I would now like to hand the conference over to Mr. Dan Clifford, Managing Director. Please go ahead.
Thanks, Amanda, and good morning to everyone. Thank you for your time this morning. I have with me Peter Trout, Ian Poole, and Adam McKinnon as well. It's been a very active quarter for the company, to say the least. With an updated Federation resource, we welcome Bob Vassie and Helen Gillies as new non-executive directors to the board, and we also had the unfortunate retirement of Cobb Johnstone, our Chairman, and the subsequent appointment of Susie Corlett as our Interim Chair. Added to this was the completion of the Federation scoping study, significant exploration updates across the company, the integration of Dargues operation into the portfolio, and strong output in performance as a group.
All in all, giving us a quarter of 36,000 ounces at approximately AUD 1,400 a ton, and a year-to-date position of 80,000 ounces of gold, approximately 4,000 tons of copper, and 18,500 tons each of lead and zinc, resulting in an all-in sustaining cost on a year-to-date basis, approximately AUD 1,200 a ton. This has put us well on track for the full year guidance of 100 tons-113,000 tons at AUD 1,425-AUD 1,575 all-in sustaining costs. This was also underpinned with a 42% reduction in our total recordable injury frequency rate and a cash position of AUD 77 million, post all the acquisition costs through the quarter. Noting here significant builds in doré and con and receivables at the end of the quarter that won't be seen in this cash position. Ian will expand and quantify on that later.
There are, though, two areas that are firmly on our performance radar within the quarter. Dargues in the quarter has been below our expectations by approximately 1,200- 1,500 ounces. The primary contributor being development or dilution and lower grades during February. This is caused by a lack of infill drilling, and that has been corrected with the infill drilling program that the company put into place during the handover of the business. Also the slow turnaround of grade control assays. That will also be corrected during the course of this coming quarter. In essence, with development forming 50% of the mill feed during that month and the lower grades, with the sparse information, those lower-grade materials actually went through the mill, being a significant contributor to that month.
March performed well, though, once we had better place in the development and better understanding with the information, most recently gained out of the infill drilling. Stopes reconciled to plan throughout the quarter, and particularly in March with an impressive performance, with 30,000 tons mined at 4.2 g/t . If I ignore inventory movements or inventory build within that month, particularly in March, that equates to roughly AUD 1,250 an ounce all-in sustaining cost for production. The second area in particular for us is Peak and our Kairos progress.
Difficult ground conditions, mainly talc shears, have resulted in two unsuccessful attempts for the escape way pilot hole. All other infrastructure and development is in place. Works are progressing on the escape way, with this being the final milestone being required until stoping can commence later in this quarter. We're in a very strong position for delivery of the full year and the continued execution of our strategy. With that, I'll hand over to Peter to run through the operations and projects.
Thank you, Dan. Our three operations delivered a 120% increase in quarterly gold production, and that was driven by higher contributions from the Peak and Hera mines, supplemented by the first full quarter's production from the Dargues Mine. At Peak, our metal production reflected mill feed from all sources having higher gold but lower base metal grades. This contributed to a 60% increase in quarterly gold production, despite a 23% reduction in ore processed. The processing plant continues to be constrained by underground mine production, which in turn has been impacted by labor shortages and difficult ground conditions in some areas. Establishment of the high-grade Kairos mining area remains a focus of our underground activities, and it's significant to note that 11,000 tons of Kairos development ore was processed during the quarter, and that represents approximately 20% of the planned FY 2021 mill feed from the Kairos zone.
Moving to Hera, the operations with another consistent quarter of mining and processing activities. A doubling of the gold grade led to a corresponding increase in quarterly gold production to about 11,500 ounces. Modification to the stoping sequence brought forward better gold grades to the March quarter, while deferring higher base metal grades from the North pod into the June quarter. Gold production also benefited from a favorable gold grade reconciliation from stoping in the Far West deep zone.
