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Good day, ladies and gentlemen, and welcome to the Karora Resources Full Year and Fourth Quarter 2021 Conference Call. [Operator Instructions] Note that this call is being recorded on Monday, March 14, 2022.
And I would like to turn the conference over to Paul Huet, Chairman and CEO. Please go ahead, sir.
Thank you, operator. Hello, and good evening from Perth, Australia, where it is 10:00 p.m. here.
Just as a reminder, we will be talking to a PowerPoint slide deck. For anyone interested, the slides can be found on our home page of our website, and you can just follow along in the webcast with us.
At this moment, I'd like to welcome everyone to the Karora Resources Fourth Quarter Conference call. 2021 was a strong year for us as we set new production and cash balance records while overcoming numerous challenges related to COVID-19 restrictions that impacted our labor and supply availability, especially in Q4'21. Before we get into the financial and operational details, I'd like to remind everyone on the call of our commitment to achieving high ESG standards. And on that note, we are very proud of the fact that we became one of the first junior gold producers to achieve carbon neutrality in 2021 for Scopes 1 and 2 emissions at our operations. It gives me great pleasure to announce that we will be publishing our first ESG sustainability report in the coming weeks that will further outline the steps we are taking in this area.
Throughout our organization, from the operation level through to the Board of Directors, we are committed to building on our accomplishments and continuing to implement world-class ESG standards at Karora. Here with me this evening in Perth is Graeme Sloane, Managing Director of our Australian operations; and on the line with us is Oliver Turner, Executive Vice President of Corporate Development.
This morning, we issued a news release outlining our results for the full year and fourth quarter 2021 results. Our MD&A and financial statements for the period ended December 31, 2021, have been filed, all of which are available on the Karora website and under Karora's profile on SEDAR.
Slides 3 and 4. Before I begin the presentation, I would like to remind you to please review our cautionary statements regarding forward-looking information, non-IFRS measures and our 2022 to '24 growth plan, all of which can be found in our management discussion and analysis, our news releases and our presentation slides.
Over to Slide 5. 2021 was our best year ever for production for the company. Additionally, we also had robust results from the drill bit, including new gold and nickel discoveries at Beta Hunt, south of the Gamma fault, and major extensions to the mineralized zones of Beta Hunt, including the Larkin and Fletcher gold zones and also the 50C nickel trough, all of which Graeme will speak to a little more later on the call.
Turning to operating results. We produced a record 112,814 gold ounces, so just shy of 113,000 ounces, placing us at the high end of our production guidance range for the year, which was 105,000 to 115,000 ounces, while our all-in sustaining costs for the year were $1,012 per ounce sold, placing us at the low end of our AISC guidance, which was a range of $985 to $1,085 per ounce sold.
Also in Q4, our production was just shy of 28,000 ounces at an AISC of -- an all-in sustaining cost of $1,042 per ounce sold. Last month, we announced a slightly revised guidance for 2022 that recognizes the well-known current tight labor conditions and supply chain constraints in Western Australia and globally for that matter. For 2022, we are targeting gold production between 110,000 and 135,000 ounces. at an all-in sustaining cost in the range between USD 950 and USD 1,050 per ounce sold. We also increased our sustaining and growth capital guidance by approximately 12% to reflect the reality of the current cost environment. And again, Graeme will discuss this a little more in detail afterwards.
As most people are aware, border restrictions in WA have recently relaxed, and we expect a positive impact on labor shortages over time and are hopeful, like many others, for the situation to slowly begin to improve as a result of this. Look, there is no doubt that this will take some time. It's not going to happen in 1 month. It's going to take some time to trickle down. At this point, our expectation is that our production and cost performance will improve for the second half of 2022 compared to the first half of 2022 as conditions become more normalized.
The current strong nickel price environment is also very exciting for us. This has certainly been the topic of discussions with many investors. It provides significant potential upside to our 2022 cost estimate and increases a level of optionality for us. For the first time ever, Karora introduced nickel production guidance for 2022, and that was between 450 to 550 payable nickel tonnes in our guidance last week -- when we put it out. We used a conservative nickel price of $16,000 per tonne in our 2022 by-product credit forecast. With current prices of $45,000 per tonne, there is a high potential for us to see a material positive impact on our gold production all-in sustaining cost for the year. So we're quite excited about it. We expect nickel to become an increasingly important part of Karora beyond 2022 as we continue to develop a high-grade 50C nickel trough discovery at Beta Hunt. Just as a reminder, we just discovered that last year, actually, when we put out that resource in 2020, this 50C zone didn't even exist. So we're going to be putting out our nickel resources here in the very near future.
