© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, thank you for standing by, and welcome to the SBM FY '20 Q3 March Quarterly Report Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your speaker today, Mr. Craig Jetson, CEO. Thank you. Please go ahead.
Good morning, everybody, and thank you for joining us at St Barbara for the March '20 quarter report briefing, and my first since commencing with the company just on 12 weeks ago. On the call with me today, I have Garth Campbell-Cowan, our CFO; and Mr. Rowan Cole, our Company Secretary; Val Madsen, GM, Human Resources and HSEC; Lucas Welsh, General Manager, Finance and Procurement; and Mr. David Cotterell, Manager, Investor Relations. I'd like to open up by saying how pleased I am with the very successful measures we have taken to protect our people during the COVID-19 pandemic. I along with other members of the executive team are very focused on the health and well-being of our employees and contractors during this crisis. Unfortunately, there's still a long way to go, especially for our people and our site in Papua New Guinea before we get back to some sort of normality. Our 3 mines have performed well over this quarter given the difficult operation -- operating conditions that we've had. All 3 have produced in line with ounces and cost expectations, a great achievement. We need to put some effort into changing our processes and daily habits to minimize the COVID-19 risk. We increased our cash performance by $41 million from our operating activities, as previously announced, and conservatively drew down $200 million, which we had available from our debt facilities. At Atlantic, we offered our condolences and support to families and friends, colleagues and the communities so greatly impacted by the recent tragedy in Nova Scotia in the area where we operate. Atlantic operations had an outstanding quarter with record plant throughput despite being in the middle of winter, a great effort by Laird and his team. Congratulations to Atlantic. The Gwalia Extension Project is in the final stages of the raisebore, the remaining -- the only part of that project to be completed. Extremely difficult ground conditions recently damaged the raisebore head, but the site team have been very busy with components of the project that are completed, changed the mine ventilation configuration as we integrate the new surface infrastructure into that ventilation program. At Simberi, production and costs for the quarter were well in line with guidance. Simberi is the only site that I was able to manage before COVID-19 restrictions came into the force. Our new General Manager, Jason Robertson, is doing a great job with his team in the first few months on-site in extremely difficult circumstances, mainly driven by COVID-19 as you all would expect. So with that, on Slide 4 are the details of incredible job our team has done to protect our people, their families and their business to help prevent the spread of COVID-19. We've followed very closely the advice from government and medical authorities in taking steps appropriate for quite different operating conditions as you would imagine. At our sites in West Australia and Canada, we brought in split shifts that have 2 different operating teams back-to-back so we have no physical interaction. Our fly-out -- fly-in, fly-out teams, in particular, are checked at the airport, and this happens daily for our driving teams in Atlantic in Canada. In addition, we have closed our offices and canceled all nonessential activities including all air travel. The company's IT connectivity has been highly developed and secure and robust, particularly with the increased usage we've experienced in the last month, including our first virtual Board meeting held for many hours last week. Key highlights, and turning to Slide 5. On Slide 5 are the highlights of the quarter, which some I've already mentioned. I'll draw to your attention the payment of the half year dividend during the quarter. The quarter also marked 15 years since St Barbara's purchase of Gwalia, an occasion which I'm looking forward to celebrating with the site team myself, which we'll do now sometime into the future. You will know that consolidated full year production anticipated to be lower end of our guidance range, driven by Gwalia and Simberi being at the bottom end of their guidance range. But margins still remain very healthy and significantly helped by our gold price. On Slide 6, you'll note the ongoing improvement at safety, in particular at TRIFR. Safety is my #1 priority for the company, and have been doing a lot of work in the safety under my leadership, and we'll be doing a lot more in the future. Slide 7 -- and turning to Slide 7 now, the consolidated quarterly production and all-in sustaining costs, a robust result given the coronavirus-related disruptions that we've had to endure. Moving on through to Slide 8. In particular, this is Gwalia's quarterly result. Production has been impacted by the change of conventional ventilation configurations, which you may have heard about earlier this year. This separates the mine into ventilation districts with the aim to getting more effective use of our chilled air that we already -- and we're already seeing a positive impact as that start to slowly but surely comes online. Gwalia grade was approximately what we've seen over the last few quarters, so no change of -- material change to be mentioned on that point. Moving to Slide 9, you can see the total material moved in the final raisebore shaft, which will allow the new ventilation infrastructure strategy to really start having an impact, has not yet been completed. This has been quite frustrating with difficult ground conditions. And at times over several months now, the ground conditions are described as pillow basalt in quite fractured ground so that large boulders are coming down, loosened, falling onto the