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Ladies and gentlemen, thank you for standing by, and welcome to the Karora Resources Second Quarter 2020 Conference Call and Webcast. [Operator Instructions]I would now like to hand the call over to your speaker today, Paul Huet, Chairman and CEO of Karora Resources. Please go ahead, sir.
Thank you, operator. Good morning, and welcome to the Karora Resources Second Quarter Conference Call. In addition to me, speaking on today's call will be other members of Karora Executive Management team. Graeme Sloan, Managing Director of our Australian Operations; Barry Dahl, Chief Financial Officer; and Oliver Turner, Senior Vice President of Corporate Development and Investor Relations.This morning, we issued a news release outlining our strong second quarter 2020 results. Our MD&A and financial statements for the period ended June 30, 2020, have been filed, all of which are available on the Karora website at www.karoraresources.com, or under Karora's profile on SEDAR.During today's call, the speakers will be referring to the presentation slides, which are available for download through a link on the homepage of our website at www.karoraresources.com.Before I begin the presentation, I would like to remind you to please review our cautionary statements regarding forward-looking information and non-IFRS measures, which can be found in our management discussion and analysis, our news release and in our presentation slides.I'm very pleased with the results from the second quarter of 2020 and the positive momentum we have achieved at Karora. Before I dive into the details, I'd just like to express my best wishes to all of you who have taken the time to join our call today and hope that you're all keeping well.At Karora, we remain vigilant in our approach to minimize risks associated with the COVID-19 pandemic. We have been fortunate to maintain our operations and will continue with our strict protocols for the foreseeable future to ensure the safety of each of our employees and stakeholders.As we reflect on the past year, we are extremely proud of what we have accomplished since acquiring the Higginsville mine and mill in June of 2019. We have delivered 4 very strong and consistent quarters of gold production, all while reducing our costs and maintaining an excellent safety track record.We all know how many challenging events have occurred in Western Australia during that same time period from the bushfires, the flooding, COVID-19, there have been several of them. As CEO and Chairman, I am extremely proud of the performance we have delivered despite these challenges.Second quarter gold production was approximately 24,000 ounces, and equally important, our downward trend on ASIC continued as expected, dropping another $36 per ounce down to $1,065 per ounce. This trend is by no means any accident. This is our fourth consecutive quarter of ASIC reduction and is a result of us following our strategy to focus on the cost reduction initiatives that we introduced last year. We have been delivering on this promise, and there is more to come.We are well positioned to achieve our 2020 guidance of 90,000 to 95,000 ounces at an all-in sustaining cost range of $1,050 to $1,200 per gold ounce sold, and we are confident that we remain on track to achieve our goal of reducing ASIC cost to $1,000 per ounce by the end of 2020.As a reminder, while we currently do not expect any disruptions, our guidance for 2020 assumes no significant interruption in operations as a result of the COVID-19 virus. During the second quarter, we achieved several major corporate objectives, which have transformed the corporation into a top-tier junior producer and have laid the foundation for the next stage of Karora's growth as a business.We eliminated the Morgan Stanley NSR gold royalty on the Higginsville properties, and we announced an agreement with Maverix Metals to reduce the Beta Hunt gold royalty by 2.75%, unlocking both Higginsville and Beta Hunt for renewed exploration growth. We look forward to announcing the closing of the Maverix agreement in the coming weeks.We also recently announced the closing of the Spargos high-grade gold project acquisition, which we expect to fast track into our production profile into 2021. As we have stated for over a year, we are now very much a gold-focused company. In line with that focus, we announced the sale of our remaining 28% stake in the Dumont Nickel Project, providing immediate cash to our treasury of approximately $11 million. This is a very important strategic step for the company that provides cash to invest in expanding our gold business as well as keeping upside exposure to the value of Dumont upon potential future sale.At this time, I really want to take a moment and thank everyone at the Dumont project for their service in Karora and previously at RNC. We are certainly eager to watch them progress.Barry Dahl will discuss the financial results, but I am pleased that despite having to deliver $3.5 million into the legacy hedges and an additional $3.6 million into the royalty buyback, our cash position increased yet again. Cash increased to $50.2 million by the end of Q2. This is an increase of approximately $12 million from the end of Q1.Going into the second half of the year, I'm very happy to announce that we are completely hedge free and have full exposure to what are certainly very strong gold prices. Overall, I'm very excited about our prospects for the second half of 2020, and we look forward to keeping the market updated on our progress as we continue to deliver on our goals as a company.At this point, I will turn the call over to Graeme to provide more details on our operational performance and exploration potential.
