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Thank you for standing by, and welcome to the St Barbara FY '21 Q4 June quarterly report and presentation. [Operator Instructions]I would now like to hand the conference over to Mr. Chris Maitland, Head of Investor Relations. Please go ahead.
Thank you, Melanie. Good morning, everyone, and thank you for joining us today. Please note the disclaimers on the second slide of the presentation deck. On the call with me today are our Managing Director and CEO, Craig Jetson; Chief Financial Officer, Garth Campbell-Cowan; Deputy Chief Financial Officer, Lucas Welsh; Chief Operating Officer, Evan Spencer; and Executive General Manager of People, Val Madsen.On today's call, Craig will discuss our Q4 results, and Lucas will update you on our Building Brilliance program, after which we will open up the call to questions.With that, I'll hand the call over to you, Craig.
Thank you, Chris, and good morning, everybody. So look, welcome to St Barbara's June quarter report. As always, I would like to begin by recognizing the traditional owners, the First Nations people of the lands on which St Barbara operates in Australia, Canada, Papua New Guinea and paying my respects to Elders past, present and emerging.Before I move into the main body of the presentation, I'd like to sadly but openly discuss the fatality we had at Simberi in May. One of our truck drivers was fatally injured when the truck they were driving traveled over safety berm and eventually rolling into the open pit. All of St Barbara was deeply saddened by this tragic incident. We have been providing assistance to the employee's family and counseling to the support for our Simberi team. Every day, everyone at St Barbara is working to eliminate fatalities and life-changing injuries. This is our #1 priority.An independent investigation has been completed with the report submitted to the Papua New Guinea Mineral Resources Authority, and the recommendations were reviewed and accepted. Further education on fatigue management is underway with fatigue technology audit for all our trucks and vehicles and will be progressively installed. This technology is already proven in PNG and operating in places and mining through our PNG operations.So just moving on from that said update. We're moving to safety always. We had 2 other recordable injuries for the quarter. Both were of low severity. We had no recordable injuries in April and June. We were committed to achieving our zero harm goals.Turning to Slide 5, our key achievements in quarter 4. On Slide 5, it points out, in the June quarter, we continued to drive our strategy of establishing 3 mines with greater than 10 years of operating life. We released the Leonora Province Plan and added approximately 1.4 million ounces of gold to our existing 5 million ounces of gold mineral resource. We have commenced further resource and development as well as extensional drilling, and I'll discuss the Leonora Province Plan in more detail shortly.During the quarter, we also progressed the Simberi sulfide project through further metallurgical testing, along with the development of opportunities identified in the prefeasibility study and feasibility study. We have put a process package out to tender and expect to deliver the front-end engineering and design study by the third quarter of this financial year, after which we will be in a position to make the final investment decision.The Papua New Guinea Conservation and Environmental Protection Authority continued its review of the social and environmental impact statement. I expect we will submit the remaining documentation required in the second quarter of this year. We remain on track for the first sulfide ore production in the second quarter of 2024 financial year.Our Atlantic operations had a strong quarter with mill delivering record throughputs. Lucas Welsh, who will be stepping into the Chief Financial Officer's role at the end of August, has mostly recently been promoted as Chief Transformation Officer, will shortly take you through our Building Brilliance program. Lucas has been leading the program as the Chief Transformation Officer, which has been instrumental in delivering the process improvements, which have helped Atlantic achieve a record throughput.From a financial perspective, we continued to strengthen our balance sheet with $100 million of cash contribution from our operations. After paying $21 million in debt this quarter, our cash on hand increased by 45% to $133 million. The COVID-19 situation in our operations at Simberi has improved