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Ladies and gentlemen, thank you for standing by, and welcome to the SBM Briefing on FY '19 June Quarterly Report. [Operator Instructions] I must advise you that this conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Bob Vassie, Managing Director and CEO for St Barbara. Thank you. Please go ahead.
Thank you, and good morning, everyone. Thanks for joining us for St Barbara's June 2019 quarterly report briefing. During the call, I'll also discuss the full year result, at least with respect to production and all-in sustaining cost. The full year financials will come out next month. Financial year '20 guidance, we'll also cover as well as exploration results and strategy. On the call with me today is Garth and Rowan as usual; and David Cotterell, Manager, Investor Relations.I'll try and get through the slide pack relatively quickly so we've get good time available for questions. I guess the key highlight during the quarter was our acquisition of Atlantic Gold, which completed on Saturday, early morning, our time. I'll discuss this briefly, just reminding everyone we've only just got the keys. But I can say, however, that the Atlantic team has been very accommodating in allowing us to get a head start on integration. And I'm pleased to say that because of that, on day 1, things went very smoothly and we're well advanced on our integration plan. This is, of course, aided by the fact that we're retaining the entire existing operating team and key leadership. As announced yesterday, Mr. Steven Dean has joined our Board as well. So that gives us great continuity.Another highlight was some of the drilling results that were presented this quarter. Obviously, we've got a lot more plans going nowadays in terms of exploration, and we are encouraged to see a lot better intercepts to the south in Gwalia in the deeper areas that we've been drilling for some years now. The quarter at Gwalia in the year as well was impacted by the paste line blockage delaying production from the final stope of the year, which we announced previously. Without this incident, Gwalia would've had a pretty good year given the production impact of the Gwalia Extension Project and the ventilation constraints that we've been discussing in past quarters.Simberi had a record year, again, up 6% on the previous year. So that's year-on-year records for 5 years. And the exploration campaign looking at the sulfide project continue to have encouraging results.Just moving on to the highlights on Slide 4. Production for the quarter was 86,000 ounces. Operational cash contribution for the quarter was $58 million or AUD 682 million an ounce. Simberi's full year cash contribution was AUD 98 million, a record, up 20% on the previous record of last year. Cash balance at the end of June was $891 million. I guess I can say that officially for the year ended the 30th of June, it's a nice number to be able to say. And that was obviously post the successful capital raising with $780 million of that allotted to the settlement of Atlantic Gold, which has just gone through in the weekend.Just covering on Slides 5 to 7, some slides that you would've seen from the announcements when we announced the Atlantic Gold acquisition. It was completed on the 19th of July, and it's worth reiterating that the acquisition does tick all the boxes for us on our strategy. And we've been presenting that strategy for some time, and we're really pleased with our acquisition. We've paid a fair price for a low-cost producing asset with a long life ahead of it and terrific exploration potential through that corridor. As I mentioned earlier, we had lots of very positive engagement with the Atlantic team. And the more we have learned from working with them has only added to our positive view of this company and why we did the transaction.Slide 8 on safety, we've been talking about this a lot. Safety remains a key priority for us. We had 5 again low-severity injuries during the quarter with 3 at Gwalia relating to manual activities underground. Just pointing out that whilst we talk -- we are down at recording LT -- lost time injuries we record -- recordable injuries, including if you have to take some medication or roll your ankle or you -- we have a cut that it takes one suture, but we don't want any of those. A couple of years ago, we only had 5 recordable injuries across the whole group. That's 2 at Leonora, 2 at Simberi and 1 in the warehouse corporately. That shows us that 0 was indeed possible. Now this year, we've had 23 injuries driven by 16 injuries at Gwalia, of which half were hand injuries. Many were associated with growth activities such as the Gwalia Extension Project and drilling. Needless to say, we're redoubling our efforts on the line of fire and hand injuries while at the same time moving forward on our work around safety leadership and behaviors.The consolidated Q4 June results on Slide 9 with 50,000 ounces at Gwalia, 36,000 ounces at Simberi, totaling 86,000 ounces for all-in sustaining of AUD 1,219 an ounce. So that get driven up by the lower production. When you look at the