reaming head, causing significant damage. The Paste Aggregate Fill plant has been commissioned. The crushing is operating well and the pumping circuit has been operating quite well. Although during the third quarter, relatively slow due to the mining sequence and only a small amount of stope filling occurring at this time. The final raisebore shaft is expected to be completed within the financial year. We're expecting Gwalia full year production to be at the lower end of the guidance as a result of these delays. Simberi quarter 3 March results. Simberi has improved this quarter with mining able to focus on ore rather than waste to a greater extent. Our strip ratio has dropped from 1.3 from approximately 1.4, where it is based in the previous 2 quarters, in particular. The Botlu pit in the south of the mining area is really quite a small pit, but in common with other pits in Simberi. Deeper parts of that deposit have been superior in terms of ore tonnes and grade than the grade control model would have suggested. Processing performance has been good through this quarter, and improved milled tonnes and recovery with the relining of both mills a big contributor to the improvement. And the rock from the deeper zones of the pits, which are reaching the limits of the oxide pit shells, has increased the wear rate not just in the mills, but also the conveyors, the breaker at the top of the hill and also the ropecon. My broad observations from my visit there was encouraging. Some of the significant investments in recent times, including 1,500 meters of a new conveyor spliced into the ropecon belt and the installation of a new pebble crusher and scrubber has all gone quite well. The Simberi PFS has had a third-party independent review and validated by the panel of external experts. We are shortly submitting the proposal to the Board for a decision. During the quarter, we announced an update of Simberi's reserves and resources. We increased from -- by 30% to 2.2 million ounces on our [indiscernible] drilling campaign [indiscernible] in particular. Going on to Atlantic Gold on Slide 11. [indiscernible] in this team the length it'll go to get to a great quarter. Mill throughput had another record at 1.2 grams per tonne gold, closer to the reserve grade of 1.1 rather than the exceptional 1.5 grade last quarter. The Atlantic team took advantage of the winter where the conditions to complete the planned truck rebuilds leading to 17% decrease in material moves mean that we're light on [indiscernible] to a greater extent. [indiscernible] that we saw. Some engagement with our -- so you'll notice [indiscernible] on hold due to COVID-19 restriction [indiscernible] for the relevant [ permission ] on the First Nations organizations. They're all in [ lockdown ]. [indiscernible] been able to have some limited interaction with [indiscernible] area adjacent to development for their project to be filled has also delayed [indiscernible] COVID-19 issues in the country. Moving on to Slide 12. Slide 12 shows cash balance, which has increased by $241 million during the quarter. This includes a $200 million drawdown from the syndicated debt facility I mentioned earlier. And this is after an $18 million dividend payment, $10 million in growth in capital and $6 million in exploration expenditure. So moving, I guess, on to the next slide, Slide 13, in terms of our exploration. So in Australia, exploration during this quarter focused on the Leonora region, Pinjin and the Drummartin JV we have with Catalyst Metals. On Simberi, we have completed the diamond drill program designed to gather additional geotechnical metallurgical and assay data for the sulfide project, as you would imagine. In Nova Scotia, we were able to conduct some suspension of work. The northern -- our North Brookfield area in the southwest of the province returned some particularly encouraging results. I am sure that we'll all look forward to. As previously announced, we suspended an exploration fill work due to COVID-19 restrictions. However, we are currently evaluating that position, resumption of exploration activities within a reasonable time line, and we're using relevant guidelines to be able to start the exploration programs up once again in the very near future. Slide 14 and 15 outline our strategy and growth pipeline. The company's strategy remains relatively unchanged in that we are focused on building out our existing growth options as well as considering external growth. Within the current portfolio, we have consultants assisting with the review of Gwalia as we look at -- to reset our production profile. We also have consultants reviewing our optimal sequencing of Atlantic Gold projects. As I mentioned earlier, the Simberi sulfide project has been prepared for a submission to the Board as we speak. Overall, I'm still very excited about the growth opportunity and potential we have in our portfolio.In conclusion, and moving on to Slide 16, we've had a solid quarter at all 3 operations despite the restrictions imposed by COVID-19. Importantly, our safety performance is trending in the right direction. Consolidated full year production is anticipated to be in the lower end of our guidance range. Cash at the end of the quarter increased $41 million after $18 million dividend payment, plus $200 million from the drawdown of our debt. This puts the company in a very strong position in the $320 million and enables the organization to withstand interruption in production across all our operations if need be. In the near term, we are expecting to take the proposal to the Board for the Simberi sulfide decision. Lastly, we have reviews underway again at Gwalia and Atlantic to maximize performance reaching full potential and growth of those operations. I'm planning to provide an update in quarter 4 on the progress of those reviews.In summary -- and with that, I will now hand over and take questions. Thank you.
