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Thank you for standing by, and welcome to the St Barbara FY '22 March Quarterly Report Conference Call. [Operator Instructions]
I would now like to turn the conference over to Mr. Chris Maitland. Please go ahead.
Thank you, Sarah. Good morning, everyone. I'd just like everyone to take note of the disclaimers on Slide 2. I'm Chris Maitland, Head of Investor Relations for St Barbara.
On today's call, our Managing Director and CEO, Craig Jetson, will discuss the Q3 performance. And after which, as we said, we'll open up the call for questions. [Operator Instructions] With that, I'll hand the call over to Craig.
That's great. Thank you, Chris, and good morning, everyone. I'd just like to also introduce Mr. Lucas Welsh, our CFO, who is also sitting in on the call to assist me during this call today. So thank you, Lucas.
And as always, I'd like to begin by recognizing our traditional owners and First Nations people of the lands which St Barbara operates in Australia, Canada, Papua New Guinea and pay my respects to the elders past, present and emerging.
So moving on to safety and our safety performance. And I always talk about safety remains our number 1 priority, and that certainly has not changed through this quarter and will not change in the quarters to come. Our safety performance in the last quarter has clearly been in line with our quarterly goals, which is great to see. But also what has been great to see is our improvement over the previous years, and we are still continuing to improve, and I'm really encouraged by that result. But ensuring that we are improving and not maintaining and not becoming complacent, we have a renewed focus, and I've mentioned our Safety Always program in previous calls. I mentioned it before, as we focus on safety leadership for our frontline leaders and senior management executives and beyond and also our employees in terms of safety frontline engagement.
So moving from safety into our -- some of our key achievements in quarter 3. We produced 62,000 ounces of gold at an all-in sustaining cost of $2,290. The Bardoc acquisition is now complete. This increases our group ore reserves by 7% to 6.2 million ounces and our group mineral resource by 22% to 3 million ounces ore to 16.5 million ounces in total. As the Bardoc transaction headed into closing, we started early engineering development and design work, we're now focusing on developing Zoroastrian, starting the first production from Zoroastrian 6 months earlier than previously expected, starting in Q1 FY '24, producing around 30,000 or greater than 30,000 ounces from 300,000 tonnes of ore delivered to the mill on an annualized basis. I'd like to just thank the team that's been working on expediting that design and program to bring this online sooner than we thought we could.
Aphrodite is now expected in H1 FY '25 or sooner and adding a further 90,000 ounces of production on an annualized basis, and we look forward to bringing that online. Pleasing to see is Simberi is now back in production. With all the issues and the headwinds it's had in the last 12 months, including COVID, it's great to see the trucks rolling through the mine one more time.
We've continued with significant and positive grade intercepts during the quarter from recent drill results and also what we call Old South Gwalia or the Gwalia Shallows. And this will certainly support the continuity of mining as we go forward once the shallows are online, and I'll talk a little bit more about South Gwalia and where that fits later in this presentation this morning.
In terms of Leonora itself, the gold produced production has been -- is down. And the gold production has been driven by reduced mill throughput, lower head grade and lower contained gold from ore that we've purchased. So the next -- the purchased ore, in particular, has significantly outperformed in terms of grade and tonnes delivered to the mill, and I'll talk about the Gwalia grade being lower shortly. So the mill throughput was 9% lower due to lower ore purchase volumes being delivered than previously stated. And certainly, an increase in scheduled mill downtime resulted in that 9% lower than expectation. Mill grade was also down 8%. Gwalia grade was lower due to mining of lower-grade stopes longer than anticipated. Also, the lower grades from stockpiles used to top up the mill to close the gap created by the lack of delivery is expected from purchased ore volumes that had not been delivered as expected. The purchased ore received did not deliver the grade as expected as well. And this lower grade and lower tonnes significantly reduced the expected plant production for the quarter.
