Thank you for standing by, and welcome to the Northern Star Resources December 2022 quarterly results conference call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand conference over to Mr. Stuart Tonkin, Managing Director and CEO. Please go ahead.
Good morning. Thanks for joining us today. With me is Chief Operating Officer Simon Jessop and Chief Financial Officer Ryan Gurner. I'm pleased to present our December quarter results, marking the midpoint of FY23. We have continued significant progress on our growth projects in line with our profitable growth strategy to 2 million ounces per annum. Our December quarterly production of 404,000 ounces at an all-in sustaining cost of AUD 1,746 an ounce demonstrates our capability to operate at 1.6 million ounces per annum. For the second half, higher forecast production is expected to drive unit costs lower as Thunderbox delivers expanded nameplate capacity and grade improves at Pogo.
We maintain our full year guidance of 1.56 million- 1.68 million ounces at an all-in sustaining cost of AUD 1,630-AUD 1,690 an ounce. Our safety performance is sector leading with a lost time injury frequency rate of 0.9. We continue to see numerous incidents, so a concerted focus on training, competency and safety leadership is ongoing. This is reflective across the sector with staff turnover and skill shortages continuing to challenge improvement in safety performance. Simon will speak to the Australian operations shortly. At Pogo, we continue to meet the mill throughput rate of 1.3 million tonnes per annum, with an increased percentage of stoping tonnes now at 72% of the blend.
Overall grade improved quarter on quarter. Some stope mining dilution on the margins of the deposits saw a reduced average mill grade. Ounces sold at 65,000 for the quarter at an all-in sustaining cost of US dollars $1,362 an ounce. The second half focus at Pogo is improving mined grade to deliver our full year guidance. It is very pleasing to see unit costs improve at Pogo and the operation generated mine operating cash flow of $30 million in the quarter, we have more optimization work to do at Pogo in the remainder of the year. During the quarter, we released an exploration update highlighting continued new discoveries as well as in-mine extensions across the group.
The new Joplin Deposit at Kanowna Belle Underground provides mine life extension there, and the regional drilling at Red Hill discovered a significant mineralized system providing growth optionality for the Kalgoorlie region. The Wonder North and Golden Wonder discoveries are in close proximity to the newly expanded Thunderbox plant. In Alaska, we continue to extend the Goodpaster deposit beyond the existing high-grade resource. Our financial position remains very strong, which Ryan will talk to shortly. We are well leveraged to capitalize on the strengthening gold price with fully funded growth commitments advancing. We have growing cash earnings, which enables prudent capital allocation, including organic growth, dividends and share buyback, all with a focus on delivering superior shareholder returns. In regards to the Fimiston mill expansion study, our team continues to evaluate the most compelling design options and actions to de-risk execution to present a case towards final investment decision.
Now over to Simon for the Australian operations.
Thank you, Stuart. For the Kalgoorlie production center, including KCGM, Carosue Dam, Kanowna Belle, and South Kalgoorlie, we sold 210,000 ounces of gold at an Australian all-in sustaining cost of AUD 1,738 an ounce, down on gold sales from the September quarter, while AUD 24 an ounce lower on cost. This production delivered a mine operating cash flow of AUD 177 million, while we spent AUD 99 million on significant growth capital projects. Of this major growth capital total, AUD 62 million was spent on KCGM open-pit mine development. At KCGM, open-pit material movement increased to 21.1 million tonnes, in line with our material movement plan. Pleasingly, truck hours increased 13% as we take advantage of the new open-pit fleet.
Grade of mined ore was higher due to increased volumes and higher grade ore from Golden Pike South. The open-pit physicals have now delivered 41.5 million tonnes of total material movement for H1, which is delivering into our strategic goal of 80 million tonnes-100 million tonnes per annum of annualized movements. This is an amazing effort from the team. Progress in the East Wall remediation area continued and remained on track for reestablishing FY24 access back into Golden Pike North's higher-grade ounces. Underground mining volumes for the Kalgoorlie region increased 5% compared to the September quarter to deliver 115,000 ounces. KCGM's underground Mt Charlotte operation lifted volumes by 19% to 470,000 tonnes as access to greater stoping areas came online.