Graeme will also provide additional details on the 50C trough. But I can tell you, look, we're working very hard at getting the new nickel areas into resource and getting it completed. So in short, we expect nickel by-product production from Beta Hunt to grow meaningfully beginning in 2023, and it will trickle into 2022, but 2023 should be a lot more meaningful and be a real differentiator for Karora going forward. There's a lot of work to be done on the nickel front, but we have some very exciting opportunities in front of ourselves.
And it's important to mention that while we intend to capitalize on strong nickel prices and our production potential, we will not let it lessen our focus on gold. Looking beyond 2022, we believe our multiyear organic growth plan announced in the middle of 2021 to increase our gold output has put us on a path to increasing annual production between 180,000 to 200,000 ounces by 2024 while reducing all-in sustaining costs.
As we execute on our plans, the company will continue to grow towards joining the ranks of the next tier of gold producers and also towards the reward of a higher market valuation for all our shareholders.
Over to Slide 6, I wanted to talk about some financial highlights for 2021. The 2021 revenue was very strong at approximately $264 million for the year. That was up $25 million or 10% compared to 2020. 2021 adjusted earnings were approximately $48.6 million or $0.33 per share. That's about $23 million lower compared to 2020. That's mainly due to a $26 million tax restructuring recovery that we realized in 2020. 2021 adjusted EBITDA was about -- was $104 million or $0.70 per share, which is a 9% increase over that same period. And our fourth quarter adjusted earnings were $12 million or $0.08 per share, and Q4 EBITDA was $25 million or actually $0.16 per share. Our cash balance at the end of 2021 was a record at $91 million, positioning us in a strong financial situation as we advance our growth plan.
Before I pass it over to Graeme, I would like to take this opportunity to thank the entire Karora team, including the Board of Directors, for turning out a very strong performance in 2021 despite the challenges we had all over operationally everywhere. The commitment demonstrated by the team has been and continues to be truly remarkable and certainly does not go unnoticed.
On that note, I'll turn it over to Graeme to give you an update on the operational highlights.
Thank you, Paul. Let me begin with a review of our key safety and environmental metrics, both of which I'm pleased to say continues to trend in the right direction. For Beta Hunt, we are now over 536 days LTI free; and at Higginsville, 51 days. Our company-wide TRIFR rate, which is an Australian industry-wide measure, has decreased over nearly 60% over the past year, demonstrating our strong commitment to safety at both sites. On the environmental front, we had one reportable incident, which was minor in nature, quickly rectified. For the full year, total environmental incidents were down 36%, and when coupled with safety, a very pleasing result from operations.
One area, which Paul has mentioned, which continues to build momentum for the entire industry is the impact of COVID and what it is having on people and costs. With the new variants and WA's national and international borders now open, we are entering uncharted waters. Recruitment and retention of people, along with the increases in costs due to COVID, will impact our all-in sustaining cost and productivity going into 2022. For example, we have seen diesel prices rise 8% in quarter 4, and one of our service contractors or contracts currently being negotiated, they are seeking a 15% increase, so certainly challenging times. We do have countermeasures in place, including a specialist COVID management team. But in many cases, we are dealing with unknowns. However, be rest assured we have and will continue to do whatever is necessary to lessen the impact.
On production, as Paul outlined earlier, 2021 was a very strong year, coming in at the high end of production guidance and the lower end for our all-in sustaining costs. Total mine production was 1.7 million tonnes with 1.4 million tonnes processed at Higginsville at an average grade of 2.6 grams. Mill recoveries remain consistent and very strong around the 92% to 94%, demonstrating the benefits of optimizing our feed blend from Beta Hunt, Higginsville and Spargos. Plant improvements made by our processing team throughout '21 also contributed to the improved recoveries.