Three new dump jumbo development drills have arrived on site and partially commissioned and going through commissioning phases as we speak. And this will allow the site to increase advance rates through quarter 4 and beyond into the coming years. The higher all-in sustaining cost at of $1,916 has been driven by lower production. Sustaining capital guidance has been lowered from $65 million to $75 million, down to $55 million to $65 million due to the lower truck and jumbo availability, predominantly stemming from lower -- skill shortages in Western Australia, creating these -- most of these issues.
The rehabilitation of the Gwalia post fall of ground event from last year is formally complete. This enables access to the high-grade stopes that we've been able to access up until now because of that fall of ground, putting us back on track to achieve our targets and guidance through quarter 4.
The acquisition of Bardoc was completed on April 13. The Bardoc development accelerates our province plan, which we're able to fill the mill much sooner than we first anticipated when we put the province plan together some 2 years ago. Aphrodite and Zoroastrian, while adjacent to the rail and road infrastructure, which connect them directly to the Leonora plant. This uniquely places Leonora in a position to add value to the ore bodies, which would otherwise be -- which would otherwise need construction of a new processing facility. Construction of the surface works at Zoroastrian is to start in Q2 FY '23, previously planned Q3 and FY '23. First production from Zoroastrian is now 6 months earlier than previously stated now in Q1 FY '24 and, again, producing 30,000 ounces from 300,000 tonnes of ore delivered to the mill on an annualized basis. Aphrodite is expected in H1 FY '25, again to add another 90,000 ounces to our production also on an annualized basis. Along with the Bardoc acquisition, it has substantially increased our mineral reserves and resources and significant land package, which we have now consolidated to reserves and resources. Zoroastrian is open in all directions. We intend to drill the resource extensions once the decline has been established. And once that decline is established, we will continue with further potential ore feed to the mill as we drill and search for other opportunities in this new mine. This was clearly a focus by the team during the due diligence and was part of the decision-making in terms of the Bardoc transaction and potential upside.
As previously stated, the group ore reserves were up 7% to 6.2 million ounces and the group mineral resources up 3 million ounces to 16.5 million ounces or an increase -- a total increase of 22%. Further updates are expected in quarter 1 FY '23, and this will include Old South Gwalia, which internally looks very promising, and will add not just incremental uplift production, but gives us much flexibility to the Gwalia, the mine, to deliver consistent feed to the mill. Along with the development of more open headings at the Deeps and by adding the shallows sets Gwalia mine up for flexibility and consistent ore delivery, which has not been seen and not been the case for many years at this operation. Early preparatory work in Zoroastrian is now completed, which brings forward the commencement of the decline and construction to quarter 3 FY '23. All efforts will now focus on resourcing and productivity for the mine to deliver first ore as soon as possible. First ore from Zoroastrian is now anticipated in quarter 1 FY '24 or sooner compared to H2 FY '24 as previously stated. The first full year of production contributes 30,000 ounces as a set of contained gold from the 300,000 tonnes of ore that were delivered to the mill at an average grade of 3.5 grams per tonne.
The first ore from Aphrodite mine is expected in H1 '25 or hopefully sooner. The first full year production of Aphrodite is expected to contribute a further 90,000 ounces to our gold profile from the first -- from the 900,000 tonnes per annum, again at 3.5 grams per tonne. And I look forward to seeing those flow through.
In terms of short term to fill the mill plan is to develop Zoroastrian as soon as possible, and this high-grade free milling ore body is compatible with the Gwalia ore. At this stage, we will be transporting the ore by road initially at a rate of about 400,000 to 500,000 tonnes per annum potentially until the rail solutions are able to be realized. Aphrodite will soon follow, coinciding with refractory ore capability at the Leonora plant.
In terms of our province plan and our vision and strategy moving forward around the processing hub, we plan to transform the Leonora into a processing hub with a 2.1 million tonne capacity uplift and eventually a refractory ore processing capability. Combining the nonrefractory ore sources today from Aphrodite and Harbour Lights continues to be the strategy in the future. The PFS has identified a cost-effective opportunity to expand the mill from where it is today at 1.3 million, 1.4 million tonnes up to 2.1 million tonnes per annum for approximately $30 million, and I have stated that in previous releases.