At Dargues, the operation was successfully integrated into our operating portfolio following the change of ownership in mid-December. The underground mine ramp-up is progressing very well and remains on track to steady-state ore production of 30,000 tons per month by the end of the June quarter. Quarterly gold production of just short of 9,000 ounces was below expectation due to the February result shown in figure five, and as explained by Dan.
Looking at our growth projects, the Federation scoping study was completed in the March quarter, delivering very encouraging results. The study looked at a range of project configurations, these converged upon a preferred scope of a new underground mine at the Federation site and leveraging the established infrastructure at Hera for ore treatment through either a new or modified process plant. The scoping study had the benefit of our operating experience at Hera, in turn, this provided high confidence in the underground mine design, infrastructure requirements, and operating costs. That confidence supported the decision to proceed directly to a feasibility study. We expect that study to be completed by the middle of next calendar year. We're also pursuing regulatory approvals that will allow us to further evaluate the Federation deposit using an underground exploration decline for drilling and collection of a bulk sample.
Work to support the environmental impact statement for the full project configuration is also progressing in parallel. At Great Cobar, the pre-feasibility study is continuing, with samples from the current drill campaign being used to prepare an updated mineral resource estimate and to inform geotechnical, mine design, and metallurgical activities. This program is expected to be completed late this calendar year. I'll now hand over to Ian Poole, who will discuss our quarterly financial results.
Thanks, Peter. The March quarter's all-in sustaining costs were AUD 1,429 an ounce, and year-to-date, all-in sustaining costs were AUD 1,199 per ounce. This cost performance has Aurelia well-placed to meet its full-year guidance of all-in sustaining costs of between AUD 1,425 and AUD 1,575 per ounce. On the 31st of March, there was AUD 77 million cash on hand, which included an AUD 6 million build of working capital due to the timing of debtors. Aurelia also held higher than typical levels of doré and base metal and gold concentrates due to the timing of shipments. This finished product was valued at a cost of AUD 21 million. Working capital is expected to be released in the June quarter.
The key drivers impacting the reduction of cash in the June quarter were cash flow from operations after sustaining capital of AUD 21 million, including the continued ramp-up of Dargues, continued investment in growth capital of AUD 11 million, increased patterns of tax, which were AUD 7 million, based on forecast FY 2022 profits. The initial term loan repayment and cash backing of bonding of AUD 8 million, which relates to the financing arrangements put in place for the Dargues acquisition, and stamp duty payments of AUD 13 million, which was flagged at the last quarterly and relates to the Dargues acquisition. During the quarter, Aurelia maintained its hedge book with 53,000 ounces of gold hedged with [the company financially] for the next 12 months at an average forward price of AUD 2,437 per ounce. I'd now like to hand over to Adam.
Thanks, Ian. This quarter has again seen extensive surface and underground drilling across all of the company sites. As reported to the market, in March, the first results from Aurelia's phase one drilling program at the Dargues Mine produced very strong initial results, including 36 m at 5.4 g/t gold, 14 m at 8.8 g/t , 26 m at 4.8 g/t , and 15 m at 7.8 g/t gold. The results from the Plum's Lode in the eastern part of the mine were particularly encouraging, demonstrating high-grade mineralization is open at depth and along strike. Through the quarter, the company has had two surface rigs and an underground rig operating at Dargues, aimed at increasing confidence in the existing resources and reserves and targeting extensions along strike.
Results for the deeper extensional drilling are still pending and will be released late in the current quarter. Moving to the Peak Mine, and the most recent results from the lower portion of Kairos continue to demonstrate the outstanding high-grade potential of the deposit. New intercepts reported in March included 13 m at 50.7 g/t gold and 16% lead zinc, and 16.5 m at 6 g/t gold and 14% lead zinc, amongst an array of other very strong intercepts. The latest drilling has extended the deposit along strike to the north, and the high-grade gold lead zinc mineralization remains open at depth. We're also highly encouraged by the presence of broad zones of copper mineralization encountered immediately to the east of the Kairos deposit, including intercepts of 38 m at 2.3% copper and 46 m at 1.6% copper.