Thank you, Paul. I'm pleased to report another positive operating quarter despite the ongoing challenges that Paul mentioned around COVID and weather. As previously mentioned, our first and foremost priority is the health and safety of our personnel. As part of this, we recently completed a 12-month safety management audit and gap analysis, plus we have established a new safety management structure and we'll be appointing our first group occupational health and safety manager very shortly. Our COVID management systems are working well, and employee morale remains high.If you turn to Slide 6. On a consolidated basis, tonnes milled totaled 326,000 tonnes up 4% compared to quarter 1, delivering a total of 24,078 ounces. At Higginsville, gold produced was 7,260 ounces, down 5% from quarter 1, the results of processing lower-grade stockpiles due to a number of heavy rainfall events and the preferential treatment of the higher-grade Beta Hunt material.At Baloo, recent grade control drilling has intersected plus 2-gram material at debt, which has led to the reoptimization of the entire pit. The result of this work should deliver further ounces to the Baloo resource and is targeted to be completed during quarter 3. The Fairplay North pit is progressing well and provides a second open pit mill feed into the Higginsville plant. Production at Fairplay was originally expected to be completed by the end of Q3. However, recent drilling has raised the potential for this to be extended.During the quarter, we commenced pre-stripping activities at Hidden Secret and Mousehollow with full-scale mining to commence shortly. Both pits are located within 10 kilometers of the Higginsville treatment plant. Recent metallurgical test work has confirmed recoveries in excess of 90%. An updated mineral resource estimate for the Hidden Secret and Mousehollow is due to be delivered in quarter 4 as part of the planned Higginsville resource reserve update.At the Pioneer deposit, which is located 14 kilometers south of the Higginsville plant, we have resumed resource drilling strength in preparation to bring this project into our near-term production pipeline. Pioneer forms part of our strategy to maintain a minimum of 2 open pits operating in tandem at any one time. This will ensure flexibility in mine production and important, optimizing of feed blend into the Higginsville plant.Slide 7. At Beta Hunt, total tonnes milled was above forecast and consistent with quarter 1 at 186,000 tonnes, an average grade of 2.64 for just under 17,000 ounces. Mine production continued to resource from 2 main areas, the Western Flanks and A Zone. As previously reported, some mining areas within Western Flanks have shown with up to 20 meters wide, which helped underpin the increase in mine production towards the 65,000 tonnes per month level.Slide 8. As I touched on earlier, resource infill and extensional drilling at the Baloo and Fairplay open pits continue to support ongoing mining activities. And in the case of Baloo, we are seeing what could be a further depth extension of the main mineralization. At Hidden Secret, grade control drilling has commenced and will soon shift to Mousehollow in preparation for the mining activities. In fact, we now have enough information to increase our confidence that Hidden Secret and Mousehollow will become one contiguous open pit.On Slide 9, the map shows some of the areas around Higginsville, where we're either actively advancing or evaluating high-priority exploration targets. A number of these targets were located within tenements previously under the now eliminated Morgan Stanley royalty. These areas include, but not limited to, Aquarius, Two Boys, the Paleochannel extensions and Barcelona. With a rapidly growing list of exciting targets, plans are already underway to fast track exploration at Higginsville.At Beta Hunt, drilling mainly focused on grade control, however, some exploration for both gold and nickel was carried out during the quarter. An update will be provided when results become available.Slide 9. On the 7th of August, we announced the acquisition of Corona Resources, which includes the high-grade gold Spargos Reward project. Spargos is located only 65 km from our processing plant. It has a historical high-grade resource of plus 4 grams a tonne and can be easily fast tracked into our production plans for 2021. The purchase terms were outlined in the press release on the 11th of May, and I believe will provide to be a very positive -- will prove to be a very positive one for the company, especially given the shift in the gold price, up some 20% since we settled on the terms and on the back of the results of the work we have undertaken to date.The tenements cover 33[Audio Gap]located 10 kilometers to the south, which already has a small historical inferred resource, plus there are a number of high-grade intersections along strike of the main load. In particular, we are very keen to follow-up on the drill intersection reported late last year by the vendor that returned 37.1 grams per tonne over 18 meters from a depth of 62 meters. That finished in mineralization of plus 200 grams per tonne. This is potentially a new footwall zone and remains open in all directions.So overall, a good first half for 2020. And despite the ongoing challenges of COVID, we expect a very exciting second half of the year for our shareholders and operations.I'll now pass you over to Barry Dahl.