[Operator Instructions] Our first question is from Alex Barkley from Morgan Stanley.
A couple from me. Firstly, I think you mentioned you were on some of the periphery stopes at Gwalia this quarter. Would we be expecting to get into some of the higher grade central stuff in the June quarter? Or is that perhaps going to be pushed into FY '21?
Yes. Look, Alex, I think that's a really good question. And given, I guess, some of the issues that we've had with the raiseboring, in particular the ground that we're going through and the extended I guess the times taken to finish that project disappointingly, I suspect we will push it somewhat. As I've said earlier, we do have, I guess, a number of consultants, mining engineers, mining specialists and alike, looking at our current operation to optimize that asset. But there will be, I guess, some impact of the delays of the vent shaft, for sure.
Okay. And moving to Atlantic Gold, you've talked about some of the COVID-related delays. Is that interaction with the government, is that going to delay your internal studies? And where does that study time line fit about when we can start seeing the optimal mine time line?
Yes. Look, clearly, what it's done -- and the Atlantic team, in particular, had to endure a horrific, I guess, last month, in particular, not only from the COVID issues that we're seeing globally, but also with the, I guess, the deaths that they've had because of the [ mass shooting. ] Now that's making it very, very difficult, of course, for all governments to be focused on things like permitting. And clearly, with the COVID, most of the operations in government and also the First Nations are closed down. But we are continuing on with our own internal project advancements. So at this point in time, the timing for that strategy to come out and be played out in more detail would be in the quarter 4 later this year.
Next telephone question is from Nick Herbert from Crédit Suisse.
Three for me, please. Just on Gwalia. When can we expect to get the results of the review there? And on current planning, maybe thinking about the ramp-up of mining rates in the -- over the next couple of quarters, just thinking in terms of what we can embed in terms of a base case, which can then be sort of optimized from there.
Yes, Nick, I think the Gwalia, I guess, project group of people that I have there at the moment isn't looking exactly what you're asking for. I think the timing is for me to come out and talk in much more detail about Gwalia's full potential, and ramp-up for the future will be in quarter 4. So the very question you're asking in terms of -- there's 2 parts to it, really. The first part is to finish the ventilation and continue on with development and certainly catch up on development. At the same time, we need to be able to tune the ventilation effectively to get maximum benefit out of the infrastructure that's been installed. On the back of that, the consultants that we are using are looking at line optimization over a long period of time [indiscernible] not just short. So in terms of that detail and [indiscernible] to effectively model, again, will be out in the quarter 4.
Okay. Understood. And then do you mind just reminding me what the current mill throughput capacity is?
Yes. Look, we -- I think the [indiscernible] mill is about [ 2.4 ] as soon we continue to ramp -- ramping back 1 million to 1.1 million tonnes as soon as we debottleneck the operations.
Okay, great. And then moving on to Simberi. Just looking at what you need in Q4 to hit that bottom range of guidance, like it will be the strongest period for the year. Is that just on full plant utilization post the work you did there in the June quarter? Or is there an improvement in grade factored into that June quarter also?
No. It's certainly not an uplift in grade. It's more through reliability and throughput. We're doing a lot of work at that site to increase the availability of that, in particular, their truck rates. One of the things that we're certainly seeing and impacted our operations materially, but it's the [ way ] of getting supply, in particular, spare parts from, say, South Africa, or if it's Bell truck related, into PNG through Simberi. So that's been quite problematic. But we're working extremely hard, and the team there are working extremely hard on throughput availabilities and reliabilities and, I guess, uptime utilization as well. If all those, and we have no reason to doubt that they won't, all line up, they'll come in at the bottom end of guidance.