This was very pleasing and is part of growing this operation to 3.5 million tons per annum by FY26. Carosue Dam increased ore tons while grade was lower due to sequence constraints at Karari. The porphyry underground mine commenced during the quarter and is well established after three months of development. Kalgoorlie Operations, Kanowna Belle and South Kalgoorlie produced consistent volumes quarter on quarter, while all-in sustaining costs reduced AUD 114 an ounce with margin focus was a key driver for the team. Processing volumes in the Kalgoorlie region was 4.8 million tons or 2% higher than September quarter, despite no processing activities at South Kalgoorlie Mill, which was moved into care and maintenance during quarter one. The revised processing strategy of three plants in the Kalgoorlie Production Center has been successfully established. Grade and recovery was consistent quarter on quarter.
At our Yandal Production Center, including Jundee, Thunderbox and Bronzewing , we sold 128,000 ounces of gold at an Australian all-in sustaining cost of AUD 1,591 an ounce, up 26% on gold from the September quarter and flat on all-in sustaining costs. This production delivered a mine operating cash flow of AUD 112 million, up 38% from September quarter. We spent AUD 56 million on growth capital projects, AUD 11 million lower quarter-on-quarter. Bronzewing spent AUD 8 million on major growth capital during the quarter as we develop this mine for the expanded process plant. Our Jundee operation achieved a new record quarterly underground ore mined with a 39% increase in ore at an average mine grade of 4.1 grams per tonne.
As a result, mined ounces increased 93,000 ounces for the quarter, up 31% from the September quarter. Total jumbo development this operation was steady at 8 kilometers for the quarter and will continue to be a key enabler both on drill platforms and increased stoping areas. Processing throughput was steady at 740,000 tonnes back to nameplate volumes. Thunderbox underground operation continues to increase the stope mining fronts with 503,000 tonnes of ore mined in the quarter. Ore tonnes mined from both underground and the open pits increased to 1.7 million tonnes, up 30% on September quarter and exceeded the processing volume by 50%. Open pit mining volumes more than doubled to 4.6 million BCMs mined during the December quarter.
The substantial increase in material movements is very pleasing and will provide future access to all sources at Thunderbox. The total mined ounces was 62,000 ounces, increasing 15%. Processing volumes in the Yandal region increased significantly quarter-on-quarter to 1.95 million tonnes. As previously mentioned, Jundee was steady with the throughput growth coming from the Thunderbox mill expansion. The new process plant continued to successfully ramp up, milling 1.2 million tonnes for the quarter. We will systematically be ramping up processing volumes as we stabilize running the new plant over the course of the second half. It is pleasing to see sprint capacity at or above nameplate run rate of 6 million tonnes per annum already. Our focus is on bedding in the new operational processes for this expanded plant.
The Thunderbox project remains a key focus in the second half as consistent throughput will drive lower costs. I would now like to pass over to Ryan, our Chief Financial Officer, to discuss the financials.
Thanks, Simon. Good morning all. As demonstrated in today's quarterly results, Northern Star remains in a robust financial position. Our balance sheet remains strong as set out in table 4 on page 8, with cash and bullion of AUD 495 million at 31st December. We remain in a net cash position of AUD 145 million, with corporate bank debt of AUD 350 million. The company has recorded strong cash earnings for the first half of FY23, which is estimated to be in the range of AUD 460 million-AUD 475 million. A reminder is that our dividend policy is based on 20%-30% of cash earnings. Pleasingly, all three production centers generated positive free cash flow, with capital expenditure fully funded.
Figure 6 on page 9 sets out the company's cash and bullion and investments movements for the quarter, with key elements being the company recording AUD 354 million of operating cash flow. Looking ahead to the remaining quarters, this is forecast to rise, with TBO positioned to operate at an annualized rate of 6 million ton capacity during the second half of FY23 and stronger margin from Pogo through higher grade stope contribution across the remainder of the year. Quarterly investment in sustaining capital, growth capital and exploration are tracking to plan. Growth capital investment during the quarter included waste material movement at KCGM, establishment of Porphyry underground at CDO, Ramone underground at Jundee, Aurelia open pit development, Otto Bore pit development and TBO mill expansion. In respect of the company's on-market share buyback.