Thank you, Graeme. I'll provide a few financial highlights from the quarter. Please turn to Slide 11. Second quarter revenue was $56.1 million, up $1.8 million compared to $54.3 million in the prior quarter. The revenue increase was primarily due to higher realized gold price in the quarter, as ounces sold were slightly lower due to the timing of sales. We also recorded nickel revenue in Q2.In Q2, we recognized lower operating costs because of lower gold ounces sold. Our operating earnings were $12.9 million compared to $15.6 million in the prior quarter. In Q2, we recognized derivative losses of $1.1 million, primarily related to $3.5 million in losses on gold hedges, offset by gains on other derivatives and a foreign exchange gain of $12.2 million, primarily related to the unrealized foreign exchange gain on intercompany loans.For the second quarter, net earnings were $9.8 million, adjusted earnings were $16.6 million and adjusted EBITDA was $17.3 million. We finished the second quarter with a stronger balance sheet, including a cash balance of $50.2 million and working capital of $43.8 million, increases of $11.8 million and $13.1 million, respectively, compared to the prior quarter.I will now turn the call over to Oliver.
Thanks, Barry, and hello, everyone. It was certainly an interesting quarter to be in the gold mining business, with the markets for gold mining equities being the strongest in almost a decade.During and after the second quarter, we delivered on many strategic corporate objectives, which have been reflected in the strong outperformance of our share price. Some of the most significant accomplishment included the 2 royalty agreements, the sale of Dumont, the addition of Spargos and the increase in ownership of a large shareholder in Eric Sprott as part of the Maverix transaction.Our investor base is evolving rapidly as we move up the market cap spectrum and attract new high-quality institutional investors. The successful completion of the 4.5:1 share consolidation has elevated us into a new tier of investment eligibility for new funds and the healthy volumes in trading since the consolidation date are reflective of this.As with the first quarter, we have not allowed COVID-19 to slow down our marketing efforts. With many virtual marketing roadshows, conferences, online interviews and continuous virtual investor meetings completed, it's fair to say that we have adapted very well to marketing Karora from our home offices.Looking ahead to the fall, we are encouraged to see that 2 of the most important conferences in our industry in the Denver Gold Show and the Precious Metals Summit are going ahead with virtual platforms. Each year, this is a very important time for gold companies to take stock of the successes of the past year and drive new investor interest in the year ahead, and we are confident that Karora will have a strong presence at both virtual shows. While we are all certainly looking forward to meeting with investors face-to-face again once the global situation permits, we will continue to push our story aggressively and continue on our strategy to make Karora a top-tier gold producer.With that, I'll turn the call back over to Paul.
Thanks, Oliver. Thanks again to everyone for joining us on the call today. We absolutely look forward to another exciting quarter as we move the business forward. I just did want to touch on one thing before we turn it over to questions. Graeme alluded to the closing of the Spargos property and referring to the press release. I just wanted to tell our shareholders that we decided to use cash to settle that agreement. So rather than issuing any shares, we issued all cash to close that deal.So with that, I'll turn it over to the moderator to open it up for some questions.
[Operator Instructions] Your first question comes from the line of Ian Parkinson of Stifel.
Congratulations on a very strong quarter. Actually, we look to be a very productive last few months. Paul, we're seeing margin expansion across the industry at a time while you're driving down costs. So just thinking like over the medium term, how do you and team plan on weighing growth versus company-wide costs, i.e., are you looking to build a sub-$1,000 an ounce long-term producer? Or will you look at other opportunities as they come?