Okay, great. And then finally, just on the Simberi study. Are you planning to release that to the market post the Board review?
That would be my intention, yes.
And next telephone question is from Brian Chu from Australian Gold Fund.
The work on the third quarter that's delivering for St Barbara...
Pardon me, Brian. Can you come closer to your phone so we can hear your question, please?
Is this a bit clearer?
Yes, Brian.
Yes. So I'd like to ask 2 questions. The first one is that I noticed that you have to take on $200 million of extra debt with this particular quarter. And I'm just wondering there is going to be an increase in the interest cost. Do you have a substantial need for the debt? Or is it really for prudent [ subsidies? ] And would that affect your operating cash flow much because of the substantial size of the debt that is going to be just sitting there?
Yes, Brian, look, that's a great question. Thanks for that. It's really -- it was a prudent decision to make in the early days of COVID, not understanding where the globe and where the world will go with COVID and the impact on our business. So we elected to draw that down for the purpose of insurance and derisking the business, if we have a need to do that, particularly in the event that if we had significant business disruption in any way, and clearly, we've been able to avoid that. So by drawing the -- draw down the $200 million debt, we've been able to reinvest reasonable rates as good as you can get these days. So the actual premiums to have that facility available sitting there if we ever need it, from a derisking perspective, is certainly working very well and was the right decision at the time. It is certainly not going to have any impact on our cash position at all. And hopefully, it will sit there to a point where we don't need it and we can make decisions around that.
Okay. And the second question I'll have to ask you is in regards to the Simberi project. You are saying that the results have increased from 1.7 million ounces to 2.2 million ounces net of monetization. So can I again understand that you are currently mining some of the sulfides already and it's stockpiled and waiting to be processed should the processing plant is built? Or is this just a general term that is used to -- like you're not really mining by ounce on the ground yet?
No. We're not -- we haven't changed our mine plan, specifically to go after mining sulfides at all. Just by the nature of Simberi, there are sulfides mixed up in the current mine plan. But certainly -- and we would stockpile if that continue to go. But we're not specifically changing our mine plan to stockpile sulfides at all. No.
Okay. Craig, and all the best with the upcoming years that you'll be on the helm. Look forward to...
Thank you very much, Brian. Thanks, Brian. I appreciate that.
The next telephone question is from Kate McCutcheon from Citi.
Wondering if you could provide some more color on what prevented you from utilizing PAF to its full potential, I guess, in March quarter. And then secondly, if you could talk about any production impacts you kind of had or having throughout this quarter at Gwalia from having to implement social distancing, particularly in some underground operation.
Yes, Kate, I think they are -- a lot of good questions in amongst that. I think the -- let me start with the COVID, in particular the separation and how we're managing it. A big callout to all our operations not just to Gwalia that Stean and the team there were very proactive in the early days and getting processes in place and all sorts of social separation occurring right at the very beginning, which is, for us, is either driving from the local communities and/or from flying from Perth. So being that proactive and being able to manage that has certainly derisked the business. Our way of operating and accessing underground and even work in the aboveground has significantly changed. So if you can imagine the chaos in the first few weeks, we had to endure and change our processes and duplicate a lot of things in many ways as we learn what COVID really meant. But to be able to come through that with virtually no change to the production or have very little impact in production is a credit to Stean and his team. I think the -- and that will continue on. And of course, the learnings from COVID right across the organization and the appointment of people in specific COVID response roles has benefited us enormously. And we'll take those learnings for any future issues that we may have. And I hope not, but if there's another uptick in COVID cases, and we're in a good position to manage going forward, given these learnings. In terms of the underutilization from the PAF plant, that's really driven by the mine banks and the mine activity. We have been up and down with production and for various reasons, mainly as we are working and advancing through on the back of the extension project. And as that comes to conclusion, we just haven't had the open stopes to backfill. And to fully utilize the PAF plant is the only reason. This quarter, we'll have similar, maybe a little bit more utilization of the PAF plant as we advance and we become more deconstrained. But that's the only reason we're not fully utilizing the underground PAF at the moment.
Okay. That's useful. And then just finally, interested if you could provide an update on the progress of the profit sharing stream at Moose River. So I guess have you made an offer to purchase that? Or what's the next data point that we can kind of expect there?