whole financial year, we delivered 362,000 ounces at an all-in sustaining of AUD 1,080. So when you look at the current gold price, that's quite a healthy margin and good cash generation.Gwalia, in particular, the quarterly result I've touched on where we had the -- had to push out a stope into the next financial year due to the paste blockage, which was resolved as we had reported. Grade was still a respectable 10 grams a tonne, but the production was the lowest in some time and impacted by the ventilation peak activities at the Gwalia Extension Project, including completing and commissioning the PAF system and actually driving out a kilometer-long drive to get to the last ventilation raisebore, which I'll talk about in a minute.Slide 11 shows Gwalia's annualized production and costs along with financial year '20 guidance. Gwalia is expected to produce between 200,000 and 210,000 ounces at an all-in sustaining cost of between AUD 1,230 and AUD 1,290 an ounce. We've talked about this year as being the transition year for Gwalia as we go from a restricted mine with respect to ventilation and trucking to doubling our ventilation in January but then having to catch up our development and indeed develop a different style of mine with the double decline and lots more development per ounce. Talked about that in the past. So we've really got to set that up. So we are having to make some choices this year that prioritize development over ounces. We could go chase the ounces, but then we'd be perpetuating the problem and not setting ourselves up for the future because we are doing Gwalia Mass Extraction, not with pumping but with trucking. And we've got to set up for that.Moving on to Simberi, Slide 12. Achieved a near-record quarter and a fifth consecutive record year. Guidance is on Slides 12 and 13. We're continuing to invest in Simberi with -- this mine was meant to be finished a year ago. Still going strong. So we've done a fair bit of work on the Ropecon with the support ropes completely changed, and we're running at about 1,600 meters of conveyor belt as we speak just to keep that Ropecon because it's such a cheap way of hauling to the plant that we want to keep that up. The -- we had some fleet purchases as well recently, and so we're making sure that we don't -- that we do feed what is generating a lot of cash for us.On Slide 13, we're guiding Simberi between 110,000 and 125,000 ounces at all-in sustaining $1,285 to $1,450. Obviously, a lot of Simberi's costs are linked more to the U.S. dollar and the kina, which tracks the U.S. dollar. Whilst we'll be trying for another record for Simberi, it does have a history of overperforming. And with -- we are looking -- we will be looking for another record to make 6 records in a row. But we have to realize that we are close to sulfide boundaries in some areas, and we will be pioneering a new pit off the ridgeline. So that's where our guidance is at the moment. We're finalizing our resources and reserves for the release with the full year results next month. Drilling off for -- and that drilling was cut off at April to go into that calculation. The drilling still continued and continuing today. The drilling for sulfide at Sorowar has indeed found some extra oxides, but we need to still determine what impact they will have on our mine plan. And there will be more about that next week -- next month, sorry.Atlantic Gold production on Slide 14. Obviously, we've just got the keys. So we've put the slide here to note historically what has been achieved. They only went into commercial production a year ago. Noting that the quarter that's just been completed before we've got the keys was 23,000 ounces. Atlantic has been reporting and guiding on a calendar year basis. So casting that into our financial year, looking back in terms of the financial year that we report on, the mine achieved 93,000 ounces at an all-in sustaining in Australian dollar terms of AUD 787 per ounce. We will provide guidance on production and costs in our Q1 report in October once we've been able to develop that as we only completed the transaction on the weekend.Slide 15 shows consolidated guidance and performance. So for the whole year, 362,000 ounces at $1,080 all-in sustaining cost. Guidance is expected to be between 310,000 and 335,000 ounces at an all-in sustaining cost of $1,250 to $1,350, not including Atlantic. Now you can see from the previous slide their current levels of performance. So obviously, that's going to increase our ounce output and lower our all-in sustaining cost overall, which is a good part of the reason why we've done the transaction.Slides 16 and 17 shows net cash movements and cash usage. We've endeavored to show you separately the organic component because obviously we did the entitlement offer and have used those proceeds now recently to settle Atlantic. So the improvement in the cash balance without all that involved was $29 million as we continue to spend on finishing the Gwalia extension project and the likes, and we're doing a fair bit more exploration.Gwalia extension on Slide 18. Project is about 90% complete. We've spent $100 million so far. We have a total for $412 million. Pleasingly, the high-voltage power cable hole was giving us so much trouble was completed and [ paste ] and we've successfully lowered the power cable down. So that's been done. Commissioning activities on the 1420 crushing level of paste aggregate fill have been ongoing, and commissioning is starting this month on the 1460 pumping and mixing level. We've completed the long development of the 1000 Barden decline to the side of the final remaining raisebore, and the raisebore machine is being set up as we speak. So essentially, because we've done the 2 surface raisebores 1 one of the underground raisebores, we can now get all the fans and surface infrastructure done while we're doing the last underground raisebore. People are on-site during the power station expansion as we speak, all that's going well, so we're still on track to finish the last raisebore in December time and commission things and be able to have ventilation turned on in January. And that will be a happy day when we're able to do that. And with PAF, we'll look to be running PAF in August. And again, that'll be a happy day because it will be taking care of our waste underground.And that's topical because if you look at Slide 19, the impact of the Gwalia Extension Project on trucking capacity over the last year, there was no raiseboring in this quarter. But you can see the impact of the raisebore waste before, and in fact, how much dirt we're actually moving. We, as you know, are targeting our trucking [ vision ] in the Gwalia Mass Extraction project to be at 1.1 million tonnes of ore movement. This graph shows us we can do it because we're virtually moving that amount now, but a fair bit of it is waste. So when we get the ventilation on, when we can demonstrate our development rates with that ventilation, we'll be able to recast the life of mine plan.So we've left the indicative future profile as we have been saying it for some months now, and that's presented on Slide 20. Always we'll be trying to improve that but as I said before, we want to run 6 months of development after we get the ventilation turned on. So at the end of this financial year, we'll be able to recast how we're going to mine Gwalia.And interesting on Gwalia through Slides 21 and 25 and our other exploration, we're getting really good results between 2,000 and 2,200 meters below surface as we do drilling out to the southern extension. We are giving good, thicker [ end strips ] which sort of shows that our previous drilling might have not have been in the center of the orebody because the plunge was going further south. So we're continuing to do -- drill the holes off those parent holes. And we're, in fact, doing an extra parent hole just around the corner from the state hotel, or around the corner from our offices, Jessie Alma, where we've done some drilling with the -- shallow drilling and we're following up with more drilling in the September quarter. It's looking interesting there. And we're doing a lot more regionally as is shown in the slides.Back Creek in New South Wales, we've only just started there, but we're encountering copper mineralization and gold from the get-go in that area. So we'll be doing a bit more work there. With the Newcrest joint venture and the Papua New Guinea next door to Simberi, the Banesa target. A couple of holes come through there that do show very large intercepts but of low-grade gold and copper mineralization, the right sort of rocks that we're looking for, for large-scale porphyries. And [ DSO ] depending on another hole and a fourth hole has commenced.Drilling at Simberi below Sorowar, we've been putting out slides on that over the last couple of quarters. We're now doing 30 by 30 meter spaced drilling, which is really what's required in the 60 by 60 that we've done. We're still doing some 60 by 60 further out to the north as we can get [ benches ] to drill off as the pit expands. And again, positive sulfide results but also some oxide encountered there, and we'll be looking at how that comes into the mine plan.Strategy and growth on Slide 26 and 27. As we've put it out before, obviously, it highlights what Atlantic Gold brings to St Barbara. So once we've actually finalized getting in with Atlantic Gold and go through and convert their plans into our financial year plans, we'll be able to give guidance for Atlantic Gold and then also then combine it as the whole group guidance. And like I said, that'll take our ounces up and our all-in sustaining costs down.So in conclusion, we've had a good quarter all considering, especially with tough times at Gwalia, that we need to -- we know what we need to do to set ourselves up for the future there, and it would be great to be able to turn the ventilation on and get PAF running, as I've described. The exploration, we're putting a lot more effort in there and some encouraging results. And at the end of June, we were debt free with cash of $891 million, obviously $780 million going into settlement for Atlantic. We have undrawn facilities of $200 million.And with that, I'm happy to take questions.