Full year mine production from Higginsville was 855,000 tonnes at an average grade of 1.6 with the majority coming from Hidden Secret open pit, which is, by the way, scheduled for completion during the current quarter. A total of 557,000 tonnes was milled at a grade of 2.1 for the production of 34,500 ounces, up 5% from the previous year. At Spargos, production from Stage 1 open pit began in quarter 4 and continues to ramp up as per schedule with planning and approval for Stage 2 well underway. Drilling during quarter 1 of this year is planned to extend the current margins of the open pit and grow the underground resource. Bringing Spargos into production in just over 18 months is an impressive achievement for the team, and we're looking forward to the operation becoming a steady source of mill feed into the future.
At Aquarius, the box cut was completed, and the decline advanced over 200 meters by the end of quarter 4. First ore from Aquarius is expected to be intersected this quarter. However, this is very -- at the very top of the ore body, hence will be lower grade with the main zone on the 1,180 level due to be reached in quarter 2 this year.
At Two Boys, limited mine production was carried out in quarter 4. However, development has intersected the main high-grade ore zone with assays pending, and we hit that this quarter.
If you move to Slide 9, the operational highlights for Beta Hunt. For the full year '21, Beta Hunt provided approximately 60% of the Higginsville mill feed and accounted for around 70% of the total gold production. Tonnes mined were 886,000 tonnes at 2.8 grams; and milled, 884,000, just under 3 grams for a total of 78,500 ounces -- 78,500 ounces, I should say. To maintain current production levels and support the growth plan, Beta Hunt continued its staged fleet replacement program with the acquisition of 2 new AD60 trucks and a new jumbo drill on order for delivery midyear. Development of the second is underway and on schedule. Contractors have been mobilized to site. The 506 underground incline commenced and the surface box cut underway and scheduled for completion in quarter 2 this year. The main surface decline will then commence to link with the 506.
As for nickel, well, as Paul said, what a story, and who would have thought we'd be looking at price of over USD 40,000 a tonne. Nickel will play a key role going forward in our production plans. It's all about how quickly we can get into a position to deliver on that value. Current nickel production is limited mostly to remnant areas which supports our 2022 nickel production guidance. However, with our exploration success over the past 18 months, we are well positioned to add to our nickel resource, which will underpin a significant increase in production from '22 level -- from 2022 levels leading into 2023. Slide 10, exploration highlights. Turning to exploration. We are very pleased and excited by the results being delivered by our team on the ground. As previously mentioned, we have numerous opportunities at various stages of progress and what better way to unlock this value than a healthy exploration budget. This year, we'll spend between AUD 20 million and AUD 25 million and look to carry this through going forward.
At Beta Hunt, almost 10,000 meters of exploration and resource development drilling was completed during quarter 4, primarily directed at supporting our multiyear growth plan. Drilling focused on extensional and infill drilling from underground and a small number of surface holes aimed at testing the update extensions of A Zone and Western Flanks. Underground drilling targeted new and parallel gold zones in the Hunt, Beta and Gamma Blocks. Results from this drilling are expected to be incorporated into a new updated resource planned for release in the coming weeks.
With respect to nickel, drilling of the 50C has extended the strike length to over 250 meters and 150 meters in width, all in just over 10 months since the first discovery hole. The 50C block remains open with a historical hole of 11% nickel over 9.5 meters located 1 kilometer to the southeast of the 50C block. An updated nickel resource incorporating 50, 30 and 10C is expected to be completed by midyear.
So in conclusion, 2021 was a record year for us. And although we are faced with a number of challenges, we look forward to delivering more of the same in 2022.
I'll now turn over to Oliver Turner.
Thanks, Graeme, and hello, everyone. Over the past several months, we've seen a material shift in current market conditions that have led to a strong performance across the gold sector, even if for somewhat uncomfortable geopolitical reasons. In addition to our usual investor road show, marketing and retail investor summits, we've seen an increased generalist investor interest in the gold sector.
Our decision in 2020 to focus on advancing our ESG strategy at Karora has paid dividends, both with respect to new investor meetings and in securing new, large institutional shareholders. As we all know, ESG criteria are changing the global investment landscape. And with that in mind, we have pushed aggressively forward with advancing our strategy over the last 18 months.
I am pleased to announce that in just the next few weeks, we will be releasing Karora's inaugural ESG report. This report is the culmination of 18 months of work by our team internally and expert external advisers and marks a new milestone for the company. Over the last 3 years, Karora has matured as a stable business, driven very strong shareholder returns for investors and now has developed into a new potential investment for large ESG-focused funds. It has been a challenging but fruitful journey, and we would like to thank all of our employees, contractors and stakeholders who have supported us in getting to this point. As we float around the $1 billion market cap threshold, we are certainly entering a new and exciting era for Karora shareholders.
