategic review, which we completed during the quarter. Atlantic, we will pause Beaver Dam and focus on the permitting of Fifteen Mile Stream, and I'll talk a bit more about that later on.
And for now, I'll ask Lucas to take us through the cash flow Slide 6. Yes. Thank you Lucas.
Yes. Thanks, Dan. And I think as everyone can see from the slide here that our cash position dropped by $27 million over the quarter. And that was largely driven by the lower production and, I guess, the following a higher all-in sustaining cost, which impacted that in operating cash flow. But as I mentioned before, I do want to call out Simberi's performance over the quarter. This is the first quarter Simberi has been cash flow positive for about 5 quarters. Now Simberi has been able to ramp up production in recent times, and they did build up a sizable goldin-circuit inventory recently over the last few quarters. And they're able to draw down on this GIC balance during December, meaning that we were able to sell more gold ounces than it produced in the quarter, contributing to that very healthy cash flow. In relation to other movements, really, the timing of payments and receivables did result in a larger than average negative net working capital balance. And in relation to that working capital, with Atlantic starting to reach the end of its open-pit mining, we are seeing a corresponding reduction in payables there. So it's contributing to some of that cash outflow. But also just due to the timing of Christmas holidays and New Year holidays, we did best returns, tax returns that we ordinarily would have received in December. These were pushed out into January.
And we also for the ore purchase payments that we do in Leonora, we paid for a parcel in December, but they weren't processed until January. So just a bit of a mismatch between payments and receipts there for that particular parcel. I do note that in January, we did draw down an initial $20 million from our Australian dollar debt facility. And that was really just to make sure we maintain a strong working capital balance during this next short period.
Thanks, Dan. That was all I was going to highlight on this particular page. Back to you.
Thanks, Lucas. And look, if there's any questions on that later on, Lucas will be on the line to talk through a bit more detail. Now I'd like to go to Slide 7, where we'll get into the results a bit more. You can see on the graph there that the mined grade, went down 4.8 grams per tonne, which is obviously contributes to the cost. You can see the relationship there. That's not a secret. But, I guess, what did happen is that we did have a slippage in the, I guess, bringing on better grade and not just better grade stopes, but actually larger tonnage stopes in that quarter, which we are now putting on the deck right now, and we can have a chat about that if anybody wants to look at looking forward to 6 months. We did do -- we actually have improved development. So we're actually doing a lot more development than we had in previous quarters, which will not immediately give us the, I guess, the tonnes and the grade that we need for the mill. But it will set up the operation for future quarters. And you can debate as to how much you want to push the development, but it's fair to say that we've got a bit of catch-up to do to bring the mine back into an even, I guess, planning in terms of getting the required stopes and the development for future stopes. Because when you do development, you land up basically bringing in more diluted ore and that impacts the grid. So all in all, a very high all-in sustaining cost of $2,796 an ounce, and that's obviously not what we're here for. We did push some more tonnes through, so that was very good because obviously the mill is quite important, a very important asset actually to maintain our production through 24/7 basically for this quarter that we are dealing with now. So we did do a couple of mill shutdowns to realign the mill and do some crusher works as well. So that now is under our belt. It's not gone away because we do need to continue to do maintenance, planned maintenance on the mill to make sure that when we bring in these high tonnage stopes, which I'm glad to say that we have got 2 stopes on the deck as we speak. I know people will be thinking, well, thanks, Dan, that won't help last quarter, but it is certainly going to set us for this quarter and the fourth quarter. So I'm pretty happy about that. Now we talked about Zoroastrian. It's [ 130,000-odd ] down the road. We started off the decline. I -- when we went through the merger talks and agreed, we agreed to suspend that. It can be started up quite quickly. If there's an issue with the, let's say, the deal doesn't go through, we will then restart, but we'll also have an agreement that's in progress currently with Genesis to do some ore toll treatment from Ulysses and other areas -- or other assets, sorry, in the Leonora area. So that's something that's quite important for us. Now I'm talking -- going on to Slide 8. And there's a lot of initiatives. There's a lot of things that Andy and the guys are doing at site. One of the -- obviously, the topping points when I arrived in late November was, how we're doing with the contractor? I have to say that to this date, we were actually having now a very strong relationship with Macmahon's. Yet, there can always be improvements across the Board with maintenance of equipment when you've got a large fleet. We are optimizing the fleet.