[Operator Instructions] Your first question today comes from the line of Reg Spencer from Canaccord.
Just a couple of questions around Gwalia CapEx guidance, if I can. Obviously, once you've got the ventilation in and understand better your underground development capability there, I presume you're going to give us some medium- to longer-term guidance for that net feed into your life of mine plan. But I was just more interested in the growth CapEx figure, you mentioned elsewhere that you've guided about $12 million to spend with the budget for the GEP. What are the other items in that $35 million growth CapEx guidance?
Yes. Just -- I'll get Garth to answer the second part. The first part with the -- with Gwalia's sustaining CapEx, is as you know, we're now splitting off into -- at depth into double decline. And so that's where a lot of the sustaining capital goes, is in the decline. And also because we've been hamstrung by ventilation, as ventilation comes in, in [ January ] we've been -- we're going to be catching up a lot of development and actually developing levels out so that we can have places to pull stopes. So that's why we're sort of -- and this is why I said in my talk that we're prioritizing development over ounces to make sure we set up the mine well for the future.On growth CapEx?
Yes. So, Reg, so in growth CapEx it's completing the extension project. There's also -- I think we footnote in -- or put a note in the quarterly that we're spending $15 million on further upgrading.
Yes. [ For the GMX stopes ].
Yes. GMX around the ventilation, further upgrading. So that's in there. And then there's also some CapEx in there for FY '20 around the tailings dam left and also from the minor stuff around further studies. But a lot of it is that $15 million plus completing GEP.
Yes, and I think it was about a year ago that we put out there that we were -- we chose to future proof ventilation for GMX, pumping or no pumping, as we've decided to do a trucking just so that we weren't doing -- having to go and upgrade the fans now and rather -- with the GEP project rather than do it as a second step.
Okay. Jumping across to Simberi, could you remind me when you think you will be in a position -- or when you might have completed your assessment of the sulfide project? I know I might have asked you about this previously. I was wondering if you could remind me about that, please.
Yes. The drilling had been going slower than we'd hoped really due to drill rig availability in Papua New Guinea and the difficulty of drilling that sort of ground where we've had to bring in boosters to keep -- to get the depths that we want with RC drilling. So we're doing -- we should be finished the 30 by 30 campaign at the end of August. That's my plan there. We cut off every resource and reserves in April. That's our process as we just had the drilling we have in April and then do all the work around resources and reserves to report for the year-end. But whatever holes we do have, we bring into the study thing. So what we had -- what we're doing in parallel with the drilling rather than wait for the drilling to complete is we're doing -- we've already engaged people to upgrade the PFS, and that's from the PFS we did last time. It's looking in more detail at the concentrate handling end of the game and the potential assessing options on putting a wee bit more milling in the front end to keep throughput rates up at a lower -- at a smaller grind for better condensate. So that's all going on in parallel.I think we'll have a good view of the orebody at the end of August, and then we'll update the study through to the end of the year. And that'll be in quite -- we've already done the study, we'll be upgrading that. And so at the end of the year, we'll be able to make a strategic -- this is the -- end of the calendar year, we'll be able to make a good strategic decision around Simberi.