with a significant decrease in community transmissions. Simberi has continued to implement the St Barbara COVID-19 protocols with the support and guidance from external medical specialists and additional controls to limit people movements in and out of the operations and on and off the islands. Currently, a COVID-19 vaccination program is taking place on site. To date, approximately 22% of our employees and contractors have received their initial vaccination. We are targeting more than 80%, and we have commenced information campaign for all employees, contractors and the community. As you would expect, St Barbara's COVID-19 management plan is working quite well and continues across all our sites.So turning to Slide 6, consolidated Q4 results. Gold production for the quarter remained at steady 82,698 ounces, which is a strong result given our operations at Simberi were suspended for almost half the quarter. This week, the MRA has granted conditional approval for mining to recommence with the mining production to ramp up over the coming weeks ahead. The Simberi processing facility is expected to be brought back online into production by the end of the first half of this financial year.Our group all-in sustaining costs for the June quarter were approximately 2% lower at $1,623 per ounce compared to the prior quarter, largely driven and due to the increased gold production at Atlantic. And most importantly, we have continued to operate despite our COVID-19 headwinds. Our Atlantic operations recorded a 30% increase in product -- in production for the fourth quarter to 26,718 ounces. The mine focused on delivering high-grade ore from the pit. Mine ore was up 19% compared to the prior quarter. This was despite the challenges of pit dewatering and congestion due to smaller work areas on the lower benches of the pit as the mine approaches end of life. The increase in gold production was the primary driver of the 10% quarter-on-quarter reduction in all-in sustaining costs to $1,111 -- sorry, $1,011 per ounce. Turning to Leonora at this point. Gold production was up 6% to 45,157 ounces. The strategy for the quarter was to increase the tonnes, maximize the resource from mining more than one area at a time. As a result, the mine growth for the quarter was 1.5 grams per tonne lower at 6.5 grams per tonne. This lower grade combined with ore purchased and costs and the cost of transitioning to the new mining contractor resulted in a higher all-in sustaining cost for this quarter of $1,663 per ounce.On a positive note at Leonora, all mined at Gwalia was 27,000 tonnes higher at 195,000 tonnes, reflecting the continued focus on debottlenecking. This has enabled a strong increase in ore milled for the quarter at 291,000 tonnes. This is the highest quarter of milled tonnes in 5 years since the first quarter of FY '16 and significantly increased depth of mine is certainly a great result. As expected, grade was down to 5.3 grams per tonne, as there were increased stockpile material and purchased ore to maximize the mill capacity. This generated additional ounces and revenue.At Simberi, gold production was primarily impacted by the shutdown of the mining operations on the 21st of May due to the fatal accident at the mine.Just briefly, and on Slide 7, I'll turn to Slide 7 now. An inspection of the Simberi's deep-sea tailings placement pipe identified that to have been damaged, leading to a hold of processing. An independent assessment has been conducted into the failure of the pipe by consulting environmental engineers and has concluded the likely cause of failure to be a local land slide in the vicinity of the pipe. We have commenced purchasing materials and expect the piping to be delivered to the site at the end of the current quarter. Installation of the pipeline will be conducted in the second quarter with the plan to restart shortly thereafter.On Slide 8, and turning to Slide 8 now, guidance for FY '22 has been impacted by the suspension and processing at Simberi for the majority of the first half of the year. Noting that grade reconciliation issues at [ Atlantic ] operations have been experienced for the past year, we have lowered grade expectation and guidance accordingly. For the Leonora operations, guidance includes 10,000 ounces of production from ore purchased from the Linden Gold Alliance. Consolidated production for the year is slightly weighted to the second half due to the Simberi restart.And with that, I will now hand the presentation over to Lucas, who will take you through our Building Brilliance program. Over to you, Lucas.