So we've taken equipment out of the mine and to do that or to allow us to do that, we've had to make sure that the availability of the other equipment is there. Now it is improving. In fact, it's actually improving. As you can see on Slide 8, there's actually some very good improvement. But as with December, sometimes you have some knockbacks. It's not a secret in the market. I'm not the first person to comment on the tightness of good quality experience mining personnel but also as important maintenance personnel.
Now I guess we can complain about the market until cows come home, and I'm going to probably say something different. We've got a large workforce underground at Gwalia and we've spoken to Macmahon's we would like those guys who haven't got the experience to get trained at Gwalia and stay at Gwalia. Now as you know, the market is pretty open to transfers. But it appears that I think that if we follow down the path that we are discussing with Macmahon's that we'll actually be able to retain people at Gwalia. And in a meeting last week with the CEO and COO of Macmahon's, it appears that Gwalia is now looking like one of their best retention sites within Macmahon's.
Now the last thing I want is a training mine and then people moving ahead. However, people that can't move with the times and people that can't change with the rapid change in Gwalia, then obviously they will need to be moved on. But the bottom line is that we've now consolidated the mine, the upper mine, the middle mine and the lower mine with Macmahon's. So we will have a saving -- a fixed cost saving across the site with a change to a single contractor. And we will not be bringing any more equipment in. So that work, which is probably a lot of rehabilitation in the upper areas, which is very, very advanced. That will mean that the incumbent contractor Macmahon's will absorb that, and we will have a circa $1 million amount of cost saving out of those changes that we are doing. Obviously, equipment availability is a very strong talking point on a daily basis, and that still will be a strong talking point going forward. And -- but we are seeing improvements in that area. I mean, as you know, we've got 13 trucks underground. Every truck that comes up the mine needs to carry a full payload. So that's improving. So we're now getting 54, 55 tonnes on each truck. We've got hot seating on shift changing, which is adding benefits. We're getting people who are putting their hand up to stay over shift change and roster changes to actually get vent fixed up, et cetera. So the morale, the culture is actually improving quite a bit and other sites -- site guys, there's nothing different at Gwalia. Yes, we've got some seismicity and it's a little bit deeper than other mines in Australia. But it's still just a mature mine. And with good planning, good procedural approaches to the operation, doing the basics the right way. And as I said, we dropped to 55,000 tonne stope ahead of schedule the other day, and we've just dropped another stope yesterday, a week ahead of schedule, and we've got 2 large stopes to drop in February. So when you've got the dirt on the ground, I mean, the ounces are broken, you're not drilling and squeezing ground. They're not dirt flows and then it's a matter of getting that stuff up to the mill and getting that mill running 24/7. So the focus on short-term planning, good scheduling and having that rebuild by what I call senior engineers to make sure things and then getting the stuff down the mine happening on a 24-hour basis rather than thinking about what's going to happen in a month's time. Let's think about what we're going to do in the next 24 hours to ensure that we have things available or [ dirt ] available for the mill. The mill is getting a lot of attention and to bring back a lot of automation and repairing sort of the, I guess, the older assets in terms of crushing and the mill liners, et cetera. So that's work in progress. And I must say that Andy and the team at site, yes, they've got a big task ahead of them, but I am confident that we will see improvements in the second half, which will deliver more ounces. And to that point, I won't be changing guidance to that last guidance in October that we -- [ 145,000 ounces to 162,000 ounces] -- [ 65,000 ] ounces. The other thing we're doing at site is we are now reviewing the personnel across the board through the contractors and also through our own technical departments. And there has been some redundancies in that area, and there would be more going into this year as well to really bring into line, when you drop ounces, you've got to drop the costs. And Gwalia is a circa 70% fixed cost operation. Contractually, I think it's north of 80% fixed costs. And that -- all of that means that we've either got to produce dirt or we've got to slim down. So at the moment, we are pushing to get both happening so that the net result is a lower asset cost per ounce. So that's work in progress as well. I'm sure there'll be some Q&A on that, so I'll move on to Simberi. And as Lucas said, Simberi, which is Slide 9 -- Kasun? So we've seen better grades coming out of Simberi. And as Lucas mentioned, gold in circuit also has been pulled down, and we will be continuing to pulling that down through this March quarter. But we are expecting to see better grades going forward as well. We're doing a lot of grade control drilling and associated resource drilling around the pits. As I said, the strategic review was completed in December. We've managed to extend the oxide life through to FY '25 and with a bit of luck, we will be pushing and hopefully getting that through to FY '26 with the current drilling. So the -- we've confirmed also that the Sulphide project could add 10 years onto that as well.