To treat ore from Harbour Lights and Aphrodite, we have selected the Glencore Albion process I previously mentioned as a preferred technology at a cost of around $110 million to $120 million, and work will continue on in that space to understand more.
The acquisition of Bardoc allows us to accelerate the delivery of our regional processing hub and vision. We think that this will provide many new opportunities for acquisitions and discovery in the future, particularly in the Leonora province, which will expand on the Leonora province plan over time and over the years to come.
With its numerous ore sources and expansion to 2.1 million tonnes, we have a pathway to produce approximately or greater than 270,000 ounces for at least 5 years starting from FY '25, or if I have my way, and if possible, even sooner. In quarter 2, the drilling program intercepted multiple high-grade zones in the upper portion of the Gwalia, which we call Old South Gwalia. The drilling program is mostly completed, achieving further encouraging results through quarter 3. At this time, we are targeting an updated mineral resource in quarter 1 FY '23. As previously mentioned, this potential new mining front at the shallow depths could increase rates of ore delivered to the processing plant and adding mining flexibility to the current mining operation. This is now beginning to see Gwalia as a healthy, well-engineered mine turning instability and unreliable past performance, returning its reputation to be a very reliable and healthy asset that it once was.
Simberi produced 10,254,000 ounces after recommencing production in January. Production was then again impacted by staff availability due to increased COVID-19 infections in country and on the island. At its peak, 270 of our regular 600 daily workforce were in isolation. This limited operations and maintain has resulted in low truck availability and a maintenance backlog. The low truck availability drive a decision on site to target shorter haul distances, but this meant a mine plan change and, in turn, processing greater amounts of sulfide material, which had a negative impact and drive lower grade and recoveries than previously anticipated. The increases in site costs to manage COVID-19 combined with the low production has resulted in obviously a higher all-in sustaining cost than we previously had stated. Simberi now remains on track to achieve its recent revised guidance of FY '22 of 25,000 to 30,000 ounces and the cost guidance of AUD 3,200 to AUD 3,600 per ounce.
We have been notified of the replacement of the PNG Minister of Environment and the Head of PNG Conservation and Protection Authority. Permitting of projects have been delayed now because of these changes and permitting of projects have also been delayed because the PNG national elections in June in 2022. Not to state that I am currently in PNG and have meetings with the ministers planned for tomorrow, and I'll be talking to key government ministers while in country to see if we can find a workaround together to complete the permit approval process prior to the elections. Our FID for the sulfide project will be delayed until CEPA grant the environmental permits that we seek. We're using the extra time to test alternative capital solutions to address cost escalation for equipment and construction currently seen across Australia and been experienced across the industry. Moving to Atlantic. Touquoy grade declined as predicted and previously stated when we changed guidance by 32% as the mine approaches the end of life. Touquoy remains on track for cessation of mining in H1 of FY '23. Production this quarter has been impacted by the frequency and severity of storm and weather events. A little bit unusual in terms of severity for this time of year, but it clearly has been impacting crushing and milling throughput rates. Also unforeseen and something that's not normal is it also caused 9 power outages in the quarter, which is a significant production delays as well.
With spring arriving, these events are expected to subside, so Atlantic remains on track for guidance that all-in sustaining costs, in particular, of $2,013 an ounce due to a lower head grade and lower throughput rates. The capital guidance reduction at Atlantic Gold, our sustaining capital has been reduced from $10 million to $15 million to $5 million to $10 million. The growth capital has been reduced from $20 million to $30 million in guidance to $15 million to $20 million. Scope changes and the deferral of spend to FY '23 is to align with the permit approvals as we look forward predicting the time lines as we know them today. In terms of Beaver Dam, our next mine in our province plan and our sequence. Round 3 of the information request received back in January. We remain on track to submitting the answers to the IR3s in quarter 1 FY '23. This aligns with our target for approval of the EIS in September of 2022. The work at Fifteen Mile Stream, in particular, modeling and sampling is underway, and we're responding to the Round 1 information request for the EIS. This is expected to be completed in H1 FY '23.