Excellent. And then finally, jumping across to Canada, I know you've only just got -- you've got the keys, but any idea as to how much thought -- well, let me rephrase that question. How long do you think it might take to put your fingerprints on the longer-term development plan for Moose River? I note in your presentation, your quarterly and under the Atlantic plans for the asset, they had a production growth up to 250,000 ounces, but I see now that you're only saying plus 200,000. Is that of a bit of a clue as to you might be taking a slightly different approach to the medium- to longer-term development?
Look, it's really just because we need to be able to get our hands on not only the asset but the team there. And if you look at the permitting, the permitting seems to be in good shape and on good track to deliver. And it's really how you stack those 3 extra mines up because at the moment, it's got Beaver Dam and Fifteen Mile Stream coming on together at an almost the same year. And I think that we're able to do that and it gets our ounces up. I think what's more important is how we optimize that production schedule knowing where more resources are coming from. And I think we've alluded to the fact that where they've been drilling, for example, in Fifteen Mile Stream to put tailings, they've had to move it because where they were doing the condemnation drilling, they found another deposit.So we're about to drill -- we're finding more in Cochrane Hill. We're about to drill a bit more around Beaver Dam. And as -- for example, if those resources get bigger, that will change the -- it could change the sequence where you might say, okay, we'll run Beaver Dam for longer with a higher rate. So you're trying to optimize the sequence with only knowing some of the picture which is what's been drilled to date. And if you cast your mind back, they did all the drilling and did a great job of consolidating all the different leases and ownership and everything to get the whole strike of Nova Scotia into their pocket and then stopped drilling because they were spending all the money on building the Touquoy plant. And now they've only just recommenced it. So really we want to have a good look at that drilling and targeting and go through the whole process again of optimization. But what they've got is a plan there that does make sense.
Your next question today comes from the line of Matthew Frydman from Goldman Sachs.
I just wanted to ask a couple of questions around Gwalia, in particular, development rates are obviously the key opportunity there, as you've identified. Can you talk about what your current advancement rate is now in terms of meters per month? And then also, what do you think you would need to get to in order to deliver that 1.1 million tonnes per annum? So I guess what's the gap? And then how much of that gap in your view is going to be delivered by, I guess, the infrastructure improvements around the GEP and ventilation and the PAF circuit versus, I suppose, productivity improvements from Byrnecut and initiatives like the autonomous jumbo? That's the first question.
Yes. Look, it's a great question. I think just to put it into context though, Gwalia up until recently hadn't been -- it just had to do just-in-time development. So you might pull a [ shot ] and leave the jumbo there and it wasn't development-constrained. Then as we turned the corner to really needing development rates to increase, we didn't have the ventilation. So the current development -- we've got 4 jumbos, and we're probably doing about 330 meters a month out of those 4 jumbos, which is -- and trying to look for equivalence really is hard because we're deeper and we bolt down them right down to the floor and we don't just bolt the roof and everything like that.But there's demonstrations towards for that size of fleet and other mines towards 680 meters. Now we're not planning on 680. I guess we're sort of planning on getting the 550, and we think that's very achievable. And that's what's in our current plans. Obviously, if we can do better, and indications are Byrnecut's able to do that at other mines, then fantastic. But what we really have to be careful of is you've got to have development headings and you can't just throw jumbos into it because you're not going to put a jumbo behind another jumbo. You've got to have a place for it to work. So one of the things we are doing, which isn't contained in our current forecast or anything until we do the work, and we're about to open up a project on this. So 2 projects, 1 project is scalable, which I've talked about before, which is using the current -- the next few months, 6 months, until we get ventilation on to actually gear up for success and development grades. And that includes the auto jumbo that we've just done our first month with, and that's getting a lot more advanced per cap than we are used to getting, so that's positive. And also the systems and the process we use to development to get to more the -- what the industry is getting as to where we've been. And like I say, where we've been has been either because we didn't have to do it or because we've been ventilation-constrained.So we think our targets that we've got in there are quite achievable. To go beyond that, we could do it but we need places to work. So we're currently thinking about -- and we need to optimize this in terms of net present value. But going up the sequence into -- we've been in West Lode before, which is about 80 meters offset. So it needs development but we could invest development into having another set of working phases in West Lode, especially in the juicier sections of it.But putting that aside, we're at 330. We want to get to 550 and the industry is well beyond that. We've got a bit of special circumstances, but the ventilation is obviously going to allow us to do that. It's just that we have to do a lot more development per ounce because we're now doubling our decline development requirements and there's very long drives between the declines because whilst the strike of the orebodies widened out, that's a good thing, it's also got thinner.