Yes. Thanks for the question, Ian. Look, we're always going to be looking at opportunities for growth. We've always said consistently that our growth will come from 2 sources here, organic growth and bolt-on acquisitions. And there's no better example than Spargos, that it's close to our mill. We got it at a very decent price. It's certainly going to be accretive. We'll continue to always evaluate our costs. I've been in 3 different gold cycles now, Ian. I think some of us sometimes get excited about the metal price, but we often get sloppy with our costs. And we need to maintain that cost vigilance and make sure that we're always striving to reduce our costs while we're expanding the business. You'll start to see, look, we had, I think, $10 million -- $11 million in exploration this year. We just had a Board meeting. We're looking at updating exploration. We know that adding value from the drill bit is going to be very critical, putting together a long-range plan for our shareholders to see what our expansion can become is going to be very critical. So in answering your question, I think we will always remain disciplined at reducing costs. It's ingrained in me, and I don't ever want to stop that. And I wanted to reflect in our entire organization, while evaluating anything that is accretive for us to grow.
Okay. Great. And just one more, I mean, kind of changing gears back to the COVID situation. Have you seen any local issues within Australia? I'm thinking outside of your immediate area about supply chain, access to spares, consumables? Or is everything ticking along quite nicely in country?
Yes. So look, Graeme could answer it better. I just want to say one thing on it, though. Look, Graeme has taken a very proactive approach, and we followed that. Even when we had the bushfires, we were -- we increased our supplies. So we would have more reagents, more rock bolts, more supplies so that in case something were to occur, including more stockpiles in front of the mill. We're prepared in the event that there are some supply chain disruptions or even access disruptions. We've taken a very proactive approach in our supplies and our ore in front of the mill.
Okay. And again, congrats to the team on a great quarter.
Thanks, Ian.
Your next question comes from the line of Derek Macpherson of Red Cloud Securities.
Echoing Ian's comment, congrats on a solid quarter. A couple of questions on something that I've tried to -- the numbers that I'm seeing, it looks like the cost came down materially at Higginsville relative sort of quarter-over-quarter, which is a real positive and probably reflects on some of the work that you guys are doing. Is that something that's sustainable going forward? Or are we going to see a little bit of fluctuation in those numbers?
Yes. Derek, thanks for the question. I'm going to turn that one over to our Managing Director, Mr. Graeme Sloan. So Graeme, if you want to talk about our operating costs at HGO?
Yes, will do it -- will do it, Paul. Look, it was pleasing to see costs come down at Higginsville. The biggest area where it did come down was at the processing plant, which was great to see. And it was partly driven. There's not many things you can say come out of the COVID that is positive, but one of the positives that come out was a lower fuel price. And we were able to take advantage of that. So that's certainly part of it, but we've been working very diligently on all costs across the whole of the 2 operations. And those cost initiatives are starting to be reflected in our price. So I will see that you will see a little bit of variation as we go forward. But overall, our aim is to come back down to what we've been saying for some time now, and that -- that's around that $1,000 an ounce all-in sustaining costs. And I'm pretty confident we'll achieve that.
Okay. And then, I guess, specifically to the milling costs. I mean you guys noted in the press release, it was $21 a tonne, which is very good. And based on 95% availability, is there a little bit more to squeeze there? Or is that as much you can get out of the mill at sort of the current throughput rate?
Just -- on that, Derek, there's a couple of ways you can do that. Obviously, you can keep the costs coming down. But the other part of the equation issue is to put more tonnes through the plant at the same cost. And so we're looking at both. We -- I think we're getting close to the lower end of where we can get to in the mill without sort of a significant increase in throughput. If we can maintain costs and get -- and throughput up another sort of 10% to 15%, we could see costs come back down a bit further than that. So at this point in time, we're getting close to the bottom end of it, but we won't give up until we're absolutely sure we've milked everything we can out of that plant.