Lastly, I would also like to announce that we now have a full virtual tour produced by Reality Check Systems on our website. Given the challenges with getting investors and analysts to site over the past 2 years, this is a wonderful tool to get a virtual, firsthand view of the progress made at our properties. All 3 operations are available in 360 video as well as some impressive drone overviews. The tour can be accessed directly from the home page, and we encourage our listeners and investors to take a spin through our operations.
With that, I'll turn the call back over to Paul.
Thanks, Oliver, and Graeme. I just want to take a moment and thank everyone for joining us on our call today. And I will just turn it over to the operator at this time to ask some questions. Graeme and Oliver, I'm hoping you guys can hear me. You might have to help -- I'm struggling here with one of my technical things. So let's see how the questions come through here. Go ahead, operator.
[Operator Instructions] And your first question will be from Ovais Habib at Scotiabank.
Paul and Karora team, just wanted to take congrats to you and your team for really a strong year despite the COVID restrictions. Paul, a couple of questions from me. Just starting off, so in regards to your 2022 guidance, you're expecting your first half of the year to be stronger than the second half of the year. Can you provide some color as to what's driving this? Is it tonnes? Is it grades? And also, maybe, Paul, you can touch upon the current nickel guidance. Does that include the new 50C zone? Would you be in production by the end of the year on that zone?
Thanks, Ovais. Sorry, can you hear me okay?
Yes, I can.
Yes. Sorry. So Graeme, I'm going to pass those to you -- those both. So the first one is the operational first half versus second half and then the nickel above the 50C. So go ahead, Graeme.
Yes. Okay. Thanks, Paul. Ovais, look, it's actually the second half will be stronger than our first half, and that's mainly based around 2 things. It's based around that we move into some higher-grade material in the second half into the meter, some of the ore bodies. So that does one thing. The second thing is that we are anticipating the first half, we're still going to have a hangover from quarter 4 with COVID cost increases. And we think as we go forward into the quarter 3 and 4, we should see and hoping to see some of those relaxed, and we're able to get access to people and some of the service costs we should see start to stabilize and hopefully come down. So that's on the first part of your question.
On the second part of your question on around 50C, that is -- that we will have an updated nickel resource with 50C, 30 and 10C that will come out shortly. Based on that, we'll be able to then look at putting some mine plans around the development plans. Now it is 50C is at the base of the Beta Hunt ore old system, if you like, the current Beta Hunt. There is still well over 2.5 kilometers of tenements to explore. We will need to explore that mainly from underground, given the fact that drilling from the surface will be quite deep and therefore very expensive. And we will need to develop access plans into these areas, although we do have some relatively close development in and around the old Beta area. So we are able to access it. It really will come back down to the indirect things like ventilation and services, water and power.
So those -- all of those plans will be put together over the coming weeks, if not months, and then we'll look to -- on the back of the new decline and the new ventilation systems that will be installed, we will then be able to form a much better production plan than we have at the moment. So it's just a matter of time. We know 50C is extremely exciting for us as you don't often see those widths, those lengths of strike and the grades that we're talking about. And we haven't seen those, quite frankly, from the early Western mining days when Beta Hunt first started off. So it's really exciting times. 50C is there. 10C is not too far behind it. And then we have 30C, which we look to fill in a few holes.
Ovais, I just want to add. Sorry. It's Paul. I hate to cut you off here. I just wanted to add one thing to Graeme's response here. While he was talking about carryover from Q4, one of the things I think we should just make -- explain is because of being in Western Australia, one of the things we got hit with obviously, Graeme talked about COVID in Q4, but more importantly, there's regulations here in Western Australia. But as of December 1, if you were not vaccinated, you were not allowed to continue employment. This was not a Karora decision. This had no bearing on us. It was actually a federal -- the government actually, not Karora, the government's decision where every employee has to be vaccinated acted.
And we're not -- unlike other of our peers, we lost something like -- I think it's around 26 to 28 people. Don't quote me on the exact number. It was a big number that we lost on December 1, even though we tried to change a lot of people's mind. That had a significant impact in December that carried into Q1 as we're trying to hire throughout the holidays and early January. So that carried over, and I think that's an important thing to say.