Yes. Kate, the only thing that I can share about Moose River is the exec of -- and the Board of Moose River has met with my executive team. We have made an offer, and we're currently sitting down with the Moose River executive group again in the coming 2 to 3 weeks to discuss that offer in more detail, and we should be able to have an announcement on that in the coming weeks.
Okay. So that will be something that you'll look to update us on outside of the cycle?
Correct, Kate, yes.
Our next telephone question is from Reg Spencer from Canaccord.
Focusing on Simberi. Just want to check that there will be no major change to the project metrics with the Simberi feas relative to the pre-feas in terms of plant throughput and so on and so forth, holding, obviously, that the grain has changed versus the prior iteration of that study.
Yes, Richard, I don't foresee any significant change, material changes. If they do, they would hopefully be on the upside and not on the downside. But given the robustness of the drilling program that's gone on there for many years, the pre-feasibility project, the way that that's been managed and brought to the table, now we've had third-party independent reviews. I'm very confident of going to the Board, but with the right deck. So I wouldn't suggest for a moment that there'll be any material changes at all. No.
Okay. Great. Again, sticking with Simberi. Just looking to get a little bit of color on that drop in processing costs, I'm sure there's a little bit of economies of scale in there. But when do you expect to start to see some material cost benefits from lower oil prices? Do you have any existing hedges in place? And if not, would you look to put any hedges in place?
Well, the answer to that is absolutely we're reviewing that position quite often. In recent times, because of things like the oil price and where that's going, you can see globally that people are taking advantage of that around the world, and we're certainly keep keeping a close eye on that. But I'd just like to say, in terms of operating costs, part of the future strategy of what we're doing -- I've mentioned that we have consultants at Gwalia and looking at our production and cost profiles there. That's part of a larger strategy for the entire organization. So I suspect there will be a lot more to talk about in the coming near term -- in the near couple of months, 3 months around that cost profile in a lot more detail.
Sorry, Craig, so that would form part of the results of the feasibility study or what you're doing with the sulfide? Is that when you might look to flesh that out?
Yes, for Simberi, it would be for sure, yes.
Our next telephone question is from Adam Baker from Global Mining Research.
Previously, St Barbara provided an FY '21 and FY '22 outlook for Gwalia of 230,000 ounces per year. Does this still stand? Or do you expect the ramp-up to be somewhat delayed?
Yes, look, it still stands. I think the organizational review that I'm currently doing with the team, there's nothing material that would suggest anything different to make that change at this point in time. I won't, I guess, forecast the future and what that could mean, but are certainly looking to optimize that business right across the portfolio. So that still remains.
Our next telephone question is Levi Spry from JPMorgan.
Joined a bit late. I might have missed a few things. So just confirming that Simberi PFS is going to the Board for approval to progress to a feasibility study this quarter. What's the approximate costs on feas?
Yes, Levi, you're right. The Board will receive a recommendation within the next few days and the decisions we've made on what we're going to do. In terms of the cost, it still stands, I think we guided around USD 150 million. And that still remains the same.
Okay. And just over at Gwalia, one of your WA gold mining peers talked about a 10% loss in productivity because of the COVID measures they've taken. Just confirming, you're not seeing any losses in productivity for a deep underground mine.
Levi, no, we're not -- that I can stand here or sit here today saying that this is COVID related. Swings and roundabouts as we go through the optimization of the vent program, in particular, and what we're doing at the mine. We're seeing peaks and troughs of production. But I'd have to say, again, with what all the operations we're doing, no more than what the team at Gwalia have been able to achieve. I just wouldn't be able to say that there would be any material impact on production driven by COVID. Now if you're talking about costs and productivity and different things, then absolutely, it would be. But in terms of our guidance and our production targets, I'd have to say no.
Okay. And I caught the tail of a question at the start. You talked about updating the Canadian mine plan and the Gwalia mine plan in quarter 4. Is that right? And is that quarter 4 calendar year? Just jog my memory here, please.
Yes, it is. And look, and to the clarity, we have a strategic team looking at Gwalia as we speak, and they're certainly looking at life of mine, but also looking at the major opportunities there with cost out and production, particularly in the way that once the ventilation is completed and we debottleneck the mine, what is the full potential of the mine over a long period of time? What does that look like cost out of that business? The same thing applies and the same methodology will apply at Simberi whether we do or whether we don't go forward with the sulfide project. And then, of course, where do we actually sit? What does Atlantic look like in the next 2, 3 to 5 years? All that type of strategy is currently being built behind the scenes. And we hope to be a bit more transparent about what that strategy would look like from the entire organization by quarter 4.