Further work will evaluate the potential for this area to host a potential mineable copper lens. Continuing with the copper theme, Aurelia also reported its first significant drilling into the Great Cobar deposit following the acquisition of the Peak Mine in 2018. Great Cobar has a current indicated and inferred resource of 4.1 million tons at 2.2% copper and 0.8 g/t gold.
With the latest drilling aimed at increasing the confidence in the grade and tonnage estimates, and providing samples for additional metallurgical and geotechnical test work. Encouraging intercepts from this program included 60.5 m at 2.2% copper and 0.3 g/t gold, with a higher-grade portion in this hole of 12 m at 4.4% copper and 0.6 g/t gold, and another intercept of 9.3 m at 3.5% copper and 1.9 g/t gold. The program also intercepted some strong mineralization in the western lead zinc lens at Great Cobar, the best of which was 15 m at 26% lead zinc. Drilling is currently ongoing, with the focus now shifting to potential resource extensions in the poorly drilled areas up and down dip of the high-grade zones of the Great Cobar resource. Thanks, Dan.
Thanks, Adam. Just in wrap up, I think it's fair to say the combination of the three assets, incredibly value exploration, country, and opportunities, and Federation are the keys in our strategy. In looking forward, it's about delivery of the full year, continued exploration at all three operations, and Federation feasibility studies targeting in the vicinity of 600,000 tons per annum throughput. These priorities for the quarter, looking forward and into the year, firmly set our platform for returns growth from the business. With that, I'd like to hand over to questions. Thanks, Amanda.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up your handset to ask your question. Your first question comes from Dylan Kelly from Ord Minnett. Please go ahead.
Yes. Good morning, team, and congrats on a great result in what is one of the busiest quarters I think I've seen in terms of news flow. I'll keep on coming back, but let's just start off with the scoping study for Fed. First of all, where is it? I read it, and it doesn't seem to contain It's as if the whole thing's been sanitized by the regulator. What's happened there? And is this to do with the high amount of inferred material that was being modeled in the study that was trying to be released?
Dylan, I'm sure you'll agree with me that the ASX has a number of key issues or protocols with the releasing of scoping studies. Throughout this exercise, the scoping study for us has been about informing us internally, particularly as to the boundaries for the EIS and environmental approvals, and enable us to take it forward directly into feasibility. There is a number of delicate issues in releasing of a scoping study. To be blunt about it, we don't need to. We don't need to release the scoping study.
I think it's important for investors to understand timeframe and where we're heading. I've just indicated where the feasibility is targeting in terms of throughput to the business. With extensive drilling yet to go, a growing resource, future resource to reserve conversion, there's a fair bit of water to get under the bridge yet in terms of exact capital numbers or project valuations.
Okay, fair enough. If this is internal, and/or a combination of not being able to release because of the amount of inferred material that was there in the first pass, does this mean you're gonna be looking to provide an update based on the revised resource model as it comes to pass? Or how do you think about in terms of milestones that we can expect to come out about it?
I think the first milestone is the group resource and reserve report timed for July this calendar year. Of which Federation and other exploration activities will make into there to a certain proportion. The key milestone beyond that really is the completion of the feasibility study, such that we go to our final investment decision. We've indicated that's during the course of the next financial year.
Okay, fair enough. Just turning to Peak and the issues that you've had there just with the egress. Can you just walk us through what's going on? I didn't quite understand what happened in relation to some of the talc shears that you're moving through. If you could just talk to if that's the reason why, say, ROM was notably weaker for the period and development rates have come back.
Good morning, Dylan. It's Peter here. I'll respond to your question. The situation at Kairos is we have everything in place for ventilation, decline access, and the upper and lower ore drives in the first stoping block. Where we've encountered challenges is putting a pilot hole down to establish a separate shaft within which we can install a ladder way that provides a second means of egress in an emergency and makes us compliant with the New South Wales mining regulations. We have had two unsuccessful attempts at putting that pilot hole down with the diamond drilling. The first one was a steered hole. The second one was aimed between the interpretation of talc shears. In both cases, we encountered talc and simply couldn't pass through those zones with the diamond drill bits.