In terms of the Atlantic province plan, the vision for Atlantic operation as a processing hub servicing multiple satellite mining operations to remain our strategy and focus. This is not too dissimilar to our province plan thinking and growth that we are currently seeing at Leonora.
So just to recap, the Bardoc acquisition is now complete. It increases our group ore reserves by 7% and group mineral reserves by 22%. Production from Zoroastrian is now 6 months earlier in Q1 FY '24, producing greater than 30,000 or around 30,000 ounces or greater from the first 300,000 tonnes annualized of ore delivered to the processing plant. Aphrodite is now expected in H1 '25, adding a further 90,000 ounces to production uplift. Pleasing to say Simberi, where I am today, is back in production.
We continued to have positive grade intercepts in Old Gwalia South. And Gwalia, and this is going to obviously assist Gwalia, the mine continuity and consistency of ore feed to the mill, from this area, which is known to be Old Gwalia South, as we refer it to, or at 600 meters to 1,000 meters below the surface.
And with that, I'll certainly like to take the opportunity to thank everybody for dialing in and their attendance today and listening. With that, I'll now pass back to Sarah, our operator, and open up for any questions that people might have. Thank you, Sarah.
[Operator Instructions] Our first question will come from Peter O'Connor with Shaw and Partners.
Can I ask a couple of high-level questions first? There's been a lot of reports out today, so there's a lot of headlines about what's happening in WA. So I just wanted to focus on WA and think about the June quarter. And I know you made comments during your prepared remarks, quite different comments from a range of companies both today and the last few days about the impact of COVID to the extreme of one company withdrawing guidance today. And others saying that it's not an issue because they're not a FIFO operation. So I'm just wondering -- given your experience for the March quarter and April to date, how do you see the June quarter panning out? And is COVID more of a risk? Again, I'm thinking specifically more WA at the moment.
Yes, Peter, that's a really good question. And I think there's 2 answers to that, there's Part A and Part B. I think the site -- and clearly, we've been able to manage to date. But as you know, Western Australia has been able to manage reasonably well up until this point, and I'll talk about that in a bit more detail shortly. I think the biggest thing that has hurt us somewhat in this quarter, in particular, that I'm reporting against, is our ability to get train operators where we need them. Some of the ramp-up and effects of COVID in the state in WA itself certainly made that shortage of labor even shorter than we saw the quarters previous. So we're seeing it's starting to ramp up and affect us.
But I think one of the biggest issue is equipment delivery on time and, certainly, our ability to provide technical resources from different areas of Australia that normally would come in at a technical base to help us maintain and troubleshoot and technically resolve some of the issues on fleet has certainly been very, very thin on the ground and high demand. So that's been the problem leading into this quarter.
The quarter has generally been affected by the ramp-up of COVID in WA and the amount of development and work and the resources, demands that are currently occurring. So we're starting to see that overflow. So I think there's a bit there, but we've been able to manage around. And if I look at the total material move from Gwalia the mine, even though I'm flagging we've been affected, the current production rates from underground to the surface are higher than what they've been for many years. So even with those shortages, we've been able to move the material from a TMM perspective.
I think now the threat that we're certainly looking to manage closer is now WA opening up pretty much to the rest of the country. What seems to be the increased explosion of COVID cases in the state is certainly a threat moving forward. It's something that I'm not planning for, but it's something that we're managing very, very closely. And we're putting our control hats on as best we can to mitigate those controls by having different rosters, having extra people in areas that are critical and certainly ramping up. I'd have to say that mining contract has started to really deliver some good results in the whole and the work that Macmahon's have been doing, resourcing from different parts of not only Australia but different parts globally, internationally has certainly been encouraging. So -- we're trying to manage the best we can, but I see WA opening up as a further and potential threat to us, Peter, yes.
Craig, just a follow-up. Your comment about the technical skills, that's interesting. Is that about dollars? Or is that about people, bums on seats?