Our next telephone question is from Matthew Frydman from Goldman Sachs.
Just wanted to touch on the Simberi sulfides project, and whether you could give a bit more color on what you're expecting the path forward might look like from a mining license perspective. Clearly, I'm asking the question in the context of what we know about Porgera. And I know Simberi is in a different boat because obviously it supports an island community. But wondering whether that -- whether what the government has done at Porgera, I guess, might weigh on the Board's decision to deploy more capital in Papua New Guinea and wondering what kind of fiscal or licensing terms or agreements you might hope to achieve before you do make that decision.
Matthew, I was hoping that question wasn't going to come up. But...
Sorry. Sorry, Craig.
But thanks to that. So look, I'd have to say in terms of what's happening at Porgera, only the key players there would know. The rest of us would speculate. So how that would affect us would be minimal in my view. And there's a few pieces to that. What I would say that, one, is the team over the last couple of years, in particular, has certainly got our license to operate now out to about 2028, I think, before it even has to be reviewed. And that will give you some sort of confidence of the reputation that St Barbara has operating in PNG. So I don't see that as any material, I guess, change other than certainly of interest of what's happening at Porgera, in particular, to what it would have to our sulfide project. I think if we generally have a good business outcome and proposition, return on investment for the Board, the Board will support and move forward, but I won't preempt that until we have that discussion. So linking it to what's happening with Barrick and Porgera, I don't share any sort of view of major risk at all.
Sure. You touched on the fact that your existing license is up to 2028. Clearly, some of the value of the sulfides project probably sits beyond that time line. So would you want to get comfort around a mine life beyond that? Or do you think you could delve into the project given that -- I guess just given the current mining license situation, you'd be comfortable with that?
Yes. Look, immediately, if you went ahead with the sulfide project, you're extending the life of mine north of 8 to 10 years or longer, we would hope. So I think the business proposition in itself is very robust and sound. In terms of licensing, as you would be aware, Matthew, there's risk with the Mining Act and change of legislation and a range of impacts in PNG that we want some sort of a surety for and protection against if we were to invest the $130 million to $150 million, whatever the sulfide project would take if we go down that path. So yes, we would want some guarantee. We certainly have support of the landowners. The local-level government, provincial government in particular, are paying a very keen interest in what we're doing and wanting to know how to help. But we would certainly look for government support and longevity before we sign up to any major project there.
Telephone question is from Andrew Bowler from Macquarie.
Yes. Also jumped in a little bit late. I did hear you talk about pillow basalts being sort of the main reason behind the delay in the raisebore at Gwalia. I'm assuming you have a pretty good idea of [ those teams ] from the pilot hole there. Do those pillow basalts continue? And is there sort of explanation if it gets delayed again? Or have you factored this into your new completion guidance?
Yes. We've certainly factored it into that guidance. There's no doubt. And yes, it was certainly on the radar. Now if you remember, we had a similar issue with ground in one of the other vent raises recently, so we were prepared for it. So this one in particular -- and we backed ourselves thinking we had a technical solution and we're much better prepared. But then again, you're really in the lap of whatever gets thrown at you in these sorts of environments. So we've come out on the worst end than we would have liked. We're certainly struggling -- have been struggling in this ground for a period of time. And it's not so much that it's so slow going, but that's one problem that we face. But we've had in this hole, in particular, this vent raise, in particular, we've had large rocks fall on top of the cutterhead and damaged them. And that is a lengthy project to lower the cutterhead back down into the mine and repair them. That's a couple of weeks each time we do that. So yes, we've certainly been battling and fighting, but we will finish that work in this quarter.
And our next question is from [ John ] from [ Eastern W Limited ].