Now obviously, we've deferred the Sulfide project, and we reminded additional oxide material. And we will be doing some, I guess, impairments of Simberi, and that will come through as with the Atlantic impairments on the half year results scheduled in February. At the end of the day, look, when we -- if we go through with the demerger and the merger, we will be creating a new company called Phoenician Metals. And the incoming CEO, Andrew, and his team will, I'm sure, have a closer look at how things need to go forward with the strategy at Simberi. But I'd just like to say at this moment in time, thank you very much for what was a good quarter and I'm hoping the March quarter will be of similar success for Simberi.
Turning to Atlantic operations now on Slide 10. Now, I guess, it is disappointing that Atlantic 10,000 ounces, but at a cost of $2,867 an ounce. We had a major impact by Hurricane Fiona, which hit us in September, caused some geotech issues in the north wall of the pit. That remediation required us to take out some low-grade stockpile materials to fill the mill, but also push the Touquoy pit into January and that pit will now be completed at the end of this month. But obviously, the cost of taking that through another month is coming out in that sustaining cost. We have reduced the mining personnel and the corporate personnel to match now, what we think will be the -- as I said, the end of the pit. And when I was up there on Jan 3 and 4, I was part of that redundancy across the engineering, the mining operators and the corporate head office in Halifax. So that's all happening. And I must say, thanks to all staff who worked with that. It's never a good time to make people redundant. Now what is the next exciting part of things at Atlantic is really now waiting for the Nova Scotia regulators to give us the permit to do the in-pit tailings so that we -- so we can move and lock in the 2-year stockpile processing sort of final part of that site. We did lodge it on the 9th of Jan. We're expecting it to be approved by the 10th of March. There is then another 60 days' worth of deliberations, but we are quite positive on a positive result there, but you never know until we actually have the paper in our hands. We'll have sufficient, basically, room then to complete the remaining stockpiles that we have at site, which, as I said, will take us through for the next 2 years. We did announce with the December that we would be shifting our focus from Beaver Dam to Fifteen Mile Stream and that is now in progress. We have -- we need to have more discussions and time with key stakeholders around Beaver Dam permitting. But we will -- I'm sure that we'll bring out some more information on that a bit later on in the quarter. Just as a bit of a technical, Fifteen Mile Stream has the biggest reserve and resource at Atlantic. And that actually will be the most profitable of our deposits in Nova Scotia. So we're looking forward to that study being recommenced and having that really coming into play down the line. But as I said that the deals of the strategy, I think, will be as part of the demerger conversation. And as I mentioned earlier on, we will be looking at some impairments or carrying value in our second half year results.
Slide 11, and I don't propose to go through this in great detail because you obviously have been privy to this back in December, and there's been a lot of conversation around. But, I guess, just to reiterate is that we will be -- if the merger and demerger approvals go through, then we will have a group that will basically -- well, fully focused on the Leonora assets under a new company name called Hoover House, which would be the combined Genesis and St Barbara assets. And the CEO and MD of that would be Raleigh Finlayson, and I will depart. But I will be on the board of Hoover House. At the same time, we will be demerging Simberi and Atlantic with a new company called Phoenician Metals, which we aim to list on the ASX. It will be 80% owned by existing St Barbara shareholders with the remaining 20% held by Hoover House as a cornerstone investor. And as I said, Andrew Strelein, who's currently on the line as well, which he is happy to take questions later on, who's our current Chief Development Officer, will be the new CEO and MD of Phoenician Metals.