During the quarter, 9.4 million Northern Star shares, totaling AUD 82 million, were purchased and canceled. Since initiation, 42% of the 300 mill program has been completed, with 15.5 million units being purchased at an average of AUD 8.21 per share. The 12-month program remains open until September 23rd. On other financial matters, depreciation and amortization are in line with company guidance provided of AUD 600-AUD 700 per ounce. First half depreciation is at the upper end of the guidance range at approximately AUD 680 per ounce. For the quarter, non-cash inventory charges for the group are AUD 57 million or AUD 140 per ounce. As mentioned previously, the majority of these non-cash inventory charges relate to the milling of acquired stockpiles at KCGM.
For FY23, this charge will likely be approximately 50%-60% higher than FY22. In respective costs, our business, like all others, is experiencing pressures. The size, scale, and flexibility within our portfolio positions us to maximize efficiencies and productivities in the business, which provide opportunities to reduce costs. In addition to this, our fleet investment program at KCGM and planned expansion at TBO, which is now complete, means we are well-placed to navigate the current challenging cost environment. We remain confident in a stronger second half of the year in terms of both production and costs from maintaining mining and processing volumes at Pogo, with a focus on high-grade stope delivery, ramp up in throughput at Thunderbox to 6 million tons per annum, and increased ore volumes from Mt Charlotte, and greater contribution from the lower cost ounces of Golden Pike at KCGM.
Lastly, in respect of hedging, table 5 on page 9 sets out the company's committed hedge position at 31st December. During the quarter, the company delivered 174,000 ounces into contracts and placed 145,000 ounces in FY26 at an average price of AUD 2,954 per ounce. The overall hedge book being 1.28 million ounces at an average price of AUD 2,673 per ounce Australian. I'll now hand back to Ashley for the Q&A session. Thank you.
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 the handset to ask your question. Your first question comes from Levi Spry with UBS. Please go ahead.
Morning, morning, everyone. Happy new year. Thanks for the call. Just a question on the KCGM plant expansion FID. Can you just update us on timing there and remind us around the, I think in the last presentation, you mentioned a three-year build from FID? Is there any change to sort of timing and scope on that?
Thanks, Levi. Yeah, we're still working into the final detail. The two elements of that is getting much firmer engineering final designs for the expanded case and tighter accuracy on that pricing. The second part is that de-risking element for the execution phase. Ensuring some of the long lead items and/or pre-works could be advanced or progressed. We haven't given a date as to what when FID would be reviewed, but we're certainly in the second half charging ahead with the information provided to our board to give consideration.
I think it's more likely in the next guidance year for us to look at what we're doing there, but it's still very compelling, and, you know, we're still advancing it.
Great. Thanks, Drew. Just on the, just on the South Kal mill , a few clients telling me the gold's going much higher in the next few months. What is the sort of status there? Is there, is it about people or if you're comfortable that gold's $200 an ounce higher by the end of the year, can you turn it back on? Is it really an optimization game or is it still constrained by people?
It's probably linked to your first question in that if we move it from sort of Fimiston from 13 to, you know, 24 million tons, the catch-up capacity for that extra million that SCO offers, will get gobbled up quick, right? It's not about-
Yeah.
turning it on for 1 million tons and torching some margin and cash, because it was one of our higher cost mills in the region.
Yeah.
Then to your point on people, down back to 3 mills at Kanowna, Fimiston and obviously, Carosue, we've got great stability, full teams, good focus. You know, the strategy was the right one. It's worked and we're happy with it. As far as divesting it or otherwise, it's happy for it to sit there, not operating because it doesn't compete with us, as well. It's certainly contributing to the cash generation in the region, not motivated to turn it on any time soon.
Got it. Thanks, mate. Thanks for the time. Thank you.
Your next question comes from Daniel Morgan with Barrenjoey. Please go ahead.
Hi, Stuart and team. You just highlight Golden Pike access being steadily regained in FY24. Is that going to be material in terms of ore access, or is it merely just a steady growth over time from FY25 onwards? Thank you.
Yes. I'm gonna answer. Thanks.
