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Thank you for standing by, and welcome to the St Barbara Briefing on FY '19 Q3 Market Quarterly Report. [Operator Instructions]I would now like to hand the conference over to Mr. Bob Vassie, CEO. Please go ahead.
Yes, thank you, and good morning, everyone. Thanks for joining us for the quarterly report briefing. If you hear seagulls in the background, it's because I'm on holiday at the moment in the Sunshine Coast but pleased to be on the call today. Also on the call back in our Melbourne office is Garth and Rowan and David Cotterell, our Manager of Investor Relations.The company has delivered another good quarter. Gwalia had a similar quarter to the last quarter as ore production continued to be impacted by the Gwalia Extension Project which, of course, is setting us up for the future, more about that later. Simberi achieved yet another strong quarter, and this has led to an increase in the guidance for Simberi that we announced a couple of weeks ago on the GMX call.We have a number of exploration programs underway, both at Gwalia and Simberi but also regionally around Gwalia and Back Creek in New South Wales and Pinjin in WA. And I'll just be going through the slides this morning and leave time for questions at the end.Just getting to the highlights slide on Slide 4. A total of 88,000 ounces at an all-in sustaining of AUD 1,098, which, as you can see, is very similar to last quarter, very, very close. Both operations performed well during the quarter, with Simberi setting new records for grade and recovery. In fact, Simberi has set new records in both these areas for the last 3 consecutive quarters, good achievement. The last 4 quarters actually totaled 141,000 ounces for a rolling year, so that's a fantastic result for that operation. We continued to record significant exploration results at Gwalia and Simberi. I'll cover that a bit later.Operational cash contribution was AUD 71 million or $800 an ounce. And the cash balance at the end of March was up to $382 million, up $25 million from last quarter. We also paid a $0.04 fully franked interim dividend on the 27th of March.Just on safety. Obviously, the trend in our total recordable injury frequency rate is not what I would like. Again, it's a number of low severity, largely hand injuries, underground manual handling type of injuries, and we are focusing on a new program on what we call line of fire incidents and where people put their hands. It's annoying. But we didn't have any injuries at Gwalia in March and so far in April, so we're putting a lot of effort behind it. And Simberi has had a -- continues to have an excellent safety record.Consolidated production on Slide 6. That's the overall production consolidated. Overall, the quarter was as expected.Moving to Slide 7, Gwalia production. As forecast, Gwalia had a similar quarter to Q2 due to the impact of the Gwalia Extension Project. Ore mined was lower compared to the previous quarter, with ventilation requirements for raiseboring and development in installing PAF equipment on 2 mining levels competing for production activities as well as the waste generated, especially from raiseboring competing for trucking capacity. Guidance for FY '19 was revised during the quarter to between 235,000 and 240,000 ounces and all-in sustaining cost to range between AUD 980 and AUD 1,000 all-in sustaining.Simberi production cost profile on Slide 8. It's, as we mentioned, fourth consecutive quarter above 34,000 ounces driven by higher grade zones at the base of Sorowar and Pigibo pits as we near the base of those. Recoveries, which were a factor of the higher grades, were a new record at 90%. All-in sustaining costs were higher in the quarter impacted by the weaker Australian dollar and costs from 2 of the scheduled maintenance projects. The first at the start of the quarter was the 100-hour shut to realign the SAG mill and various other works, including a full workover of the deep-sea tailings pipeline.And the second, I was up there 3-or-so weeks ago, looking at the replacing of the Main Lode bearing support ropes of the Ropecon, quite a significant job. And it -- so I'm pleased that's gone through well, and Ropecon is back in action as planned. We didn't run out of any ore. We had a good stockpile at the base of Ropecon. In addition, we had higher sustaining CapEx due to the fleet replacement, and some of that will come into next quarter. We have just -- I think we've brought in 5 secondhand trucks from the U.K., so that continues the trend of getting sourcing quite cheap, lower our secondhand articulated trucks this time from the old trucks and into our existing build fleet. As a result of a strong quarter, we recently lifted production guidance to between 130,000 and 135,000 ounces, and all-in sustaining costs were reduced to between AUD 1,245 and AUD 1,300 per ounce.The Slides 9 and 10 cover our increasing cash balance and cash generation and how we use that money. You can see the net cash movements and cash balance. The cash position at end of the quarter was $382 million, and this was after $14 million interim dividend payment, $4 million in income tax, $19 million of growth CapEx which, when combined, is $37 million.Moving on to the Gwalia Extension Project update, which is nearing completion with approximately $18 million spent so far. The high-voltage power cable hole for the PAF component was completed