Now there's a lot of work, paperwork, legal requirements, court approvals. And if all goes well, we'd expect that transaction to be executed in May 2023. So I mean, as I said, I don't really want to go into great detail on -- you can read Slide 13, which obviously was in that pack of December 12. And talking about why it makes so much sense to rationalize the mills in that area, I'm fully behind it. I think that there's significant gold in the ground, whether it be free milling or refractory. But over time, I would be assuming that all of those assets will come online through the time for St Barbara. It would require a significant capital injection, which currently we probably are not in a position to do. But, nevertheless, the assets of St Barbara are a key part of unlocking the Hoover House going forward strategy. So I look forward to seeing that as Raleigh has said that the 5-year strategy plan will be due around about sort of in the September quarter. So looking forward to that. As you can imagine, there's a lot of integration work required, and that's proceeding now post the Christmas break. And our lawyers and technical guys are busy with the independent experts to get all the assets DD done, et cetera. So a lot of activity, but I just want to reiterate that we, at St Barbara, still have a job to do to get Gwalia back to producing some really strong ounces in this half. And as well as making sure that we give the merger our best shot. So a lot of work on the table.
But just touching on Phoenician Metals on Page 14. This is a very good, I guess, entry for St Barbara shareholders. There's 6.2 million ounces in resource, 3.7 million ounces in reserves. So with our ASX-listed investments, circa $34 million -- so -- and bringing in St Barbara's royalty portfolio. So I'm actually quite excited that Andrew has got a good set of assets. Some of them obviously need to be developed. There will also be a very strong flexible balance sheet and again, circa $85 million cash and no debt.
So we have Hoover House as a cornerstone investor. I think that, that's a very good option for our St Barbara shareholders. So I'll stop there because I'm conscious of time, but I'm also conscious of my own voice. So I'm happy now to move on to Q&A. So operator, please?
[Operator Instructions] [Technical Difficulty] [Operator Instructions]. Your first question comes from David Radclyffe from Global Mining Research.
So my question, Dan, is I'm just trying to understand here at Gwalia, the difference from you putting your experience [indiscernible]
Sorry David. Yes. David, unfortunately, Dan, can't hear you with reason. David seems to having trouble at their end. [indiscernible].
[Operator Instructions] Sorry, guys. We've seemed to have lost the incoming. So Chris over in Melbourne is going to try and forward the questions to us. Yes. Okay. David, if you can --. hang on we are going to dial back in. David, I assume you're still on the line, just dialing back in.
[Operator Instructions]
Yes, look, the Q&A session was opened. Sorry, we missed about 5 minutes of Q&A. So let's start again.
Your first question comes from David Radclyffe.
Dan, I'll try again, sorry. I guess, what I'm just -- was -- my question was I was just trying to understand at Gwalia, the difference from sort of you putting your experience approach into effect here taking over the role leading the company. And that merger plan to sort of slow down or targets in the future. And there's probably quite a bit of overlap here, but just trying to understand how they kind of work. Also, you mentioned development catch-up, and that's been a factor at Gwalia for a long, long time. So it would be good to get your idea on how long that would take to be effective? And then looking forward, there's sort of been a lot of capital spent historically in the -- at the mine you've [ pipe ] projects, ventilation projects. So is the plan or the capacity of the mine going to be that 700,000 to 800,000 tonnes a year, but you've sort of got spring capacity back to that old target of 1 million tonnes? Or is that old target just -- and always was unrealistic.