We're now on the third hole, which we're piloting with a raise bore bit. That hole has reached design depths overnight. We're now going to survey that hole so we can steer the underground development to break through into the pilot hole, attach the reamer, excavate the raise, and then install the ladder way. If all going to plan in that regard, we do expect first ore production in June. The broader issues around the performance at Peak, and you've identified the development being less than planned, was heavily impacted by labor. We're in a very challenging labor market right now. We're feeling that most acutely through the underground operations. We're working with the underground mining contractor to get manning back up to appropriate levels and support sustained development and production numbers in the mine plan.
Okay, fair enough. I'll pass it on and I'll circle back.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Michael Evans from Acova Capital. Please go ahead.
Good morning, gents. Thanks very much. I think it's just following on from Dylan's questions in some way. I'm just looking at your figure three in the announcement, which has got the Peak throughput and cost per ton. I appreciate there's moving parts. How should we think about the average cost per ton going forward into FY 2022? As soon as the throughput comes down to 120 a quarter, the costs seem to push up towards AUD 300 a ton. Is that sort of correlation, no reason why that shouldn't change? If you get your annual throughput back closer up to, I don't know, 650 or something, is that the goal for FY 2022, for argument's sake? AISC, on sustaining costs closer to AUD 200. I appreciate they move around each quarter, but how should we think about that for life of mine at Peak?
I'll take that one, Michael. It's Dan. We haven't given an indication of what LOM cost structures look like. I will focus on FY 2021 guidance for Peak. The throughput ranges for Peak were planned to be somewhere between 620 and 660,000 tons throughput through the mill for the year, at an all-in sustaining cost of between AUD 225 and AUD 250 a ton. Sorry, not all-in. A cost per ton of AUD 225- AUD 250 odd a ton. We're well on track for those. On a year-to-date basis, we're sitting at about AUD 225 a ton for Peak.
Noting, too, that increase in volume to call it a midpoint of 640, 650,000 tons is a 20% improvement over the prior year in terms of throughput, of which was another 25% improvement over the FY 2019. You're right. As tons go up, costs come down. We will see a bit of noise through the asset. In going forward, the plan for us is to take Peak up to capacity of the mill and with the polymetallic feed or multiple ore body feeds, somewhere between in around 750,000 tons- 800,000 tons a year is the objective over the coming years, that will naturally bring down the cost per ton.
Okay. That's a great answer. Over the coming year, you do expect that to come down?
Yes.
Because mainly driven by the economies of scale of the higher throughput, despite the fact there's lots of moving parts, I suppose, because there'll be more I'm just thinking out loud now, but there'll be more sustaining costs some years, less you're developing mine areas, et cetera. Kairos is quite deep, I understand as well. No, that's good. Thanks, Dan.
You're dead right there, Michael. There is a lot of moving parts in the business. I think long-term, we look at significantly building confidence in Great Cobar, once we get a bit further spread out with the operation. At the moment, our focus is primarily on Kairos and getting Kairos opened. There's 1 million tons there at 7-odd g/t sitting there, and I think that will grow. I think that's important for us. In the medium to long term, it's having that mill jammed, and that's going to take a little bit of time and effort in terms of development and sustaining and growth capital to get it there, but that is the target.
Yeah. Okay. That's great. Just while I've got you on Dargues, at the beginning of the call, you mentioned there a couple of challenges which you're dealing with in terms of the additional dilution and the development, or I think did you say moved to a slightly lower grade than you expected? There's nothing you've seen in the experience in mining to date and the reconciliations taking into account adjusting for your more-than-expected dilution, if that's the case. There's nothing you've seen that suggests that the reserve grade, there's any issues with the reserve grade?