Yeah, thanks for that, Daniel. Simon here. In terms of access back into Golden Pike North, that's part of our growth in ounces at KCGM, up to 650,000 ounces by FY26. Golden Pike North is the a key driver of those increased ounces over the next few years. We're remaining on track with the wall in terms of that capital to pull that down. During FY24 we'll start to regain access back into Golden Pike North. It's all in the current plan as we've outlined with the growth ounces at KCGM.
Okay. Thank you very much. Just switching to Pogo, and the grade, you know, which was 6.6 in the quarter. I know it was telegraphed that you'd be, you know, a lot weaker in the first half and stronger in the second. What are your expectations on grade in the next couple of quarters? If you could go on to that, please.
Yeah. Thanks, Daniel. Look, north of 8 g is obviously the reserve grade of 8.5. That's our ultimate landing point. With what we're seeing in the near-term plan, there's some mining dilution in those stakes that we're addressing with some of the legacy development in that place. Yeah, we're certainly just relooking at where that is. Our current plan forecast that, you know, we can deliver into the guidance that's there for the full year to achieve that. There is some capacity to mill a bit harder than the 1.3, that's more linked around the shutdown timings and essentially above 8 g delivers that. Yeah, it's a real focus on quality over quantity.
The real impressive thing at Pogo is really the unit costs keep coming down, and there's still plenty of work to optimize that in the second half that the team are focusing on.
Okay, thank you. An accounting question. When you define cash earnings, and one element of that is cash tax paid, I presume that stamp duty payments that I think were made in the September quarter is not included in that. Can you just confirm?
Yeah, that's right, Dan. Yep. It's not included in the cash earnings for this part.
Okay. Thank you very much.
Thanks, Dan.
Your next question comes from Al Harvey with J.P. Morgan. Please go ahead.
G'day, Stuart team. Just a quick one on Thunderbox. Just on the path to that 6 million tons per annum rate, do we get that from pretty much now or with that rate, you know, more like, the final quarter of 2023? Maybe you can just provide us with, you know, an estimate of the exit rate into the end of 2022.
Yeah. Thanks. Thanks, Al. Simon here. Obviously last quarter we started the commissioning and change over and did the major tie-in. That was a big quarter for us. During the second half, we'll progressively ramp up the process plant. It's just bedding in everything to consistent high utilization, high run rates. Our plan is that the exit rate of FY23 is at known quote.
Thanks, Simon. Just looking at the buyback, obviously the cadence picked up in the quarter. I was just wanting to understand whether that can be sustained. I assume there's a few blackout periods into reporting. Just how you guys are thinking about, I guess the returns from a buyback. I mean, obviously the average price you've achieved so far has been pretty good and the stock's now trading a fair bit higher. You know, what other options are there to deploy that capital? I know you've got the stated dividend policy, but, you know, is there any upside to special dividends or any other things we should think about from a capital management perspective?
Yeah, thanks. You're right in as much as, you know, 42% of that buyback is complete. We averaged it at AUD 8.21. Yeah, we're still looking at all of these things, these instruments through the lens of, you know, superior returns. When we comp it to exactly that, your dividend calculated 20%-30% of cash earnings, you know, decisions to come up in the year around Fimiston expansion , capital allocation, those type of things, we weigh it all up. Yeah, we're in a blackout at the moment on the buyback. It's open through till September this calendar year. You know, these things also play with where gold price is at and where evaluations sit. It's an instrument in the toolbox.
We'll keep it live and keep evaluating returns on it.
Sure. Thanks, Stu.
The next question comes from Matthew Greene with Credit Suisse. Please go ahead.
Hi. Yeah. Good morning, all. Simon, I've got a couple on Thunderbox. Just firstly, can you give us an indication of the volume and grade profile you're expecting in the second half from the open pit?
Yeah, thanks, Matt. fairly consistent. you're not gonna see, you obviously got increasing volumes, so you're not seeing huge changes in the grade profile. The reserve profile for the Thunderbox operations is 1.6 grams per tonne. last quarter we milled 1.5. It's not gonna change a great deal over the journey. It's more increased contribution from the Thunderbox underground. D zone, we're starting to get into slightly better grade as we get deeper into the pit there. It's fairly consistent around what we delivered in the last quarter.