All right. 95% availability is pretty solid. And then just my one last question -- or my second last question. On -- with respect to grades, both Beta Hunt and Higginsville were a little bit below sort of whether it's reserve grade or where you guys have been trending. Is that -- I'm assuming that's just normal variation, but can you sort of maybe guide us a little bit on where you think grades are going to be over the back half of the year at the 2 operations?
Yes. Derek, the grades, they are part of the cycle, as you know, when you're into these production areas there. And as much as what you forecast-- at the start of -- at the end of last year, where you'll be about this time, there's always variations in actual stopes you're mining from. So we will see grades sort of hover around these areas, but we're looking to push these up with a few initiatives we've got in mind. So to get back up to a little bit higher of what we forecast at the start of the year. So a little bit of variation, mainly around different areas, the variation in stoping that we're doing.
Okay. And then just my last question on the Maverix royalty transaction. What's the latest guidance on when you think that transaction will close?
Yes. Derek, this is Paul. So look, we had 2 outstanding issues, Derek. We're almost done here, we're hoping within the next 2 weeks. One was the commingling agreement that we had to do and the other one was a tax thing. And I'm sure we disclosed those in the press release, but we're very close to getting those done. As soon as they're done, we will announce it quickly thereafter.
Your next question comes from the line of Nicolas Dion of Cormark Securities.
Congrats on another solid quarter. Some of my questions have been answered. Maybe just on Higginsville, within the context of guidance. I know COVID-19 creates some uncertainty, but since publishing your original numbers for 2020 back in January, you've obviously made a lot of progress, the royalty renegotiations. You've extended the 2 pits that you're currently mining there. And now you have a third pit, Hidden Secret coming in. So I guess my question is just that, is it fair to say at this point that you're baking in a relatively high degree of conservatism in those 2020 guidance numbers?
Graeme, you want to add to that?
Yes. Look, and again, these guidance numbers we put through at the end of last year or at the start of this year. And as you know, we -- at that point in time, we'd only had Higginsville for less than 6 or just over 6 months. And it was really trying to get our head around what we had in the pits and what we could reasonably forecast. So we went out and bold. We put the guidance out. We knew that we needed to do put it out for the market, which we did, both from production and costs. And to a certain -- we've certainly been able to meet that guidance and in areas exceed it. But I will say it's still -- we're still going full steam ahead of getting a nice long pipeline of projects or open pits there that we can forecast the guidance on in and around. That work is still happening. You can hear from my earlier presentation or earlier notes that we're doing -- undertaking grade control. We're doing resource drilling in some of these areas still. So there is still some uncertainty, but we're hell of a long way from where we were before, much better position. And for this part of the year, I'd like to keep that guidance where it is. And hopefully, we can do much better than what that is. But again, it's just -- there's still a few uncertainties there that we're working through.
And Nicolas, just to add on to what Graeme is saying. This is Paul. I think sometimes with all the excitement on the -- everything we've done and the gold price, I think sometimes it gets lost in translation or -- it really is our first year of production. And I've been part of a lot of companies throughout my career. And the first year is always usually the most challenging one. So for us to put out guidance, make sure we deliver it consistently quarter after quarter after quarter and make sure that we're never short is really, really critical for us. We want to maintain that reputation that what we say we're going to do, we're going to deliver on, so.
Your next question comes from the line of Matthew O'Keefe of Cantor Fitzgerald.
Congratulations. Good quarter, obviously. But just a couple of quick questions. A lot of stuff -- a lot of the key questions have been asked. Specifically around CapEx, I think you reported $2.16 million. Can you give me the split between Beta Hunt and Higginsville and what they entailed?
Thanks for the question, Matthew. I'll let Graeme talk about the split with the capital between Beta Hunt and Higginsville.
The vast majority of that, Matthew, that CapEx was spent at Higginsville, mainly around the pre-strip that we did on some of the pits, certainly started with some of the work around Fairplay and in fact, the strip around Baloo on one of the ends when we expanded that pit. A little bit of the other remaining part of the CapEx, about 30% of that CapEx went into Beta Hunt, and that was around -- typically around capital development and getting us to the next level of production on the 7-day in A Zone and some ventilation work that also need to be done.