Yes. Thanks, Craig. In December last year, we released Slide 9, which shows the 2 near-term uplifts we are looking to achieve over the next 3 years across our operations, and these are progressing as planned. Building Brilliance has started successfully with initiatives focused on sustainable productivity improvements to underpin our operational performance.The Building Brilliance initiatives delivered a cash benefit of $41 million in FY '21, above the target of $30 million to $40 million for the year. Building on this, our target is for $60 million to $100 million in Building Brilliance savings for the coming year.The next 2 slides have some highlights of the program that demonstrate some of the productivity improvements, which are driving our guidance for the coming year. As you can see from the 3 charts on Slide 10, the Building Brilliance program has had a significant impact on key performance indicators in the mill at the Atlantic operations.The Building Brilliance program has encouraged everyone to review processes and ask how can this be done better. A great example is where one of our frontline employees noticed that the angle of the spray bar in the trommel wasn't optimal. Through the program, he was able to raise this issue and it was promptly addressed. We adjusted the angle to ensure the fine particles were able to be efficiently separated and passed through the trommel screen. Previously, this material had been discharged from the trommel with the scats and would have been reintroduced into the mill later.This, together with other minor modifications to the plant, resulted in the plant setting new throughput records in Q4. Similarly, the maintenance team critically reviewed their maintenance program to determine how they can best maintain the plants while minimizing shutdowns. Our prior approach was to have regular shutdowns and perform maintenance on all equipment. Now we regularly inspect equipment and perform maintenance only as and when required. Critical to this is having ongoing monitoring to avoid having unplanned shutdowns. With this approach, we have seen an increase in mill availability.The Building Brilliance initiative saw the introduction of downcomers, which force slurry down into the carbon-in-leach tanks to increase residence time. We also installed sparger units to inject more dissolved oxygen into the same tanks. These initiatives improved our recoveries by approximately 1%.The next slide, Slide 11, shows some key metrics, which are driving increased operational performance at Leonora. A common enabler for these initiatives is the commissioning of WiFi underground. It has enabled greater usage of teleremote operations, which has had 2 positive impacts. The first is safety. We've been able to reduce the number of people working underground, such as loading, where operators can now operate machinery from the surface. This also has the benefit of reducing idle time during shift changeovers when this equipment is run remotely from the surface.The strong WiFi network has also enabled real-time allocation of equipment, again, further reducing idle time. One of the key drivers of the performance in Gwalia is a number of development fronts. You can see there has been a considerable change from the start of FY '21 to where the year ended. As more fronts open up underground, the team are better able to manage utilization of equipment, and we have the ability to have more equipment operating at the same time. This increase in development has arisen from multiple initiatives. Two examples are installing ground support and cut length. The time taken to install ground support has been decreased by the introduction of the Epiroc Boltec and using self-drilling anchors instead of cable bolts. By reducing the time taken to bolt a heading, we've reduced the development cycle time. We also worked with Orica to identify the optimal detonators and explosives to use for our ground conditions, which has led to a 5% increase in cut length per blast.And with that, I'll hand back to you, Craig.
Thank you, Lucas. So moving on to Slide 12 that lays out our Leonora province plan, which I want to spend a bit more time taking you through. Next quarter, we'll commence the prefeasibility studies for Tower Hill and Harbour Lights. The 1.4 million ounces of additional resources we announced in June will underpin the mill expansion study, which we aim to complete by the end of this financial year.At Leonora, our strategy is to fill the mill. As such, we continue to explore opportunities for both toll treatment and ore purchases as well as joint ventures and acquisitions where we can to deliver superior returns. Exploration drilling is planned between Gwalia, Tower Hill and Harbour Lights. There is also a resource definition drilling in Tower Hill and Harbour Lights with a special focus on testing potential high-grade extensions to milling targets.There are also regional testing targets in Jasper Hill area, which is located approximately 20 kilometers from our Leonora operations. As you would know, in early June, we acquired a strategic 19.8% equity position in Kin Minerals, which has approximately 1.2 million ounces of gold resources and is approximately 45 kilometers to the east of our Leonora operations. We believe this has a further exploration upside and is strategic.So in terms of the update of Atlantic permitting on Slide 13, I thought I would take time to walk you through some of the many permits we're working on, on the Atlantic operations as we move towards developing greater than 10-year operating life. Under Nova Scotian law, we are required to seek regular permit updates to change where we store waste rock at the operation, with all the final permits expected to be issued by the third quarter of FY '22.As per the original plan, when Touquoy open pit finishes operation, we intend to convert it into a tailing storage facility. We expect this to be done in place by the third quarter of this financial year. The conversion is required for the processing plant to continue operating in FY '23.For Beaver Dam, we submitted the revised environmental impact statement to the federal government and expect this to be approved by the end of the current financial year. In parallel, we are progressing the mining license applications for Beaver Dam, which we anticipate being completed by the end of the third quarter of this financial year. After the environmental impact statement is approved, we will apply for the Industrial Approval, which will allow us to commence construction and mining. At this stage, we are on target for the first store to be delivered from Beaver Dam in the first half of 2024. We're also working on the permits for Fifteen Mile Stream and environmental impact submission to be completed in the first half -- first quarter of the next financial year.So in conclusion, on Slide 14, we've had a strong June quarter and expected the improvement in operational performance at Atlantic Leonora to continue into FY '22. We've progressed our strategy of establishing 3 mines with greater than 10 years of operating lives. We will provide further details on the Leonora province plan, Simberi sulfide project and Beaver Dam throughout the year.Operating cash flow for the quarter was $100 million, further strengthening our balance sheet, which remains strong with $133 million of cash and $82 million of debt. We also have a $200 million of undrawn debt facilities available.The Building Brilliance program delivered a cash benefit of $41 million in FY '21, above the set target of $30 million to $40 million for the year when we launched the program. Our target for the coming year is $60 million to $100 million in Building Brilliance savings.So with that, I'll thank you for listening, and I will now hand back to the moderator and open the line for any questions people may have. Thank you.