That's helpful. Thank you. Just secondly, you mentioned you're testing the sprint capacity of the mill as you're commissioning it. Has this given you any early indication what throughput rates you think the mill could settle on a more sustained basis relative to the 6 million tonne nameplate?
Oh, look, we've we certainly have seen short periods where we're we're in excess of 6 million tons. Our real focus is just around, you know, getting that consistency at that rate. Then obviously, like most process plants over time, you optimize things and gradually push it up. First focus for us in FY23 is just bed it in at the exit rate at nameplate. Then over the next 6 months, we'll really stress test that as to going into FY24 and beyond.
Okay. That's great. My last question is just going on to Pogo. Stu, you mentioned with maintenance you could push that mill beyond 1.3 million tons. I guess the last few quarters you've been able to reach, you know, nameplate of the expanded mill. Do you feel this is the output capacity or is this going to push it harder if you can deliver the higher mining rates? If so, what does that involve in terms of permitting and sort of any sort of upgrades in front of the mill? What would you look to do? Or do you see 1.3 as really being the sweet spot here?
Yeah. We haven't. There's no permitting constraints really on, you know, tonne throughput, things that you see like in Canada and otherwise. It's, in that regard it's available, you know, dry stack tailings capacity. All of those things are there to run it. It really comes down to I don't necessarily want to fill it up at 1.4 or 1.5, you know, at a lower grade. The reserve grade's 8.5. We're focused on the quality that would get us the best unit costs. That's really key. I guess we're giving the confidence that for the second half, part of it can be throughput, part of it can be grade, but it's around timings of shutdowns and that uptime on that plant.
We kind of know where its Achilles heels are so that, you know, when things where its bottlenecks basically stop it from that throughput. Some of the things are oversized, some of the things are right at the limit, in pumps and motors and those type of rating side of things.
Okay. That's helpful. Thanks very much, guys.
Your next question comes from David Radclyffe with Global Mining Research. Please go ahead.
Hi. Good morning, Stuart and team. My question is on really the trending costs for the business and whether you think that they have peaked now. Then how sticky you think higher industry costs could be, if you're seeing any downward pressure yet in any of the cost elements of the business. Maybe within that, if you could provide some color, I guess on WA labor pressures and current staffing levels.
Yeah. Thanks, David. Probably the only cost we're seeing come off is in fuel. All the rest are fairly sturdy, fairly sticky. It really depends on, I guess, what all the commodities are doing in the same space. We're seeing some relief in staff turnover and stability there post sort of COVID border opening. We certainly haven't. Every quarter we would ask ourselves if, you know, have we peaked? Is it coming down? We don't see material signals for it to. Those unit costs to come down. Yeah, we've re-evaluated against our strategy, which is growing profitably the unit cost derived by economies of scale of larger plants, you know, on the same fixed cost base. That's really how we're getting our unit cost down.
The inputs, we haven't seen lightening up, with, you know, your materials and/or your labor.
Okay. Thanks. Then maybe I had a similar question actually on Thunderbox and the profile going forward. Specifically maybe I guess on in terms of the open pit material, because you're currently processing around a gram, but the reserves for sort of Otto and Aurelia are a lot higher. Is it still correct that we should start to see that open pit material gray going into the mill as that's sort of the larger function, I guess, of the expanded capacity start to lift and come up?
David, Simon, you will see the grade start to come up, just depending on which parts of the pit you're accessing. You know, Otto Bore is a higher grade. Thunderbox is D zone is better grade at depth. Aurelia grade will come in sort of FY24 and beyond. Yes, you'll see some better grade from the open pits as we get deeper into the pits. It's not gonna materially move on the large volume. You might see 0.1, 0.2 g sort of changes over some quarters or halves.
Okay, thanks very much. I'll leave it there.
Your next question comes from Andrew Bowler with Macquarie. Please go ahead.
G'day all. Just a couple of questions on Jundee. You talk about the power plant upgrades or potential power plant upgrade giving some pretty handy emissions reductions by 2030. Is that also expected to bring power costs down? Or is that purely an ESG exercise?