Yes. Look, both. I think the -- when we have -- I mean we've had a couple of shuts in this quarter. We've had a lot of plan work. And at times, we've had 30% to 40% of the contractors that was supposed to come to site, not turn up for the plan because on the day or the week before or whatever, they've found $1 an hour extra somewhere else and they've gone off to do another shut somewhere else. So dollars are playing a part of it, and we're seeing that pressure certainly flow through in some of our costs.
But I think the technical labor, in particular, there are a lot of technicians from Caterpillar and from Epiroc and a whole range of different specialist fields come from the Eastern states. And access to those people and the demand is extremely high. And look, I'd have to suggest that people in the Eastern states have learned how to work in the Eastern states. And a lot of people are not traveling anymore, which is causing further pressure on getting the resources. So it's something the industry is managing with as best as we can with what we've got.
Could I shift gears to PNG? And it's good that you're there because you're on the ground. You obviously got a much better sense than most people, and you've got a great experience in PNG prior to that as well. And your remarks, what take your optimism as wishful thinking or are you confident that you could get progress prior to the election?
Yes. Look, it would be nice to have this call tomorrow because I'm meeting some of the ministers on my way back to Australia today and tomorrow, though I'm currently at Simberi heading to Palm tonight, and I do have meetings tonight with some ministers to try and get that answer.
Clearly, with the elections in FY '22, it's an interesting change politically here where normally a caretaker government has been put in place for business as usual. For the first time, I think first time in history, that's not the case. This time where the current ministers are still sitting and it's business as usual as they campaign for the 2022 elections in June, they still stay in their portfolios. So I've got access to them.
The issue will be the distraction. And of course, one of the things that I raised was the Minister for Environment has been changed. And up until yesterday -- the MD of the CEPA was also changed in the recent week. That has been problematic when they're both sitting on the approval for us, which are imminent. We thought we'll get the approvals in like now. So one of the things that I'm doing when I'm here is meeting with the minister tonight and tomorrow to see if there's a work around and we can possibly work through those potential issues. Although they now have reinstated the MD, the past MD back into his role, but the politics continue on. So I'm not confident. I'm optimistic, and I know a little bit more in that space tomorrow.
Maybe we should convene the call on Monday.
Absolutely.
Our next question comes from Reg Spencer with Canaccord Genuity.
Craig, just following on from earlier questions on labor availability issues. Can we presume that the risk of further disruptions or impacts from that is factored into guidance? And what might -- or how then should we think about potential impacts into FY '23 both from labor availability issues, but general industry cost inflation as well?
Yes. Look, I think there's a couple of controls that have got in place to protect us somewhat around that threat. And one is I know how much material is on the ground. So our development is not where I'd like it to be underground at Gwalia in particular, and we're doing some work to improve on that. But I know that, for example, the rehabilitation of the areas that resulted in the fall of ground last year, I now have -- or the team has access to. They are high-grade areas, which is great.
I know how much material is on the ground and clearly have a good understanding of the grade that's in that material. So I believe the quarter, as I note now, the quarter coming, we've got a great start to that with a huge percentage of the contained gold required sitting on the deck, and we just need the trucks to cart it to the surface. So we'll put every resource we can if we get short resources -- short of resources into moving that ore. So I don't believe, as I sit here today talking to you, that Q4 is a threat nor should I be thinking about changing guidance or will I be keeping a very close eye on all that. So Q4, although some risk is not as high and I'm not as nervous about that, I think future quarters may unfold a little bit differently, but depending on the COVID situation in the state and how that unfolds.
But again, as you know, our mining contract is with Marsden and they're doing a really good job in manning up and resourcing and future plans to do that. So we're all working hard on controls. But in terms of quarter 4, I'm a little bit more comfortable than I probably would have been in any other quarter knowing what's on the ground underground.
Yes. And just on industry cost inflation and how one might think about costs into next year. If you had to put a percentage number on just overall average cost inflation, where would you put that, Craig, from what you've seen to date?