We've got between both sites, 300 our employees. If you lose that many, you're almost 8% of your workforce in 1 day and not because they don't like working for you, in fact, there were some amazing people, and I wish them all the best, but they just refuse to get the vaccine, and we respect their decision. So I think that's worth explaining, Ovais, because I don't think a lot of people when I was in North America here during the holidays understood that mandate that we were required to follow. So sorry about that, making it a little longer, but I think it adds a bit of color.
No, appreciate that, Paul. And then -- and Graeme as well, thanks for giving us all the color.
So just a follow-up question to that then. I mean, in terms of your Q4 results and then like you're talking about the COVID restrictions as well going into Q1 and also the fact that now Spargos is online as well, how do you characterize your 2022 production and cost guidance? Is -- are you on the conservative side right now, just based on all the stuff that's going on?
Yes. Ovais, I can answer that.
Go ahead, Graeme.
Yes. Look, Ovais, it's just -- obviously, there's this unknown factor that's out there. And these costs we have taken what we think is a more realistic approach given what we're seeing in quarter 4., so our guidance does include some of those. However, there is, as we said in my presentation there or might talk, that the fact is that there are unknowns out there that no company knows about that you can't sort of come and put your finger on it at this point in time. So we try to be realistic. We don't try to be ultra conservative. We're not sort of optimistic. We try to be realistic in what we're trying to deliver to you, so you've got something you can work on. So it's a real balance. Some of the things we do know and we can account for; and others, we just don't, all right? So I hope that answers your question.
Ovais, we're definitely not sandbagging here. I've been in several meetings with Graeme and with our purchasing officers, and we're seeing inflation here at a much higher pace than I've seen even in the U.S. Actually, we have contract for transportation that's going up 18%. So we're trying to take into account this and renegotiate contracts and putting them long term to do the best we can to preserve those margins. So we're working aggressively on this thing and stretching our people.
And the other thing that Graeme is doing is -- our productivity rates are improving significantly, so we're not sandbagging. Those are real numbers for us through this year, not unlike last year. If you look at last year, it was a buildup. So it's not dissimilar to the year -- the 2 years we've been in production. Sorry. Go ahead, Ovais.
Perfect, perfect. And just one quick last one is just in terms of the resource update that we were expecting on Beta Hunt. Is that still on track? I mean, when should we expect that?
Yes, there's...
Go ahead, Graeme. We're going to answer the 2 [ resource ]. Go.
No. Go ahead, mate.
Yes. So the resource, we have 2 resource updates we want to put out. We have one from gold at Beta Hunt, you are absolutely correct, and one for the nickel at Beta Hunt because we haven't put one out on nickel since 2020 as well. So both of them are expected to be here at the end of Q1 or very beginning of Q2. We're working pretty hard. This has been something we've been working on very hard, just full stop. It's been -- we've hired outside consultants, and they have had some trouble with some of the people. Look, the truth is there were some mental health issues, and we had to be the bottom end of it. So we had to get other help from consultants. So this COVID thing is a real thing everywhere. It's impacting Australia pretty hard right now. It hasn't as much in the past, but it's impacting people quite a bit here now. So end of Q1, a long-winded answer, beginning of Q2, Ovais.
Your next question will be from Nicolas Dion at Cormark.
Congrats on another great quarter. First question for me, just on the Beta Hunt fleet replacement program. Is that substantially complete? And then maybe what should we expect going forward in terms of CapEx on that front?
Yes, go ahead, Graeme.
Yes. Nicolas, look, for the most part, certainly for now, it's complete. We do have sufficient gear to not just meet our current production but the early start of the growth buildup. So we do have that covered. We have, as I mentioned, another jumbo on order, and these things are 12-month delivery, so we've had it on order for some time. And that will be delivered mid this year. Outside of that, there is some minor equipment for 2022. This is outside the actual growth development. But as far as the equipment, we are mostly done, '22. We will need to probably look at another truck replacement in '23, another couple of trucks because some of the fleet now is getting to the stage where it's either major rebuild or replace.
So that work, that evaluation is going onboard. We have just recruited a very professional new maintenance manager to look after both sites, and part of his scope is to actually go back into asset management plan for us and a replacement schedule, which we should be -- he should have very shortly. So not a lot. We are pretty good with equipment at the moment. But a lot of this, because of the long lead, we may have to place orders for some equipment going into '23, '24.