Dave, how many questions was that ? A couple, right? Yes. Look, I mean -- yes, look, in a nutshell, the mining front at Gwalia is heavily influenced by geotechnical requirements. And because you've got more than one stoping front, you've got to avoid creating pillars. So we're getting to -- we get locked into a schedule that is predicated by not want to create seismicity. So when you blast a large stope, you are almost wanting the seismic sort of release to happen immediately after the blast. Sometimes it hangs in there for a bit like this month, we had one that followed the stope blast 4 days. Now to get yourself out of that, you've got to get flexibility into the overall stoping requirements. You can't go hand to mouth. Now that sequence has been in place for probably 18 months, okay? And what we now have to do is try and divorce the development, that means the decline, the access development and/or driving away from the sort of nonflexible -- unflexible stoping districts, for example., Now the districts have got peripheral stopes, which are smaller, more high grade and requiring a bit more engineering to get a maximum grade out of them. And then we've got the lovely large, like 55,000 tonne, 60,000 tonne stopes, which really is what you want a bit of both to give that mill because remember, the reserve grade is 5 grams a tonne, right? So that's the average grade across all of the stoping front. So when I say we need to get back to basics or is -- Andy is really what we're doing is he is making sure that every factor that drives to blast, whether you're squeezing ground, redrills, happens in the shift and that there's no knock-on effect because if you lose control of the short-term planning at Gwalia, you land up with a very significant issue down the line. You may not see it today. But development is key and now when you come to ore development, okay, that's fine, you're putting stuff in the middle. But when you go with development, you're actually then having the trucks, do you want to take waste out or do you want to take all out? Now when you blast a big stope, you really want to bog the -- I can't square on the line here, but you really want to bog that stope every day, 3,000 tonnes a day, you get that mill. That mill is a hungry mill. So what you want to do is get that tonne. So you do have to come to a point where you want to push waste development but it's still then when you're mining these big stopes, you really need to then say, look, I do need to bog a bit more ore than waste. So it's a balancing thing. And we're getting that right now, and I said I am really sort of in-cycle shock reading. The cycle times have been reduced by 4 hours. So we're getting those cuts a lot more frequent, but it just doesn't happen overnight. Now to reset, and I hate that word reset, to get that structural scheduling change, and we've just finished a huge grade control program, which won't influence us now, but it will influence the future production for the new team coming in with a lot more sort of robust resource numbers. Now that could take -- look, I haven't got the exact detail, but I would say circa 12 to 18 months. Now you got to start today because you've got to get that development ahead of you. So that's what is happening right now, and we are finding big stopes. So we've got that sort of fine line short-term planning requirements happening right now. And the team, Andy has got up there is working through that in great detail. Now obviously, you hit the nail with the merger, whilst the lawyers are beavering away in the background and costing us an arm and a leg. The requirements now coming into sort of March, April, we are not going to -- we'll be releasing new [ jock down this ] for resources and reserves. We are then naturally in the cycle of doing our new budget and obviously, Genesis are doing the same. Now rather than our engineers. So we won't be fighting, but we will start to talk about the merger process by that stage, in March that we need to model things almost a little bit in parallel, but not -- I don't want to do 3 separate their model, our model and then a combined model. So there will be a lot of information available by March, and we will be hoping -- I would be hoping that we will move into that merger. Although, as I said, we still have to deliver ounces and good cost to our shareholders. So that's not going to be -- I'm not going to lose that focus. Now on the futuristic view, as we all spoke in December, ideally, we will look at Gwalia's natural flow of ounces. We've talked about that's sort of around circa 130,000 ounces, but then we've got to look at the fixed costs and the mill costs that go with that. Now obviously, we are treating second fortune material right now on a campaign basis, which is quite small. We're expecting Ulysses to come in later this year.
So as part of -- going back to the last point, the part of this planning process, we have to make sure we don't drop the ball in any area on Genesis ore coming in from other areas, plus Ulysses towards the end of the year, but also any other ore that's available in that area to boost that mill, we're currently -- we should be doing 1.4 -- or we can do 1.4 million tonnes per annum. Now we've got to make sure the integrity of that infrastructure is in place, and that study is currently on foot. So I'm hoping that we'll get that. And fast forwarding, FY '24, I'd be saying that Gwalia probably will be in that 130-plus thousand ounces, but we do need to see how that Ulysses comes in and how the overall ounces flow out of that Leonora plant. Sorry, it's been a long answer, but I hope that made sense.