Well, it should. Depending on what energy costs do, it certainly could give us that saving. I guess we're working with the incumbent energy provider that provides that gas-fired power. We'll be able to switch between, you know, that gas as the backup and then the solar with battery storage and eventually wind turbines. It'll de-risk energy costs. At the moment it's probably neutral on operating costs. The way gas prices have gone, it will certainly protect us from escalation in energy costs. Remembering there's limited capital there. It's all related to the PPA and this specialist provider putting that capital in.
No worries. Obviously, in terms of mine output at Jundee, big uptick quarter on quarter and, you know, obviously a record for the mine itself. Is that just a function of scheduling or is that sort of, you know, 2 million tonne per annum, you know, rough underground output looking a little bit low now or will that head back down towards that 2 million tonne per annum in the near future? Cheers.
Look, it was a fantastic result for the team. You know, Andrew, with Jundee, it's got those moments where you've got, you know, plenty of headings, plenty of stoping fronts, and obviously the team primed to do it, deliver it, and we build the stockpiles to for future milling. Essentially, it's same as the similar last question on Thunderbox. The south is keeping these two centers at sort of 300,000 ounces, Jundee in the north, 300,000 ounces, Thunderbox in the south for that 600 Yandal. There's all those different sources that are underground open pit that feed into that mine plan, those milling throughput.
Yeah, 2 million tons coming from Jundee underground, adding 1 million to 1.5 million of open pit material on top of that to keep it 300,000 ounces from satellite pits. The same thing at Thunderbox. There's different sources, different grades, but ultimately running at that 6 million tons gets you 300,000 ounces and that's the go forward plan.
No worries. That's all from me. Thanks.
Your next question comes from Kate McCutcheon with Citi. Please go ahead.
Hi. Good morning Stu, Simon, and Ryan. A quick question for Ryan. Can you just remind me how we should think about cash tax for the half? Are there still some receivables or refunds to come through?
Hey, Kate. yeah, now look for the half it's gonna be pretty light. We're going through our, what is FY22 tax return now. looks like it's probably gonna be neutral to a small refund. you won't see, yeah, so there's not much cash tax payable this half.
Okay, perfect. Crystal clear. Thank you. For Stu or Simon at KCGM, 80 to 100 million ton target, stellar effort to get that TMM up above 80. What are the key levers to pull now to go higher? Is it purely access to faces here for utilization and optimization?
Yeah. Thanks, Kate. It's really around opening up the Simpson South area. As we're really leveling out that part of the open pit, we're getting bigger benches, more access and the efficiencies then go up on our digs as well as utilizing the new fleet. Golden Pike South takes a lot of trucking hours to move that, the deepest part of the pit. You'll see that finish over FY23, we'll gradually ramp up in FY24 into Golden Pike North. It's really around better access to larger bench space, higher in the pit. It's using the new equipment and we'll get an increase in material movement, just where we are on the schedule over the next few years.
Yeah. Okay, that makes sense. You've got all your new fleet now, don't you? That's done.
Correct. Yeah. We finished that at the end of FY22. Really we've had sort of 6 months so far of the full fleet embedded and it's just continuing to, you know, increase those trucking hours, get more material movement and, you know, realize the efficiencies of a fleet that's new versus 20 years old.
Yeah. Okay. That's all from me. Thank you, Simon.
Your next question comes from Mitch Ryan with Jefferies. Please go ahead.
Thank you, team. Just one quick question from me. Just with regards to the KCGM mill study. I guess that's ongoing. I thought we would have had that by now. Can you remind me when that's due? Is the fact that you're continuing to study it that the return metrics don't stack up, which sort of would surprise me? Is it that you waiting for certainty of inflation sort of peaking or is there a third factor that I haven't considered?
Thanks, Mitch. We hadn't forecast it would be out by now. It's really the work to be done this year, and we're still continuing on those final engineering designs. It's really getting into the nuts and bolts of the final design and getting the engineering companies to give us hard numbers on all of that work. From what was produced last June, it's pre-feasibility level. Now we're going right down to the feasibility level to be able to make a final investment decision. That's continuing at the moment. There's been no retraction on timing or effort to get this done as prudently as it can be.