in March, and lowering of the cable is scheduled next month. We call that the Australia's longest toll not in terms of meters but in terms of time, it took a long time to get that hole exactly where we wanted it and get it cased and cemented so we can lower the cable. I'm pleased that's happening next month, and it's the same crew that lowered the cable to 1380, 3 or 4 years ago.Mechanical work on the crushing circuit on the 1420 level. PAF chamber is complete, and electrical work is nearing completion. Development on 1460 level is complete with civil works well advanced and mechanical installation also well progressed. Dry commissioning of sections of the PAF circuit will commence next month on 1420, with commissioning and operations continuing into financial year '20.During the quarter, we completed the second surface shaft and first underground shaft. So we've done both surface shafts, one underground shaft, with only one underground shaft remaining. And that's expected to commence early in the financial year as we are developing a drive at about 1,000 meters out to the meeting point. This will enable the shafts and surface ventilation of the structure to be commissioned from Q2 December.I'm really pleased with the progress of the ventilation part of the project that's launched here of the project. It's on the earlier stage of what we guided of 2.5 to 3 years. So it's on the earlier side of that. And the costs there were really good. But the difficulties we've had and the delays we've experienced with PAF have caused us a detailed reestimation of that project. And we now -- with the PAF cost increasing, we now forecast the total GEP project, including ventilation and PAF, at $112 million. Given the remainder of the work that is contracted, we got everything there for PAF and we're building it, so we're contracted with the last raisebore and contracted with the construction. We're pretty confident of that cost.Now some of the costs is due to scope changes to improve the maintainability and operability of the PAF system, but we still expected that to come in on budget really -- well, it's really in the last couple of weeks we have had to have the lion's share of it, $12 million extra, has come from renegotiation with our underground construction provider that's installing the PAF on both levels to warrant the completion of the system.Moving on, Gwalia total material moved. I put the slide in on Slide 12 because I don't think I've probably explained it as well as I could in recent presentations. It really shows the major impact of the Gwalia Extension Project on trucking capacity. Now we know we're ventilation limited and will be till December, and that's meaning we can have -- we have to make choices of whether to swing ventilation to the tunnel that's going out to the ventilation meeting point or ore production or paste filling or other development ends or even into the PAF construction.So ventilation depends what we're hinging on. But you can see from this slide, the total tonnage over the last year that we've moved is 1 million tonnes. And that's interesting because with -- that includes 367 tonnes of waste and 669 of ore, and we've split that by development waste and raisebore waste. So you can see the significant impact doing double raiseboring, for example, has had on the mine. And as soon as PAF gets commissioned, and we're starting that commissioning process next month, and when we get into operations at -- that takes away that problem. And also then we've only got one of the shorter raisebores left to go. So all that trucking capacity will have a really great effect and, of course, we'll have the ventilation coming in there at that time in December as well.Now that moves us on to Gwalia Mass Extraction project, Slide 13. We announced the results of GMX feasibility study on the 22nd of March. And as I mentioned on that call, the preferred option was to continue trucking. And we had targeted a rate of 1.1 million tonnes per annum, which is not dissimilar to what we're trucking now if you include the waste.I will not repeat all the detail we had on the very recent call, but I did want to mention some elements of how we are looking to enhance our trucking solution given that we've chosen that as a way forward. We did announce on the 22nd a future indicative production profile, Slide 14, so I'll just talk to that a bit. We've put it out for 3 years. Production for FY '20 remains ventilation constrained for the first half. And in the second half, we have a backlog of development to do because we haven't had the ventilation. And once that ventilation is available, it will allow us to set up that development for GMX. So the first half is ventilation limited, the second half is development limited.The profile beyond that, we've put out as a flat 230,000 ounce per annum, and that's the main area we're working on. This production rate is based on ore mining rate that is ramping up to the targeted 1.1 million tonnes per annum but only achieves that rate in the following year, financial year 2022. So that's an opportunity. The opportunity to improve this production profile centers largely on the underground development rates, which we talked about in the last call of that -- given the ore body geometry, it requires a hole at higher development meters per ounce.A project team has been formed and have about 8 months to sort of get their act together to be development -- rapid development ready. And so it's a team focused on everything we have to do so that when the ventilation comes in December, we can hit it hard. And so we've got readiness to do, and we've got 8 months to do it. So we have a dedicated team, and that includes our underground mining contract at Byrnecut. And the benefit of that is that next door, in the region, Byrnecut is achieving a lot higher rates than we're achieving at the moment given that we're not doing continuous development, we're doing just-in-time development. But we're confident, with them as our partners, we can get that development up, and we're wheeling in next month the first automated drilling jumbo.After GEP is complete and we got a year in the mine, we'll be able to better gauge the achievable development rates and apply these to the future mining schedule. So the opportunity is both in getting to the 1.1 million tonne per annum rate earlier, like we haven't even included it in that 3-year forecast. So in bringing in that rate early, that's a benefit and potentially exceed the rate -- that rate in parts of the mining schedule.I think as we spoke about on the last call, the pumping option couldn't keep up -- the mining rate couldn't keep to 1.4 million tonnes a year, and that's more like the limit that we want to do geotechnically. So there's an opportunity between -- to replicate the mining rates we could get out of the pumping option if we can get everything else right on those development rates, those cycle times and trucking to surface with the ventilation we have and also the timing of the new ventilation that we guided on in the last call, which is another $100 million of ventilation that we would install possibly in 3 years' time or earlier if it benefits. So those are sort of things we're trying to optimize at the moment as we do our Life of Mine Plan and the resource and reserve planning that we do this time of year.Just quickly on exploration. We've started RC drilling at Jessie Alma, which is just not far from the state hotel on our mining lease between Gwalia and the Tower Hill deposits. We completed 5 holes, with 12 remaining, as our first sort of RC program. And so far, the geology and operation looks encouraging. I hope to give you some results soon.Pinjin, we're continuing our process along the large tenement packaged. We're focused in on a few trends. And with -- and based on that knowledge, we've acquired further 2 tenements to the south, which we think are in the right area for us.Back Creek in New South Wales, we completed the first diamond drill hole, targeting a geophysical anomaly. Assays are pending but the hole intercepted some chalcopyrite, so that's encouraging as a first hole in that anomaly.On the Newcrest joint venture, we're getting close to finishing our second hole at the Banesa porphyry target. And also moving closer to home with Gwalia, we've continued drilling to the south in the deep areas. We'll get some results there, pretty encouraging from 16J that just sort of show that it suddenly plunges it's possible -- it is seeming to flatten out a bit.At Simberi, there's -- again, we continue to get really encouraging results. It's slow going with that grounding, hard to drill with RC and requiring boosters and push and checks in the jungle. But -- and it's going a bit slower than I would like. But so we've started the 30 by 30 meter drilling before we finished the 60 by 60 because as the pit pushes out, we'll actually be able to make some benches for drilling. We should finish that drilling in September quarter. However, expect we can start gearing up for studies now shortly because the ore body is looking good. In fact, we're already doing some work on refreshing the previous PFS and readiness for completing the drilling.I do expect some of the drilling we've been doing is -- importantly, it's not only finding sulphides, it's finding oxides, which we've done over the last few years to push out the mine life. There will be -- some of the results will make it into the resources and reserves this year for Simberi, both in sulphides and oxides.Just rounding out, Slides 19 and 20, you've seen before in terms of our pipeline and our focus on organic and inorganic opportunities. And in conclusion, we've had a very good quarter. Gwalia maintained production despite the impact of Gwalia Extension Project. And I think that is really illustrated on that slide, showing how much ore, roughly 150,000 tonnes of ore in the quarter and another 100,000 tonnes of waste. That's a great opportunity for us, and we're going to resolve it shortly.Simberi had another strong quarter. Feasibility study results had let us down the path of trucking, and I think that is the right decision for this ore body and this mine, and it's up to us now to optimize it and get there quicker. And exploration continues with good results, and cash has increased to $382 million, leaving the company well positioned. So with that, I'll take any questions.
[Operator Instructions] The first question today comes from Michael Slifirski with Credit Suisse.
Yes. Maybe I've got 2 or 3 quick ones. And first of all, the Gwalia Extension Project, the capital change, the $12 million. Is that on the remnant $20 million, having spent $80 million to date, $20 million to go. So does the $20 million become $32 million? I'm sort of struggling to understand why so late in the project it's increased by so much?