Okay. And then I guess my next question, you already talked a bit about the infrastructure that you already have near to the new 50C and 30C nickel troughs. If it's too early for this answer, I'm sorry, but I'm just wondering if we can get maybe some high-level numbers on sort of, I don't know, if there's a CapEx figure we can think of or what level of throughput you think you could get out of those new areas. Anything you're able to share at this time would be helpful.
Yes...
I'll tell you what Nicolas -- sorry, Paul. You go.
Yes. What I was going to say is this, look, we have yet to put out that new resource, and we're pressing to get it out, like I said, at the end of March, beginning of April. With that, we're going to have some details around the mine plans. Here's the one thing I would say, Nicolas, this is a reminder to everyone. We budgeted -- it was $16,000 a tonne for nickel we used -- in our budgets, our 2022 budget. Nickel is $45,000 a tonne, and our $16,000 a tonne was somewhere right around that $30 per ounce savings. So you can do the math, depending on where nickel prices go. There's nobody who's going to be more aggressive than us than to get out of remnant areas. We've been mining them in areas since both Graeme and I got here.
And look, I've been mining 34 years. The hardest thing to do in a nickel operation or any operation for that is mining remnant areas in old stopes, under backfill, next to backfill, drilling out pillars. It's a lot of work. So we are very eager to get into the 50C, the 10C, the 30C. All these areas are new discoveries, 50C, again, was discovered last year. We continue to drill out. So we're going to -- we're not going to drag our feet out. We're going to go as quickly as we can. We're only -- we've only got a south of the Gamma Island Fault. The drift is only about 150 meters, so it's not a long ways down there from the 2.6 kilometer strike we have. So I hope it answers your question. I think I would use your -- the value you use, Nicolas, the best thing you could give you for your model for now. And we'll give you an update. Oliver will be calling you guys as soon as we get something more than that.
Okay. Great. No, that's helpful. And then just maybe my last one, just again on inflationary pressures. Are there any specific areas that you're seeing -- I guess any specific areas of concern from your key suppliers that you're seeing?
Well, we're fortunate that there's not anything that we're seeing at this moment, and we go through this every month with our team. Every month, we're going through critical spares. We're going through making sure cyanide, lime, anything, explosives. There is nothing diesel that we are being told at this point will stop shipping, and we're going to run out of it, like rock bolts or any of those supplies, Nicolas. The issue is the same as everyone else in the world. We're victims to escalating prices, and we're doing our best to manage that like everyone else is. So we're not ignoring it. We're doing everything we can to announcing.
Okay. That's it for me, and congrats again on the quarter and the strong year.
Yes. Thanks, Nicolas. It's good to hear for all of us, so...
Our next question will be from Michael Fairbairn of Canaccord Genuity.
Congrats on a good quarter. I wanted to start with just a question on diesel. With the diesel price increasing the way it has over the past few months, I was wondering, I guess, a, do you have any oil price hedges in place? And b, how exposed are you to the oil price? Are you able to give any kind of sensitivity on this?
Yes. Graeme or Oliver, either one you want that one?
Yes, I can start off. And Oli, you can jump in, if you like, if I miss anything. But look, currently, where we sit with our diesel, we use about somewhere between 15 million and 20 million liters a year. So that's a cost somewhere around that sort of AUD 15 million. So our -- and what we saw in quarter 4 was a sort of an 8% increase in diesel fuels per liter. So we -- and again, we already know that in quarter 1, we've seen a bit more of an increase as well.
So as far as what impact that it has on our -- it's obviously a big part. We are helping to offset that, Michael, with other savings in other areas. But look, diesel price is a concern for us, and it's just the way we need to look at how we manage that. And one of the ways that we -- our biggest usage at the moment is our powerhouse, which is all diesel-generated power. We're looking to bring in either -- at this stage, either sort of main power from not too far away and/or a mixture of renewables with gas that we're looking at to bring in as well. So I think within a reasonably short space of time, we'll have certainly the plans going forward, and then we'll look to implement those to take away that heavy reliance on the diesel fuel.
So I just want to add to Graeme's response here because we -- Oliver touched on it in his section here today about our ESG focus. Our focus is going to be on burning less diesel. So our hope is that we're going to get hit with the prices with the way they are. We don't have any hedge at the moment. But those larger trucks that we bought are significantly more efficient, cleaner burning, and they move a lot more tonnes than the older. We had 40 tones and 50-tonne trucks We have 60-tonne trucks now, which burn the same amount of fuel as a 40- or 50-tonne trucks. So they're just cleaner burning.