Sure. And then just secondly, as you've identified in the slide deck, around 40% of the material you moved in the last quarter was waste and that was without any raiseboring. Can you remind us of how much -- in sort of steady state of the PAF circuit, how much you'd be hoping of that waste would go to PAF? And then in terms of how many trucks out of your fleet would you expect that, that would either liberate or that you would then divert to ore mining?
Yes. Yes. Look, our long-term setup for PAF is to probably deal with 75% of the waste. Now in the past, our waste had been about [ 200,000 ] tonnes a year. Now with double decline, it's going to be more than that. So we're looking to keep 75% of the waste into the PAF circuit. And the reason we're saying that rather than just assuming [ 100 ] is we're being realistic and conservative about you've got to have a stope to fill to turn the PAF circuit on. And you've got to -- sometimes when you -- if the stope is not there, you're not going to be pulling waste out. So the odd truck will have to go somewhere else and potentially surface. But it's going to have a huge impact on -- the moment from the bottom of the mine, it's taking them 1.75 hours to get out, and that's going to have a huge impact.The other benefit of PAF, of course, is not just that you're keeping the waste underground but you're pulling the stopes quicker. And the stope's cycle time, the biggest 2 parts of that is how quickly you can empty it by bogging it out but also how quickly you can fill it. And because we don't have too many places to go in our sequence and our sequence is driven by geotechnical considerations, then that's going to be a real benefit to us. So we're looking at -- our current plans include 75% of the waste going through the PAF circuit.
Sure. And then I guess following on from that, you mentioned the West Lode opportunity. I guess does that feed into whereby if you have trucks liberated from the PAF circuit and sufficient ventilation to develop into West Lode, you can therefore more effectively fill a mill and use some of that spare capacity?
Yes. That's what we're looking at. We -- what's actually interesting about the mill is we did do a bit of toll treatment to good effect in the June month. I should mention that. But -- and we'll keep looking for those opportunities. But obviously, we want to get to the 1.1 that we've talked about. When you look at West Lode, we can do a couple of things with West Lode. We may find that the net present value -- our scheduling optimization, tends to prioritize South West Branch at depth rather than West Lode. But you've got to make that optimization more intelligent and consider, well, if we had some -- even if we just went into West Lode and had a couple of stopes set up or dropped a couple of stopes on the ground, we'd have access to another front if we need it, so that if we get into a scheduling issue as we have under the ventilation constraints, we've got somewhere else to go.So we can look at it as building go-to capacity, or we can look at it as optimizing not so much on net present value but as -- on flexibility, which may be more valuable at the end of the day. So that's current work that's just getting underway. We've been doing a lot of thinking about it, but we just can't execute until January when we get the ventilation.
Sure. Can you just quickly remind us what the grades are in that West Lode area, particularly in the sort of the good parts as you've highlighted?
Look, the best part that I saw where we're putting a stope in was like 13 meters, [ back at ] 13 grams. But it's -- that varies a lot. It's actually got a bit better at depth where South Gwalia Series and West Lode sort of cover less at depth and make good sections. But up in the mine, it's -- where we've been running more like the 10 to 12s in the South West Branch and the equivalent profile -- level in the mine, say, around 1,540 or whatever, it may be around 7. Still good.
There are no further questions on the line at this time. That does conclude the call for today. We thank you all for your participation. You may now disconnect.
Thank you. Thanks very much.