No. No, there isn't. We clearly knew in the acquisition that there hadn't been a drill hole, like an underground infill hole, put into the asset. Now, that was our first lever we pulled, and that's been fundamentally about near-term understanding of the mineralization and the nature of that mineralization and the tenor of that mineralization. Those infill results have done twofold for us. One has closed up our information spacing from probably 50 m now to in the vicinity of sub-20 m in terms of hole spacings or core spacings. That increases our knowledge and enables us to much better engineer the environment down there to make the most of that grade that we can see. That's the first thing.
Secondly, I think it's also fair to say that the infill drilling, as a bare minimum, has only given us more and more confidence in the grade tenor within the asset. I think at this stage, having that information such that we can design and lay the mine out well and appropriately is key. No doubting that we will see different interpretations of the ore bodies as that drilling continues, but better to know it now. In short, no, there isn't anything this stage for us that gives us a concern on the overall average grade of the resource and reserve.
No, that's great. It's good to see some drill results come out of it. Thanks, Dan.
Just one other point on it, Michael, if you're still there. I just want to reemphasize is that when we acquired the asset, we did acquire it with a resource and reserves report from 2017. During our DD, we did trim that average grade to the asset down by 10% to get it to around that rough range of 4.9-5.5. That is the line in the sand for us in terms of where we need to get the asset. We will rerun the resource and reserves report for the asset in the course of this calendar year.
That's great, Dan. That's really helpful. Thank you very much.
Thank you. Your next question is a follow-up question from Dylan Kelly from Ord Minnett. Please go ahead.
Sorry, guys. Back again. Can you just talk us through Dargues again in terms of some of the different modifications or changes you're trying to make on-site, Dan? Have you had that much luck in terms of being able to install an on-site laboratory yet to speed up turnaround times? How's development going? Any progress or any sort of updates in terms of how you're thinking about the permitting process for maybe expanding the current scope? Yeah, just like a general update on that front.
Yeah. We talked about the infill drilling, and that was the first lever. The second lever for timely information for particularly development and grade control performance is the rapid assay turnaround. We will be reducing assay turnaround now from a couple of weeks now down to a couple of days during the course of this month. Sorry, during the course of May. That is effectively a combination of on-site and off-site work to bring that in, close it down, and get much better control. That initiative of having to build an on-site lab, we are hoping to avoid and reduce the capital costs of that and focus on external provider on quick turnaround. That's going into place during May. That's, I think, the final, or the second, I should say, second lever in getting the engineering environment of that operation correct.
Ongoing from that, I think you asked development performance. I would say month on month, actually, during the quarter, the Dargues team overperformed, and we're averaging in around 400 m a month, which is good performance for the asset. As Peter mentioned earlier, there's a couple of key numbers we have in our minds. That's 30,000 tons mined, 30,000 tons milled, where generally the capacity is under the consent, 5 g/t , or 4.9- 5.5 g/t , and 400 m of development to sustain that operating performance. All those milestones have been hit. In fact, I'd go one step further when in leading to the second part of your question. Actually, during March, the milled volume or milled tons was actually closer to a 400,000 tons per year run rate, which we milled over 30,000 tons in that particular month.
That's a great performance for the business, and I think it underlines part of our investment thesis that there's latent capacity within that mill up towards that 10%-15% improvement over the 355, which is what it's consented at. In terms of look forward in consenting, the key catalyst for us taking a clear view on what that consenting looks like in both mine life extension and capacity expansion will come after we get the results from the surface exploration hole testing depth and strike of both the main and the Plum's Lode, and we expect those results during the course of this financial year. That then clearly informs the next steps in terms of a consent extension for the operation.
Okay, that's quite clear. Adam, you were talking before about Great Cobar and some of the results there, which just look quite staggering or very, very interesting, particularly amidst Dan's clear strategy around being copper ready. How much of the drilling is extensional at this point and testing depth and trying to grow the resource? Or is this largely an infill exercise to date?