No, there was a lot of questions in there. Just maybe as a quick follow-up. Could you just talk to then the testing that's been done at the Gwalia mill to treat Ulysses or if that has happened or what still needs to be done there to reduce risk?
Yes. No, that has happened, and there's more happening right now. So we are getting more material through to do more bulk sampling. But obviously, during the DD, we did do work on that. And so I assume Genesis as well did work as well. So it is suited to the Ulysses ore as with Tower Hill suitable for the Dacian mill. So there's a lot of synergies there. I can't quote recovery tonnage throughput rates right now. But I am confident that [ Mets ] and the people in charge of the DD are all over it. But I do know from Andy, that we've got samples to just to enhance that information flow.
Your next question comes from William[ Sadler ] from [indiscernible]
Look, just a couple of questions on Leonora. Firstly, are you able to provide any color in terms of achieving the low end of FY '23 production guidance at Gwalia, and whether that's contingent on realizing any material uplift in development rates over the next couple of quarters and what that uplift might look like?
Yes. So just kind of, are you talking about getting guidance for FY '23? Was...
Yes, correct. Yes. So...
Yes. Yes. So look, I mean, there's a terminology which I said to everybody I won't use because I hate it when guys tell me chocolates for tomorrow. But the bottom line is that you can see where -- you can see where we're at right now. And if you doubled it, say, well, you're not going [indiscernible] point is that the second half is much stronger [indiscernible] all within our production schedule [indiscernible] for the end itself to, as I said, 55,000, 60,000 tonne stope. That's one. There'll be another -- quite another smaller one at better grade, and we've got another 2 firings coming in early February. So now in December, I don't even -- I can't even remember if we if fired a big stope or not, I don't think we did. So site -- mine site level, it's going to happen, and that's why I'm not changing guidance, okay? The development rates as we push them, obviously, are critical for the next phase of Gwalia, which is FY '24, FY '25. So we have to do that work the capital decline development for sustaining CapEx. And obviously, the vent CapEx is critical. Yes, we won't be building a paste-fill plant down a mine in [ Gwalia ], but we'll do the required sustaining CapEx on a vent decline, et cetera, to make sure the mine brings the best -- like Engineering 101, you can't go down into a mine at 1,800 meters with no ventilation.
I mean -- so we did a catch up there. We did a huge amount of waste removal from the mine stockpile to allow us to be able to use that stockpiling for ore stockpiling while we reschedule the trucking. So there's a lot of improvements in that area as well. But as I said earlier on, you have to do development. But when you're blasting big stopes and you want to free bog them, you need the big boggers that's got the big buckets to do that free bogging because they don't have tele-remotes. And then when you go to remote, your production drops on a tonne per day basis, and you still have to move the waste. So that is short-term cyclic planning, and that's now improving. You can't believe it, maybe don't believe me, but I can tell you, I can see the difference, the culture, the morale at site, as they're getting wins, they are feeling much better about the work that they do, and that's a great positive for sight.
Okay, no problem there. And just a quick follow-up...
Does that answer the question?
Yes. [Technical Difficulty]
May be we haven't paid the bills? We paid the bill, and we're back on.
Excellent, excellent. Yes. Look, just a quick follow-up. I guess, just trying to reconcile, I guess, during the quarter, you noted absenteeism issues at Gwalia, particularly affecting the development crews. But simultaneously, I guess some contracting out the development operators that were previously developing Zoroastrian to work on Ulysses, could you just talk through the decision process there and whether you've been able to kind of leverage from [indiscernible] that to Gwalia with those crew operators?