[Operator Instructions] Your first question comes from David Radclyffe with Global Mining Research.
A couple of questions really around Atlantic. And just looking at the guidance there for this year that, is that kind of lower grade? Can you maybe just point to what's really driving that? Is it a combination of throughput, grade or the conversion activities? And then it sounds like the pit only really operates this year. Does that mean that all the reserves have actually been depleted at Touquoy? Or is it sort of finishing a little bit earlier maybe than we expected?
Yes, David, they are really good questions. I think if I start within the grade and the reconciliation problems we have, we've been conservative because of our lack of reconciliation accuracy over the year and what we're learning. So that's point one. Point two, I think, would be, given the process plant improvements through Building Brilliance, given the productivity improvements in the mine has certainly increased production, which has brought that end of life of mine a little bit sooner than we probably would have anticipated a bit over a year ago.Also, the productivity of the mine, as you would appreciate, as it gets closer to end of life, we are in the bottom of the pit. It narrows and pinches down, and productivity is very, very difficult to maintain. This would be number two. And then the third piece of that, as you know, we've had plenty of low-grade to medium-grade stockpiles that we will bring on line strategically towards the end of the year, which will lower the overall gold units going to the mill. And they're the main drivers behind that.The permitting for Beaver Dam is critical, and it's certainly on a tight timeline, but we're still working very hard with First Nations and the government regulators to make sure that we fulfill all the obligations we have under those permit applications. And of course, we're in -- we have submitted the applications that would need, and I think, we're in round 3 now of questions from the regulators to be answered.So things are progressing quite well. It's much slower on the regulatory front than I would have anticipated a year ago, but that's been driven by many different factors in Nova Scotia. But we're certainly working through the list as hard as we can.We've also restructured the team at Atlantic and have dedicated general managers now, one for the operation -- this is 6 months old now, but one for the operation, one for permitting and technical permitting and one for community engagement and government's engagement. And they're all working as one. We're certainly resourcing the strategy to permit as soon as we possibly can without cutting corners.
Okay. So convert to a tailings facility at the end of this financial year, then by the time they're processing stockpiles in '23 and then if the permitting comes through, obviously, then moves to Beaver Dam. Can you quantify maybe how big those stockpiles are and how long they would last, given that -- I'm imagining that there's no plan B if there's a delay on the Beaver Dam permitting. I'm just trying to understand, could there be a gap? Or do you think those stockpiles could carry you for so long?
Yes. Look, I believe that the -- I haven't got the exact tonnages of low- and medium-grade combined to let you know exactly what the tonnages are. But we would have enough bridging of low-grade and medium-grade to get us through permitting at this stage. The low-grade and the medium-grade stockpiles are always planned to be processed at the end of all the sequences of Beaver Dam, Fifteen Mile Stream, Cochrane Hill or strategically in between.So what we're doing -- the permitting delay is an issue for us, and we will work through that. The low-grade, medium-grade stockpiles keep us in free cash and make some really good money. It's a very low-cost operation up there. And the high grade in Beaver Dam and beyond is still in the ground waiting for us to bring in. The pre-engineering work that's going on -- by the time we permit, we'll be shovel ready to upgrade roads and also start the mining operations. So the engineering is ready or will be ready, and that's the permit timeline now. But the low grade, medium grade, to answer your question, will bridge that gap.