Yeah, thanks, Dylan. Great Cobar at the moment, we've basically completed our infill portion of that program, and we're now exclusively focused on extensional drilling. For the last two months, maybe even a little bit longer, we have been testing both up-dip and down-dip. I think we've mentioned previously that there is quite a long turnaround time at the moment for assay results. A majority of those results are actually still pending. As Dan said, we'll update the market when we're able to later in the quarter.
Okay, fair enough.
Thank you. Your next question comes from Joshua Hain from Rest Investments. Please go ahead.
Thanks. Good day, everyone. Just wanted to understand a bit of just the manning issues at Peak, particularly in the context that I guess you've effectively reconfirmed guidance. Are we expecting grades there to continue to offset the lower mill tons, or are we expecting manning to improve?
Hi, Joshua. It's Peter here. I'll just respond to your question. We've already seen an improvement in filling vacant roles in the underground workforce, and we're seeing that transform now through into improved physicals on the underground mine. We also resumed development in the New Cobar Complex in March, and that's helping us open up additional scoping areas and provide additional mill feed going into quarter four and also the next financial year. In conjunction with that, we've got multiple areas to develop in the Peak Mine, and it's a matter of turning over those stopes to extract the ore, backfill the stopes, and take the next one in the sequence. We're certainly looking for a better set of physicals in the June quarter relative to the March quarter.
Thanks. That's good to hear. I guess just in terms of, and maybe I misinterpreted some of the previous comments, but certainly the grade was better than I had expected. Was that part of the mine plan, or did you sort of prioritize high grade because the throughput's going to be a bit lower?
It was a combination of where we were in the mine plan and remembering it's a polymetallic deposit. In the previous quarter, we were mining for areas of higher base metal grades, lower gold grades. We've transitioned through into some areas which have clearly much higher gold grades. Perseverance Deeps is case in point. We did also benefit from some better-than-expected reconciliation results in areas. A combination of where we were mining and favorable outperformance of what mining for our grades.
Okay. Great. Thanks for that.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. We will pause to allow participants to join the queue. We are showing no further questions at this time. I will now hand back to Dan for closing remarks. Pardon me. We do have a further question. Your next question comes from Bill Murray from W.Murray Superfund. Please go ahead.
Just a quick one or a quick two. The group AISC for the year- to- date is AUD 1,199. The financial year guidance is AUD 1,425-AUD 1,575. It's painting a very poor picture of the final quarter. Could you care to sort of expand on that, please?
Bill, it's Dan. There's a couple of things that we'll just draw out here. One, we will see Hera's gold grade or head grades decline quite a lot during the June quarter. We did actually have a change in order of some of the stopes during Hera from Q4 back into Q3. We will naturally now see a more rapid decline in the head grades at Hera during Q4. That is a contributor to that all-in sustaining going up. We'll also see a shift of development activity at Peak from growth into sustaining or operating costs that will go to the all-in sustaining costs at Peak as well. The combination of those two in particular drive the group full year result into that range.
Okay, one final one. On the CCC minutes for the Peak Mine, I noticed the total workforce, I'm not sure what the actual exact dates are of these, but the Peak workforce went up from 134- 141, and the PYBAR went up from 192- 202. Presumably, they weren't being used in underground. What was the reason for the increase in employment during the quarter, please?
Bill, it's Peter here. I think as I referred to previously, we had a number of vacant roles in the underground workforce. That really started to impact through in the December quarter and over the March quarter, a number of those roles have been progressively increased, leading to the higher numbers that you've quoted there.
Yeah. Okay. Thanks very much.
Thank you. There are no further questions at this time. I will now hand back to Dan.
Thanks, Amanda. Thank you everyone for your time this morning. Hopefully, investors can clearly see the platform which is being set up for the company. Next news flow for us will be on delivery of the full year with the June quarterly report and in and around, and probably just prior to that, a group exploration update as a result of the continued exploration efforts within the company. With that, thank you very much for your time, and we'll talk in July.
Thank you. That does conclude the conference for today. Thank you for participating. You may now disconnect.