Yes, that's a tough one. Because when I put my operating hat on, just my pure operating hat, I'm seeing a 15% to 20% increase in a lot of things. And some of our reagents and whatever as high as 50%, 60% increases. So that's huge. But overall, I think it's got a 10% to 25% impact. What's really concerning me, given the projects that we have in front of us, like the expansion of the mill at $30 million, that's where we see it's sitting with -- on today's numbers, if that could escalate because the steel prices, because of contractor availability, whatever, a sulfide project, in country construction, steel prices, whatever, seeing the increase in those. But what I'm also seeing is overseas -- things like anything you have to ship to our operations from internationally has tripled in price. So when we talk about buying an oil cube for diesel generation or power generation for the sulfide project, it's not only from the prefeasibility time to now. Some of those components are quadrupled in price. So I'm seeing this global effect affecting all growth projects. And I see some business, some companies have put some of their larger projects on hold because of that. We're a much smaller scale, but I still see a significant increase in cost pressures for sure.
That's very useful. Just one last question on Simberi sulfides. So if we were to take maybe a worst-case example, and you're pending your discussions with the various ministers and government departments on the permitting. Let's say that construction -- you got your approvals and construction starts, and I'm just going to pick a date, let's say, back half of '23, 12-month construction. Then you're into 2024, your mining license expires in '28. That period in which you've got to recoup your capital for that project starts to dwindle, assuming you don't get an ML extension there. So how do you think about the project as it stands? Is an FID still subject -- well, I guess, up in the air subject to what you're subject to the permitting, but also the fact that your runway on the mine life is now looking a little bit shorter as well?
Yes. So let me talk about that. The runway on the mine, I think we -- in 2019 said somewhere around '20, '21 we'd be out of ore. We've been able to extend that ore at least for this year and next year. And I've certainly spent this week here talking to the team, and we have opportunity to extend the life of this mine and from an oxide perspective more than what we've currently know it to be. So I'm looking forward to putting the extra drills in here and getting some of that work done.
But we have 12 months at least of full oxide material available to us in front of us at the moment. Now it's not that efficient mining. It's small areas, and it's selective mining in small areas that is not that efficient. But still, it's all source that's available to us, and we will use that. Given my limited knowledge, I -- and what I've seen my last trip here -- I've been here twice in the last 4 weeks, specifically, because I can now, but specifically look at oxide extensions and what we can do differently, knowing that there's still some headwinds with permitting and probably cost escalation and FID and a few bits and pieces.
I still believe we've got 2 years of oxide material in front of us with selected mining before we go into transitional material. Now the transition material is available to us now if we wanted it. Sulfide material is available to us now, if I wanted to put it through the mill. But it destroys the value so much because of the recovery issues, we elect not to do that. I'd rather want production back slowly and get the best out of the resources that we've got now and keep stockpiling the sulfides for run start. So I think there is a mine plan, mine balance to be had.
And we work through the best-case scenarios on that. But I'd have to say, driving the mine this week with the mine technical services team, the site technical team here and the mining group, I'm very optimistic about extending the life of the oxide program a little bit more than we currently know today, which will buy us some time into the sulfides. The thing that concerns me of the sulfides is not the mine plan, not phase positions, not whether we've got sulfides or not because you can see that dropping out of the walls. It's the cost escalations and what that does and working with the government here to get the permits as soon as we possibly can, which is what I'm working on.
Our next question comes from Matt Greene with Crédit Suisse.
Craig, my question just got you on Gwalia, if I may. Just on development rates, you mentioned that you're not -- development rates are not where you want them to be. I noticed you don't disclose how many headings you have any more at Gwalia. But if I think back, I think you're around sort of 23, 24, ideally, wanting to get up to close to 30 to sustain just over 1 million tonnes. Now you're putting more jumbos in place. You've mentioned that getting -- sustaining CapEx is lowest on the inability to get jumbo operators there. Can you just give me some color as to how the development is going? How many headings you have currently? And do you still expect to get up to 30 by year-end?