And as Graeme pointed out, we are working very hard with 2 separate groups at really evaluating long term how we get away from 10 2-megawatt generators running a mill to renewable energy here. That's a tremendous opportunity for us to really focus on the ESG commitments we've had and really reduce the amount of consumption on diesel that we have, so making ourselves less reliant on diesel. So...
So maybe one follow-up on that. When you're talking about the larger trucks, do you have Tier 4 engines on the new trucks?
Graeme, what engine is the newer cleaner burning truck? To be honest, I don't know at the top of my head. They're probably Tier 4s, for sure.
Michael, these new trucks that we have with the AD60s produce a much cleaner emissions. They are especially fitted with a different catalog converted to what their normal diesel truck and the old 55s that we had, so we are seeing much cleaner emissions. Obviously, the next step outside of what we're going now is to look into the -- into either electric or battery or those sort of an approach. So we are at the top end of the diesel clean trucks, if you like. The next step is to go into the other version of trucks, which is, as I said, battery or electric operated. So pretty good and certainly some good work done by our team to actually pin this down.
Okay. Fantastic. That's very helpful. Maybe just one more for me, COVID-related. As the travel restrictions are relaxed in Western Australia, can you give us a bit of a better idea for how this is going to play out in terms of easing labor pressures on the operations?
Yes. Well, having just traveled in here with the more relaxed system, I'll just start, and then Graeme or Oliver, you're welcome to add to it. It's not going to happen overnight, and here's why. We interview quite a few people on a weekly basis here for senior roles in geology, engineering or an operator. And we continue to get a similar message that as much as people want to fly in, fly out into WA, there's still some reluctancy or uncertainty that the rules might change.
We've been dealing -- I've been back for 3 weeks. I think the rules have changed twice since I've been here. The date was supposed to be February 5, moved to March 5. So there's -- people don't want to get stranded. People who are fly in, fly out don't want to leave their families and then only to find out that they have to stay an extra 2 weeks or whatever that is. So there's some hesitancy to do it now. People are -- many of the people we're speaking to are interested and are just saying, well, let us -- will it still be there in a couple of months' time? So I've been sitting with our HR department listening to this. So people aren't just signing up and hopping on planes.
I think like anything, this is just going to take a bit of time. It's not going to be snapping our fingers and borders are open, people are coming. We have quite a few -- I think probably 9 active cases, managing ourselves. There are active cases throughout. Nobody is very seriously ill or anything, praise God for that. People aren't eager or excited to jump on a plane where they could get exposure to COVID to return wherever they're from, whether it's New Zealand, whether it's further or whether it's on the East Coast, where a lot of the population comes from. I think it's just going to happen over time. Graeme, I don't know if you want to add to that. I just flew in 2, 3 weeks ago and went through all the checks and balances to get into the state of WA. So Graeme, do you want to add anything?
Yes. Michael, just it really is a double-edged short in some ways. I mean, we had people isolated over in the eastern states. One, in particular, hadn't been to site for 8 months because he was in isolation over there. The border is open. That person is now back at work. At the same time as we're seeing some of these people start to move back into the role and open up the other roles, what it does, as Paul has mentioned, is it exposes a site to then bringing it in. So we are seeing in WA an increase in COVID cases -- significant increase in COVID cases. And there is, I think, no doubt, that it will start to work its way into the mining operations around Western Australia. So including our own, we do have a couple of members now that have been tested positive for COVID. So it really is a 2-edged sword. We see a good group of people coming in that opens the door for recruitment but also opens the door for more and more cases that come in, and I think it's only going to be a matter of time.
Ladies and gentlemen, this is all the time we have for questions today. I will now turn the call back over to Mr. Huet for closing comments.
On behalf of the company, I just want to take a moment and thank everyone for their questions, for taking the time today to listen to us on our call, Graeme, and Oliver. I know that people have busy schedules, busy lives. Thank you very much for taking the time to listen in. If you have any further questions, please don't hesitate to get a hold of any one of our team. We'll gladly assist in any way we can, and I wish everyone a great health, and have a great couple of weeks, and talk to you soon. Thank you very much, everyone, and have a great day.
Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.