I've got a few, actually. My first one is on Gwalia. Now obviously, the overall situation is grades going from sort of the 11, I think, grams a tonne down to maybe 7. Just -- you've got, I think, around 10 more years at present. Are you seeing that as -- how should we see the grade? I mean is it going to be slowly over time falling? Or will we get a fairly steady sort of 7? Or is there going to be possibilities for getting into some better grades again? So that's one. Related to that is, obviously, you spent quite a lot of money on the ventilation system. I just wondered why now you're doing another study. I would have thought you've done the study first, then spend money on the ventilation, and then you go. I just wonder why you need to study again. And then the final very simple one on that is at what date roughly are we just going to be full on with the ventilation system fully working? We're just mining without some construction activities getting in the way. Another completely separate topic is how do you look at the possibilities of more acquisitions at the moment? I was just thinking in terms of say, Gwalia, some -- there's some explorers not so far away you could bolt on and trucks and ore to the site. That's another one. And then just on hedging. Obviously, what this has taught us is that mines can be shut down and then you're in trouble because you've got to deliver into your hedge book and if your mine is not working, you can't do that. So that's why you have to take out debt. I noticed, I think you're still adding to hedges. I just wonder why that is, and especially in this area of Central Bank money printing, it will suggest that gold is going to be heading north. And then just on Atlantic. I just wonder how you're going to deal with that situation because you may have to -- if your senior executives want to travel to the site, they may need to go into quarantine. They will go into quarantine when they come back to Australia. So it's almost a bit like you don't have your hands around that. And again, on hedging, they have a lot of hedging there at low prices. Are you going to really cut back on that so you can enjoy the full cheaper cost per ounce there? So those are the questions.
Yes. Well, I think let me start off with, I think, the grade question you asked around, I think, 11 grams per tonne at Gwalia down to 7, I think, was your range. We've always stated that the life of mine grade will average 6.4, and that still stands today, and that may change over time as development, I guess, continues and would certainly hope to see an uptick in that. But that's something that we can't guide for at this point in time with the information that we had. In terms of, I guess, your other questions, and all relevant. A lot of those will be answered once we come out in -- at the end of quarter 4 with the -- just before the yearly in terms of what the overall business and company strategy will be and what it would look like. As you would imagine, 11 weeks into the role, I'm certainly assessing all those particular areas of opportunity that you spoke about. So let me talk about, I think, first and foremost, some still running the mill, even deconstrained, as best we know it today at Gwalia with significant opportunity. I think we shut the mill down at the moment about less or around about a week a month. So my first prioritized area would be to fill that mill. Now whether that comes through acquisition or towing agreement or a JV with somebody to be able to tow that material to fill the mill, not sure yet. We're working through that. We have had some towing arrangements that have gone very well for us. And we'll seek to do some more. There are also significant opportunities to be able to explore near mill around Gwalia, and that's something that we're looking at, at the moment. The general manager of exploration is certainly deep diving the opportunities around that. So we're not losing sight of continuing development to fill the mill and maximize the benefit out of Gwalia. Your questions on hedging are absolutely valid. And yes, there are a lot of hedges associated with Atlantic. We certainly look to use hedges to our advantage, and there'll be more on that by [indiscernible] at the end of quarter 4 of what we intend to do and strategy-wise and how we've used the hedge. In particular, our hedge book. The COVID issues at Atlantic are certainly frustrating from my point of view because you're right, there'd be nothing more valuable than getting to the site, understanding the culture and the environment that we work much better than I do today. But I'd have to say the team at Atlantic, in particular, are doing a great job. We're all running our business and we're running our organizations these days from desktops, and that's working very, very well for us. We communicate and connect to the site. Obviously, I do it pretty much every day. It's not the same as getting there and putting your arms around things and understand it. And certainly, it's not like -- with me, in particular, I have developed relationships with the regulators and the government and the First Nations people that I would certainly like it within the first 3 months of this role. Now having said that, we are managing with what we've got effectively. We're certainly extremely valued in the region, very well regarded. I have calls later this week with First Nation and trying to set up calls with some government people on video to get that relationship going as best as we can and continuing through the permitting process. I think that's extremely important. Now strategically, to be able to set ourselves up for when the COVID restrictions start to be wound back somewhat, I think that puts all governments in a position where those -- anyone that has what I'm calling shovel-ready type projects to get the economy rolling will certainly get prioritization in permitting and in development. So we are strategically positioning ourselves for that to occur and being able to launch into growth and development at the end of some of the COVID restrictions when they get removed. But picking on your point, there's absolutely nothing better than being on there, face-to-face, and it's very frustrating. And it's frustrating globally, I would imagine for everyone.
There are no more further questions at this time. That does conclude the call for today. Thank you for all participating, ladies and gentlemen. You may all disconnect, and goodbye. Take care.
Thank you, everyone.