Obviously, we're watching what's happening out there in the market in regard to other projects and timing and execution risk. At the moment, we don't see that as a reason to not do it. Financial results are still very compelling if de-risked by the large stockpile that's sitting there. We've got great visibility of the mine planning going forward. It's a really important enabler, but it's not currently in our five-year plan. We'll make a decision this year on what we'll do there.
Thank you. Appreciate it.
Your next question comes from Neil Watkinson with Kalgoorlie Miner. Please go ahead.
Good morning, gentlemen. I'm interested in just some more specifics on what's happening underground at Mt Charlotte out here in Kalgoorlie. You've got some sort of project going to ramp up production from underground. Can you just give me a few details about how far through that is when you expect it to reach its objectives? What's what production figure do you have in mind for that?
Thanks, Neil. Yeah. Essentially, the Mount Charlotte operation, when we acquired it had a very short mine life, and it was producing at about 1.2 million-1.4 million tons per annum. We've been moving it towards 2 million tons per annum, running it 24/7 and building out the volumes, reestablishing drill platforms at the bottom levels, and really proving up the extension of the mineralization in that system. It's a significant operation, and we see huge opportunity to be able to grow volumes from Mount Charlotte to 3.5 million tons per annum over the next couple of years.
The plans at the moment continue exploration, drilling, conversion of that resource to reserve, the development activity to open up those stoping fronts, and obviously start to increase volumes that basically get trucked to the Super Pit and then hauled with the big trucks to the mill.
When do you think you'll get to 2 million tons per annum?
Essentially at those rates now at the 2 million, and it's obviously all truck haulage and, so the next couple of years is really the ramp up in the volumes.
Ramp up to 3.5?
Correct.
Yeah. In terms of how that contributes to the overall sort of Super Pit type operation, how does it fit in to what's happening in the open pit? Obviously you're expanding there as well. It's all sort of part of, did I understand correctly that you're aiming for about, what was it? About 650,000 ounces out of that whole sort of... Is that just the Super Pit, or is that Mt Charlotte as well?
Yeah. All of the whole what we call KCGM operation-
Yeah.
by FY26, that 650,000-700,000 ounces.
Yeah.
It sits at that 480,000-500,000 ounces presently. Growing it out to 650,000-700,000 ounces by FY26.
Yeah.
Essentially comes from the Super Pit, Mount Charlotte underground and the stockpiles. That's the answer.
Oh, right.
We see huge opportunity in growing Mt Charlotte. It presently doesn't have an underground on the super pit. And there's an opportunity there, and that's part of what we're considering when we evaluate the Fimiston Mill expansion study for those new portals and drill drives that we put in a couple of years ago. What we're proving up there, we've got 5 million ounces of inferred resource under the super pit, and that's a potential future large underground.
Yeah, for sure. That's excellent. Thank you very much.
Thanks, Neil.
Once again, if you wish to ask a question, please press star 1 on your telephone. Your next question comes from Sean Smith with The West Australian. Please go ahead.
Hi, gentlemen. I'm just wondering, Reid, the safety record, you'd know better than me, but mining safety in WA particularly has become a bit of a community and political issue. I'm just wondering if you could just flesh out why that safety record is still not where you want it to be and just perhaps is it more around the training of people? You can't get the people you want. You've had to dig deeper for staff. Appreciate any sort of comment. Thanks.
Thanks, Sean. Look, our lagging indexes, sort of sit around half or below half of the state averages. We're, we're pleased with that performance. It did deteriorate in the quarter-on-quarter. We're still seeing, you know, high potentials and near misses in that regard, which is reflective of dilution of skills, high turnover, and ultimately those vacancies across the last couple of years. It will take a number of years to restore that. In the meantime, it's increasing supervision, having patience, and prioritizing and slowing things down in the operations to make sure it's done well, once well and safe. They're the things that all of the industry are focused on to ensure that we're not, you know, harming people, so.
Thanks.
There are no further questions at this time. I'll now hand back to Mr. Tonkin for any closing remarks.
Thanks for joining us on the call today. As you've heard this morning, our growth projects are progressing well to deliver strong production in half two, with unit cost reduction underway as we deliver growth across Pogo and Yandal in the near term and obviously KCGM over the subsequent years. Have a good day.
That does conclude our conference for today. Thank you for participating. You may now disconnect.