Yes. Look, we had a start-up development team down at Zoroastrian. We've taken the decline down 25 meters. If we hadn't commenced the merger talks, we would have continued with that. And as you know, that saved us at $20-odd million for the financial year. We would have -- we probably would have forged ahead with that. I don't really like stopping operations, but it was a stage where we needed ventilation fans, et cetera. Now the only deployment we've done there is the underground managers gone up are working on with Genesis at the Ulysses to push that cutback and then the decline start-up. It was Macmahon's. That crew basically came out [indiscernible]. We -- as I said, we've actually optimized the jumbos, long-haul rigs at Gwalia. So we actually don't need anymore. We are happy to actually start giving more away. With the [indiscernible] contract coming to the end of this month, with Macmahon's picking up that work, there'll be Macmahon's jumbo, which is already at site, obviously, going in to pick up that work.
As I said, there won't be additional workforce. What we have done, though, we realized is that when you do a lot of development or increase development rates, you need service crews. Now the poor service crews are the guys that we fired make redundant the first thing, we have a downturn. But when you're trying to ramp things up? So we're actually putting on a second service crew to obviously make sure the vent stuff and all the stuff that's happening down the mine, the pipes are in, water is down the mine. So that's actually an add-on to -- but we are stripping out other costs. And other sort of parts of the contract. Look, maintenance is a revolving door at the moment. And as I said, we're not alone. COVID is partially. We've got [ 16-odd ] people coming in from over East, which in itself is a burden on rosters and [indiscernible]. But the bottom line is that the relationship with the incumbent contractor is now improving by the day. And I don't like conflict, but I do like to get good returns on when I'm spending a dollar. So, so far, things are working according to plan. The availability of equipment is improving, but look, can I say it's steady state? No, it's not. We will need to keep on -- and look, I won't keep it a secret. But we have got some spare capacity in terms of our own people, and we are helping and putting in processes in place to help making sure the equipment is available for the short-term plans.
And that's not hands doing fitting stuff, that's planning, making sure that the gear is lined up for the tasks ahead on a 24-hour basis. So we've really gone back to the fundamentals of short-term planning to make sure that, that happens, it doesn't help having a 3-month forecast, if you can't deliver the 24-hour plan. So that's where -- that's where the emphasis with Andy is doing right now.
Your next question comes from Matt Greene from Credit Suisse.
Hope you can hear me -- but a couple of questions just in relation to the merger. I'll put them both into one just in the interest of time. So just in terms of the cash burn or net cash balance. That's, I guess, is required to maintain. Is there a number? And what is that? And if you do breach that, do you renegotiate the deal? Or do you have to find additional funds? And then the second part of my question is, there's a lot of commentary in your presentation and the slides about the risks of the deal. And, I guess, what happens if this deal doesn't go ahead. So -- from your perspective, what do you see as the key risk from here of this -- of the proposed merger not going ahead?
I don't think there's any key risk in terms of operational -- in terms of doing the hard yards with the paperwork because we've got to demerge on foot as well, there's a bit more paperwork to be done. We've got to get the independent experts across Simberi, Atlantic, which has happened or is happening -- one, Simberi is done, Atlantic is today and Leonora is tomorrow. So that's happening. We've got the court dates. So that's not an issue because when we did the IGO deal, like, I had to wait for the [indiscernible] to give me a date, which was -- she was on holiday. So that was a bit of a problem. So I'm not seeing any major on an asset level, other than there's a lot of work. So I'm not promoting, and I don't quite get that there's a lot of negativity in the -- is it risks. But there is obviously a risk to the scheme, it's so long in formulating that is always something. But going back to the net debt. Yes, look, there's a number. We don't -- it's on a group level. We don't think we'll trigger it. So it's not really, obviously, something that is on -- our main driver at the moment will be to make sure that we get the ounces out of Gwalia and not -- and Simberi produces more cash going forward. As we said, Atlantic is touch and go on an even basis. We need that in-pit permit. So I'm not seeing any real risk to the actual deal. So I don't know where that's come out. But there's just a lot of legal beagle stuff because of the demerger and the merger. But look, the net debt trigger. I'm not overly concerned about that.