Craig, just to give you a hand there, David, we had -- at the end of June 2020, we've had 5 million tonnes of material, and we'll have more, which we'll update you when we bring out the reserves and resources in a few weeks' time.
Brilliant. If I can, just a quick one on Simberi. So can you maybe just quantify the capital for replacement of the pipeline? Is that in the sustaining of the growth guidance? And then maybe how does the sort of the loss or damage to the pipeline impact your thoughts around the sulfide project? So do you start to think now that maybe you need to have 2 pipelines? Or is it just such a freak event that you're happy to [ weigh that risk ] going forward?
Yes, David, I think the -- there's a couple of ways I'd like to answer that. One is, we could -- the pipe is end of life, no doubt, and it was always due to be planned to be changed and upgraded along with the mixing tank, seawater pumps and the [ land ] facilities as part of the sulfide project. So it was always planned to do. I think clearly, the failure took us by surprise. It was picked up on a routine maintenance inspection using ROVs, and it's clear there's been a land slide that's been the root cause of the failure of the pipe.It certainly doesn't change the methodology of a single pipe system. What we've decided to do is breaking the pipe and damage is at the 54-meter mark out of a 500-meter long pipe, it would be -- the size would tell us that we could potentially start if we wanted to, provided it would be tight process control. But I think it would be prudent to say, to replace the pipe now and upgrade all the seawater facilities on the surface, including the pumps and mixing tanks, dewatering, et cetera, is probably the right time to do that now instead of doing it twice. So I think it's about an $8 million growth capital exercise because we will upgrade the facility to handle the new and the higher throughput rates of the sulfide program. It will be just ready -- be ready well in advance now and we'll use it when we get going at the end of this year through to the commissioning of the sulfide project.
[Operator Instructions] Your next question comes from Alex Barkley with Morgan Stanley Australia.
A couple from me. A quick follow-up on Atlantic given that Beaver Dam start FY '24. Does that mean looking at your 2020 Investor Day presentation, you'd be doing that lower end of guidance if Beaver got delayed? So I'm just eyeballing the chart, is that sort of 50,000 ounces. Does that sound right?
Well, it's a good question, Alex. Yet to be determined. I think -- what I'd have to say, the timeline to permit Beaver Dam is what I would call conservative and a worst-case scenario, and we would certainly hope to bring that forward. And there's 2 ways that we can do that. One is the upgrade of the haul road facility, should be and could be taken out of the permits for the Beaver Dam, the mine. So if we get off to that, we'll close some of that gap very, very quickly. The overall effect will guide on that at the year-end and certainly have better information available at that time. But there will be and could be an effect, yes, absolutely.
Yes. And another question on Simberi sulfide, the approvals. Given some of the tailings issues you've had in your remediation strategy, do you think that would, in any way, influence the -- that environmental permitting process or not really related?
Look, it's absolutely related with the [ lens ] and the sensitivity around DSTP and any sort of tails management and dam management as far as that goes is certainly problematic when you have an issue. We've been working very closely with CEPA, the regulators. And they have been -- the honor to have a look at, one, the footage of the damage; two, the remedial plan and our plans to upgrade the system, and they've been kept in the loop from a communication perspective since the day of failure.The application for -- and submission for AIS is well advanced. There's only 2 more amendments to go into that, and that then is completed. And the communication between -- and the discussions between the 2, knowing full well we're going into a complete new system and we've decided to stay down to rebuild that system more robust and ready for the sulfide throughput has certainly gained the support of CEPA. So once all that engineering solutions are in place, I don't see the 2 being connected, and we're still on a pathway to get the approvals as soon as we can.
There are no further questions at this time. I'll now hand back to Mr. Maitland for closing remarks.
Thank you, Melanie. Thank you, everyone, for attending today's call. If you do have any other questions or issues you'd like to chat, please do not hesitate to reach out to myself or to David. We'll help you where we can. But thank you for today's call.
That does conclude our conference for today. Thank you for participating. You may now disconnect.