No, I think 30 is certainly a stretch target at this point. We've got in the order of around 20 is my understanding of today and -- but I'll reconfirm that as we ramp up towards that 30, I want that 30 not -- that 30 is more than what we will need to deliver the 1 million to 1.1 million tonnes of ore to the surface. It gives me mine flexibility to continue that 1.1 million run rate with flexibility. So I don't actually need all those headings for that 1.1 million. It just gives me the health of the mine and the ability of the mine to consistently deliver at those rates and mining optionality.
And you've seen a taste of that occur last year into this quarter, in fact. That flexibility going from one mining front to about from 4 headings up to about 15, 16 headings that we had towards the end of last year, allowed us when the fall of ground occurred. That would normally stop us and stop us in our tracks because of one -- you know the story because of one mine in front, et cetera. We were able to change the mine and be flexible enough to go off mining somewhere else, although albeit we took a bit of a punch this quarter because we're away from our high-grade areas, 9 high-grade areas, and extended our mining in the lower-grade portions of the deeps.
But it gave us that mining flexibility to continue at a rate which was -- which is acceptable and not fantastic, but acceptable. So with that vision of more headings continues on. That will be supplemented not only were the extra headings that the extra jumbos will deliver over the next quarter, but the quarters to come into next year. But when we open up the shallows between 600 to 1,000 meters below the surface, that gives us further opportunity and flexibility. If something happens in the deeps, whatever, we've got the shallows to haul from and vice versa. So I think the 1.1 million tonnes is almost touchable, right, where it was a vision and a strategy I can actually touch it and see it now. It's okay for me to say, the team at the site might be a little bit more uncomfortable with that comment. But we're really debottlenecking this mine now to put it back on where it should be, which is reliable delivery to the mill at the rates that we guide on for many months, not 1 month or 3 weeks at a time. Does that make sense?
Yes, that was correct. So just sticking on guide, if I may. The purchased ore -- now the underperformance on the grade there, was this expected? Or is this more a reconciliation issue by the third party?
Yes. Look, I think the -- when we went into the agreements, to be fair to the operators, I mean, they had their grade control. They assumed they were going to give us x amount of tonnes at the grade, and they've hit their mining headwinds. And their reconciliation hasn't quite matched up with where they thought it would be.
When we get it to the mill and when it's transferred -- transported to the mill, we batch processed it and then we reconciled against what the expectation their mine plan is and their grade control, and there's been a significant difference in the 2. And that difference has been validated on independent tests and whatever. So unfortunately, they have underperformed of what they predicted. We assumed in our plans going forward that they would deliver what they said, and it hasn't occurred.
Now I certainly understand the position they're in. It happens to us every [ damn ] quarter, it feels. But they are doing quite a good job again with narrow mining and doing what they're doing. They just haven't delivered the tonnes that we expected or the grade that we expected, which comes through because we purchase it, it comes through on the bottom line impact to our production profile. It doesn't mean for a moment it's out of cash or out of the money. It's not a great situation to be in when we're guiding on including those ounces. So we've come up a bit short.
That's helpful. And has this -- I mean, we're a few weeks into this quarter, have things improved on that front?
Well, we're currently batching now, to be honest. So I can't answer that until I see the reconciliation numbers. And once we process the current batch, I'll know more, but I don't know. I suspect not. It's been consistently underperforming now for 2 quarters. First quarter 6 months ago was flagged as a big issue. That continued into this quarter. And our team, along with those teams, have been working through those headwinds to see if we can resolve it somehow.
That's great. Okay. And just one final one, if I may. The comments you made -- and sorry if I missed this, but you said looking at 400,000 to 500,000 tonnes a year by road from Zoroastrian. Are you -- is that the sort of -- I presume you're somewhat mine-constrained currently, but are you looking at increasing from that 300,000 tonnes a year, 30,000 ounces to try to see if you can squeeze 400,000 tonnes to 500,000 tonnes. Is that something you're looking at?
Yes. The answer to that was absolutely yes. And I think I made a comment during my presentation today about as soon as we get underground, we'll start looking at further development drilling in different areas looking for opportunity. We believe there's some upside to be had. What that is, I don't know. We'll do the work to find that out. The team has done a great job in pre-engineering and getting us ready for an earlier-than-predicted start-up.