Yes. Look, we've changed our project management there, and we've done a full rerun of that PAF project. Part of it is just really where we see how long it's going to take to complete it now that we've got the Tower Hill in and how we will actually commission it. But look, the largest -- about half -- just about half that chunk was in having to negotiate with the contract that was partway through the job of installing it to make sure that we could get it done. So we had a contract renegotiation there because there was some uncertainty in how the job would be done, and we had to come to an agreement on some of the costs that they were experiencing underground. And then, Michael, not only -- we were in a position where we would -- potentially wouldn't have paid anything more, but the guys are working hard, and we've come to a commercial agreement because starting again would cause further delays.
Okay. Yes. Secondly, the Simberi recovery, how much of that is attributable to grade versus the sort of lower throughput grade residence time? Is it all grade? Or is it throughput related also?
It's strongly grade related. It's sort of much like fixed tail. So as grade goes up, it really gives us that recovery kit -- hit. Having said that, the team has been working over the last couple of years to do a range of things in the plant to improve recovery. And throughput is a bit lower, but some of that material that you see before you get to the transitional material where recovery really drops and then you get into the refractory material where it doesn't recover but the grade goes up to 3.5. And just in that sort of area that we're mining now, the ore gets a bit harder so that's why throughput's down a bit.
Yes. Got it. And then finally, with respect to the number -- or the guidance for your ore sort of hanging out for what the trucking cost profile might look like, I know you can't give that number or numbers until you finish the work, but with the improved efficiency of trucking, ventilation deconstrained, PAFs placed rather than hauling that material and so on, what's the -- can you just talk me through the cost benefits you get from that, that might sort of offset some of the otherwise cost escalation?
Yes. Look, there is a cost benefit of not having to haul the waste to the surface [ switches]. Our trucking cost there which is -- Garth, I think we've mentioned this before, when we're talking about pumping versus trucking options, truck is costing about $15 a tonne to get to the surface?
Yes, I think that was around that number.
Yes. So if you're not hauling, that makes a big opportunity for us. But I think the -- it's really just liberating, the tkms that we have available in the decline, the 10 kilometers, and just using that all for ore because if you look at that graph, we're doing -- we're about 1 million tonne mover anyway so -- and that's with the existing truck technology and current ventilation constraints. So the reason we don't just instantly go up to 1.1 million of ore on that 3-year forecast, we're saying we're not even getting there then. And obviously, you can probably tell that I think we can. It's just getting the guys to do the work on the development rates because we now sprung often to double decline, so we've got twice the decline -- declining to do, and we've got those long drives in between. So if we can get those -- you can have all the trucking capacity you want, but if you can't get these stopes in cycle and geotechnically, then you're going to be in the problem area. So the whole thing really hinges on development rates, but there's an interplay between development rates, stope cycle times and ventilation for trucking. So that's what we're just trying to optimize now. I -- normally, we'll be giving that guidance out with the full year. We are working on putting some all-in sustaining guidance out on those 2 years once we've done a wee bit of work between then and now. I just got to get back -- I was with the team the week before last, and we have agreed that the scope of work of trying to come out with some earlier advice on that, and that's what they're busy with.
[Operator Instructions] Your next question comes from Paul Hissey with RBC Capital Markets.
A quick question for me just on the grade profile at Simberi. Obviously, a relatively modest reserve remaining there, yet we've seen an upwards trend of head grade over the last couple of months. And I'm sure you guys took the chance to try and prioritize some high-grade material given the disruption on the rope conveyor maintenance this quarter. But what did the grade profile look given that limited sort of reserve life and obviously the elevated grades it proved?
Look. We've -- if you go back through our results, every time we're in a certain part of Sorowar Pit, and we don't chase it, it's just as it comes into sequence, we hit some pretty high grades. So if you're used to mining grades, 1.1, 1.2, 1.3 and then you get 2.2 or something like that, it really makes a difference. But it's not like volume is -- sure, we are getting a positive reconciliation more than we expected as we get through the sort of in positions of some of these benches. But we still plan on the long sort of consistent grade we get of about 1.3. So we -- and I think we've demonstrated that we can still pull 30-odd thousand quarters at 1.3, 1.4. So that's what we're planning on at the moment. Although we're just redoing the Life of Mine Plan from a whole batch of grade control drilling because a fair chunk of our remaining reserves will be grade control drilled, and we'll be able to update that at the end of the next quarter.
Yes. Okay. So it's just normal course fluctuations dependent upon the short-term schedule of the pit.
Yes. But we are getting more of it than we thought we would because we're happy at that -- it just seems that material gets harder before it goes to transitional where your recovery suffers but the grade goes up as well.
There are no further questions at this time. That does conclude our conference for today. Thank you for participating. You may now disconnect.