Okay. And is that -- I mean I guess that will be quite variable, the split and the amount going forward. But is it -- I mean, Beta Hunt, I mean we're in a time where we've got these good prices, is there an opportunity here to move -- get a little bit further ahead on development at Beta Hunt? Or are you comfortable like how many, I guess, months or periods you have ahead of you that you're comfortable with vis-a-vis development?
Yes. Look, there was a couple of things happened in quarter 2, Matthew. Obviously, the -- and we keep talking about this impact of COVID. But what we needed to do was to build our ROM stockpiles up to around that 100,000 tonne level. And to mine that in the event that if everything else failed in the underground or COVID was an impact that we could still look to isolate the mill and keep the mill turning and keep cash flow coming through. So to do that, we have to sort of pull our foot off the development pedal and actually look to put it more on the production side of the business. So that's now -- we've got our stockpiles to that level. We're now at the stage where we can start going back to normal underground mine production. But we do have, and we have been working, again, very hard to ensure that we've got a good 3 or 4 months of production in front of us as far as drilled stocks for underground at Beta Hunt and plus our level development is probably plus 12 months in front of us. So we do have that ability, but we will be also looking at what we can do to take even -- Beta Hunt even further than the 65,000 tonnes a month we're talking about. That's only gold. There's potential for sort of more nickel tonnes that come up as well. So to answer your question, we -- it was a [deploy] strategy to get their stockpiles up. Now they're right, we'll go back into full-scale development. So you'll see the development figure at -- and the cost at Beta Hunt start to go up. But I'm pretty comfortable where we are as far as our development meters for our current production.
Okay. No, that's great. It's a lot clear and makes a lot of sense. And then just on the exploration side, similar to that question. Can you -- just to remind us again, what's the overall budget for this year? What's the split like? And then the resource update we're expecting at the end of the year, that's just for Higginsville, is that correct?
Yes. No, the total budget -- exploration budget is $10 million or very close to $10 million. There is a component of that, a couple of million dollars that's put aside -- not put aside, but put into compliance, exploration, just maintaining the tenements that we have got. And then the large chunk of that, the remaining money is spent at Higginsville. And we have started to do a little bit of drilling at Beta Hunt around gold and nickel, but the bulk of the expenditure is at Higginsville. And it's around the resource drilling some -- and some exploration drilling. So what we'll look to do going forward, it is very clear, Matthew, that Higginsville has a multitude of very, very interesting and exciting targets that we need to follow up.
And does that include -- that $10 million, does that include money to be spent on further exploration at Spargos that you just picked up? Or is that a new -- a different budget going to come into that? And will we see that historic resource upgraded? What's the time frame for upgrading that resource?
Yes. We'll put drills into that almost straight away. And we've already got the targets. We've got the whole collars ready to go. So it's a matter now of just making sure the rig availability at the moment over here. As you can imagine, with the way gold price is, drill rigs are at a premium. So we need to make sure we get at the front of the line, which we are. And we'll look to do that drilling within sort of the next quarter or 1.5 quarter, just waiting on some approvals and the rig availability. So it will be an addition to the budget because it wasn't part of our original budget. We'll look to upgrade that as we will look to upgrade the drilling in and around Higginsville. And hopefully, we can do the same at Beta Hunt.
Right. No, now is the time for sure. Okay. No, that sounds great. It looks like some good news flow coming in the second half, which is what we're going to see. That's it for me.
Thanks, Matthew.
At this time, we have time for one more question. Your final question comes from the line of Pierre Vaillancourt of Haywood.
Graeme, could you just expand a bit on Higginsville? How much was from stockpile versus how much was mined? And how -- what was the grade breakdown there?
Yes. The stockpiles in a number of parts. And if you look at the optimum way to blend the feed into the Higginsville plant, you'll need around 50% to 60% hard rock and remaining can be oxide material. The moment you start to drop that hard rock off, you have throughput issues around the screens and so on. So what happened, when you get these rain events, we have -- we've built the stockpile up, but the vast majority of that is in oxide ore as well as some harder rock from Baloo, but unfortunately, that's a bit wet. So as soon as you get the wet weather that comes in, it's difficult to get Beta Hunt ore over. So we've had to revert back to some mineralized waste material. That's why you've seen the grade drop off, but it does allow us to keep the throughputs up. So we have, as I said, a significant stockpile up there, and we now need to supplement that with some further hard rock material, which we're working on now, and hopefully, we'll be able to make some level of announcement a bit later on.