But we've been using Bardoc's public information up until now. Now we can get in and do the work ourselves. And I have no reason to doubt that the team, once the decline is in and we do some further drilling, that we have upside and further opportunity. I don't think I'd like to continue carting 500,000 tonnes, 600,000 tonnes by road. We're really working hard with the key stakeholders to bring the rail into that transport plan as soon as we possibly can. And then the sky is a limit, particularly when we get Aphrodite online in a couple of years' time.
Our next question is a follow-up from Peter O'Connor with Shaw and Partners.
Craig, thinking back to your comments about cost inflation and CapEx inflation and the projects you have in front of you. And given your history in the industry, are we back where we were 10 years ago when we would have to make decisions about where the product should go given CapEx cost inflation? And how much wiggle room do you have with Simberi sulfide in terms of those CapEx and OpEx pressures?
Yes. Look, I think the wiggle room -- so let me start at the very end, Peter. The wiggle room is really concerning me on the sulfide project. Not that the costs that I've got in draft and it's really a high-level draft, worry me the overall project scheme of things because the payback on the project is still very, very robust. It's got a great NPV and IRR, though what, I guess, hurts the project is we say a number 3 years ago when you start PFS and then going to FS, and these numbers always climb. And it certainly climbed during the year for a lot of reasons.
And now we're seeing all these cost pressures on top of that really do concern me. I don't think we've gone back 10 years ago. I think 10 years ago it was more about a resource constraint issue than material issue and what we're seeing today. But the stand-alone sulfide project itself is robust, and it's a good project. I think is it palatable to see the escalation cost? No, it's absolutely not. And as I said, we'll use this white space between the delay in the FID from myself to the Board going to the Board and the team as to what further can we do to reduce those cost pressures or spread the cost pressures out.
The other thing, I think, from a strategy and strategic position from St Barbara as to what's the timing -- absolute critical timing given the capital spread that St Barbara may need over the next 5 years of what can we do creatively in the business to level that peak of spend over the next couple of years into a 5-year plan, and we'll do that work as well. So I think the sulfide project, great project stand-alone. It was a brand-new mine, and that's really what it is. It's x amount of dollars investment for a 12-year life of mine at around 150,000 to 180,000 ounces a year. You're not going to buy a mine with that sort of capacity for the numbers that I'm seeing come through anyway. Although they're somewhat escalated at this point. The small increment changes that we need in the processing plant at Leonora to get the mill to 2.1 million tonnes is still in the order of $30 million. And that will take the mill reliably from 1.2 million to 1.4 million to 2.1 million to 30 million is very low risk and very low capital. So that's a great project. I think what we -- and what the team are doing is looking at the timing in the Leonora province plan of where the refractory ore material from Aphrodite fits with our own refractory ore material at Leonora already is what is the timing of that project and what can we do there in terms of a project flattening, if you like.
Can we defer? Do we need to bring some forward? And how does that sit? So I think that from a strategy perspective, we're doing a lot of sale searching on what we can do differently and what could be done differently to spread that capital load requirement out on the business over many years and not just the next 5.
There are no further questions at this time. I'll now hand back to Mr. Jetson for closing remarks.
Yes. Look, Peter, and Matt, thank you to everybody that's dialed in and the questions that I received this morning, the interest you're showing in St Barbara and the demonstration today, in particular, is around we're on the cusp of really delivering some good results, solid results. But certainly, with our province plan coming to life at Leo, what that does to our business. It is certainly all upside and potential upside even further. So watch that space. I'll talk a lot more in detail in Simberi once I have some more information and meet some of the ministers tonight and tomorrow. And I'm heading to Atlantic again in a few weeks' time heading to the federal government this time around permitting and also engaging further with the local stakeholders in Nova Scotia. So things are finally opening up and moving within St Barbara. Thank you very much for your interest for everybody this morning. Thank you.
That does conclude our conference for today. Thank you for participating. You may now disconnect.