I think, Dan -- it's Andrew here, just to mention, I think some of the concern you might be referring to is we had a number of questions about the -- just the rationale for switching off Zoroastrian at this point in time. And so some of that commentary is just to reassure that we've made a sensible decision there in terms of -- with the larger ore bodies likely to come online because of the merger. We've chosen that pathway to put appropriate protections in place. So it was just to explain that given that we got off to a great start at Zoroastrian, what was the rationale for suspending that. So maybe that's what you've read into it, but that's more just reassurance on the sense of the decision there.
Yes, okay, thanks Andrew.
And yes, so Dan, what is that net debt trigger, please?
It's the -- it's CP on the schedule, I think it's $40 million.
You have to have a $30 million net debt...
The differential, it's not a number, it's a differential number.
Okay. So you had $47 million net cash when this deal was announced as of end of November. So you have an allowance to potentially burn $30 million by May. Is that how I should be interpreting that?
Yes. Lucas, do you want to jump in here?
Yes. Thanks, Dan. It's based on a forecast number, which obviously hasn't -- we're working towards. But, yes, just within a range of what we expect to be around about the time gets done. So as Dan said, we should be able to comfortably make that.
Okay. All right. And sorry, if I could just add one more. Dan, you mentioned on the getting stakeholders involved on the Beaver Dam permitting. Can you just elaborate as to what that means? I mean could we see that permit actually come through? .
I'll pass that on to Andrew, who is a lot more closer than I am. The -- from my perspective is that there are some regulators. We've got some on board and some First Nations, which need a lot more time. What we don't want to do is miss opportunities in other projects, which we are a lot more, I guess, comfortable with the local stakeholders to get that operation up and running. So that's the changeover. But Andrew, do you want to comment on the stakeholders at Beaver Dam?
Yes. I think if I understood the essence of the question was, do we think that Beaver Dam Permit could come through? And I think the sort of answer is definitely, yes. But those engagements are going to require more time. So there's still concerns that we are discussing in terms of the pathway forward there. And, I think, the key why we wanted to flesh that out in December was that we had been putting in every effort to try and get Beaver Dam in so as the first ore would arrive around or before or at the time of the stockpiles completing by the end of 2024. But with the prolonged discussions that is no longer -- we can see that's no longer possible. So we've taken the pressure off those -- the formal permitting process and giving ourselves more time to engage with the First Nations groups, in particular, but also Department of Fisheries and related to stakeholders. So -- but I still think that the intention there and the expectation is that we'll get that permit through eventually.
But obviously, we need to make sure that it's to the key stakeholders satisfaction. But again, the issue with Beaver Dam was still the next one that we could get in fastest. But Fifteen Mile Stream is really the biggest story in Atlantic in terms of larger ore overall ore reserve and resource position and future cash contribution.
There are no further questions at this time. I'll now hand back to Mr. Lougher For closing remarks.
Thanks, everyone. Sorry about the technical. I've got a lot of people around me now telling me to how to work it, but sorry about that. Look, I mean, in a summary, it was a difficult quarter, but I am encouraged that -- there are things that I'm seeing that are going to make the second half a better half. We have seen and I've made it very clear to everybody, all our contractors that we are not here to fight. We are here to actually deliver to our shareholders. And nobody wins if one is not making any money. So that's the message, and I think it's getting through.
Obviously, we are looking forward to that in-pit tailings approval and getting now work ramped up on Fifteen Mile Stream. And look, I am very keen to get the St Barbara and Genesis merger happening. I think it's a good outcome. And when you fast forward a bit, the Leonora District will be a very big producer of gold in West Australia. So I'm looking forward to that. And look, there'll be plenty more time to have a conversation. But everything is on track, and we don't have any issues that I'm aware of right now that would hinder that progress. And St Barbara shareholders will get that dedicated vehicle from Phoenician Metals. So I think that's also got a very exciting future ahead of it as well. So thanks for listening to me for such a long time, and happy to take any other questions offline from Chris and Kasun. Thank you, everybody, and I just want to thank all the sites for hard work -- all the hard work they've put through. Sometimes it's difficult, and we just got to push through. So thank you very much.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.