Can you give me a grade breakdown? What was the...
The grade breakdown -- the mineralized -- yes, the mineralized waste is around 0.7 to 0.9 and obviously, that's what -- it makes money at these prices, especially, but it doesn't meet our production guidance. And that's what we need to -- -- that's what we need to -- rely very heavily on Beta Hunt and given 50% to 60% of our feed into the Higginsville plant. So if we do get rainfall events, they last for some several days, they can impact on our throughput rates and grade.
Will you be able to increase the hard rock component from Higginsville then?
We're working on that now, and we have a number of -- a number of plans to meet that and to overcome that issue. We haven't finalized those yet, but we're not too far from it. And as I said, we'll be looking forward to put that out in the market as soon as we can.
Okay. So in process. So how did you come to the low cash cost at Higginsville, if you had all this low-grade waste? Is it just less handling, less mining or...
No. We've been -- look, there are many cost drivers in an organization like ourselves. And obviously, some of the bigger ones around fuel and key items like that play a big part. But we've also been very diligent in the way we've tackled our reagent usage, our stores usage, our -- we've renegotiated the haulage over to -- from Baloo into the Higginsville and also from Beta Hunt to Higginsville. We've put a number of cost initiatives around stores and inventory and the way we handle maintenance and our maintenance planning. So all of these that we've been working on for some months now starting to deliver what we'd hoped that would. And we're starting to see those costs driving down our key metrics like cost per tonne milled, et cetera.So at the same time as all of that, we're maintaining a very solid throughput through the plant. And as I said, our -- now our daily tonnes -- hourly tonnes through the mill has sort of gone from 140 tonne an hour up to close to 180 tonne an hour. And so these are the things that -- there's so many parts, components to what drives the bottom line, and we work on all of those. So that's -- and they're starting to come out and starting to show the benefit. So it's been a lot of work, but I'm looking forward to the second half.
So should we read in that this is a sustainable level, this cash cost that you had for Higginsville?
Look, Higginsville also -- part of Higginsville has a benefit of being able to how we charge out some of the treatment of Beta Hunt ore. So it has to do with a number of reasons why we do it, but they get -- they do get a benefit of charging a higher -- like a tolling charge to Beta Hunt than what the actual cost is. So they get that benefit as well. So that's why when we look at these 2 operations, it's because of the plant. They're basically, one, it's like having Higginsville there with a number of open pits. Beta Hunt is just another ore source into the Higginsville plant. And you use whatever you can to best optimize and get the best result for the business, and that's why we do this. So I know it's -- sometimes we like to take the 2 operations in and put them to -- as individual operations. But quite frankly, they are one. It's a bit like trying to do the same with Baloo and Hidden Secret. Beta Hunt is just another ore source like that. That's the way we treat it.
And just finally, just following up on the question on Spargos, et cetera. Can you remind me what the CapEx for this year will be?
At Spargos?
Well, companywide, I just -- if you can just remind me what that number is?
Look, I'd have to get back to you on that. And the reason I say that is because we've now started to make some changes to some of our CapEx numbers around -- and one of the biggest will be, we'll be looking to do, is an upgrade around our exploration as well. So there are -- given with Spargos now, it's -- there's some CapEx in there that we'll need to bring into our forecast. And again, we have to do it such that we can still deliver on what we're saying we're going to do to the market. But I'd be better placed to answer that in sort of a short while.
This concludes today's question-and-answer session. I now turn the call back over to Paul Huet.
Thanks, everyone, again, for taking the time to join us on our call today. Obviously, our first half was very, very focused, as you can see by the items we've done. We're actually very excited, and we look forward to an equally exciting second half of the year. So thanks for being a shareholder. Thanks for calling in. We appreciate all your support. Have a great day, everyone.
This concludes today's conference call. You may now disconnect.