Thank you for standing by, and welcome to the Northern Star March 2021 quarter results conference call. All participants are in 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 one on your telephone keypad. I would now like to hand the conference over to Mr. Bill Beament, Executive Chair. Please go ahead.
Good morning, and thanks for joining us. On the call with me today, I have Managing Director, Raleigh Finlayson, Chief Executive Officer, Stuart Tonkin, and Chief Financial Officer, Morgan Ball. The past three months have been a pivotal period for Northern Star. The merger with Saracen was approved February, opening the door to the integration of the two companies' great people and assets. An enormous amount of planning had gone into this integration phase because we are extremely conscious of the fact that merging companies together requires the utmost diligence and concentration for success. I am delighted to report that this process has been smoother than we could have hoped for. Raleigh, Stuart, and I would like to say a huge public thank you to all our people for the commitment and diligence they have shown throughout the integration.
You've all put the interest of the company and its stakeholders ahead of your own. Your approach has been integral to the success of the merger to date. This philosophy will also be key to the success of the merger going forward. Our ability to realize the huge potential offered by the deal depends heavily on a total commitment to making it work as effectively and efficiently as possible at all levels. The time and effort which has been put into this integration in the past two quarters has been substantial. We are a company that has succeeded in the transition to one business. The merger is only a few months old. What we are already seeing confirms our view that there are many significant opportunities to grow value for all stakeholders.
From a public reporting perspective, much of the work in the past quarter has been below the waterline. Despite this high level of activity, we remain on track to achieve our full-year production and cost guidance. In addition to the integration process, our teams have overcome several one-off events which have impacted the results to ensure that we have gone into the final quarter well-placed to meet our FY 2021 targets. This quarter is tracking very strongly to be our best for the year. In addition to the integration process and the one-off events, we've also worked furiously on the exploration front in preparation for the reserve and resource update next month that will feed into the new corporate strategy that will be unveiled in late July this year.
Again, we are very pleased with what the drilling rigs, all + 40 of them, have turned up, particularly at KCGM. The exploration and resource reserve push at KCGM is one area where we can already see massive benefits flowing from the merger. It is simply easier, more efficient, and far more effective to drive an extensive drilling and exploration campaign of this nature from one company rather than two. We said at the time of the merger that the upside at KCGM was immense, and everything we have seen so far says we were right, and then some. This is truly a stunning world-class asset. This is just one example of the evidence we are seeing which shows our strategy is on track. That strategy revolves around our ongoing commitment to being a business first and a mining company second.
It is aimed at growing our most profitable production the most, driving financial returns through organic growth and synergies, and delivering genuine profitable production scale based solely on Tier 1 assets. I will now pass to Raleigh for the corporate review of the quarter.
Thanks, Bill. This morning I will provide a brief update on the merger integration synergies and our planned strategy day in July. Firstly, on integration or what we refer to internally as consolidation is pleasingly effectively complete with some systems and administrative activities ongoing all due for completion this quarter. As a result of the detailed planning stemming back to the merger announcement, we are pleased to report a very smooth transition on day one, being February 15th this year, and consolidation over the first 60 days of the merger. It is worth noting it has effectively been a three-way integration between Northern Star, Saracen, and KCGM, and it is a testament to the professionalism and can-do attitude of our 3,500-strong employees and 3,000 contract partner employees for making this transition as seamless as possible.
On behalf of the Board and to echo Bill's comments, we'd like to thank everyone involved. On February 15th, we also consolidated our corporate office into one. We all now reside in one building and on one floor, a unique attribute for an ASX 100 company. On the synergies front, which we refer to as optimization, we have made excellent progress to date. We firmly reiterate our total synergies articulated during the merger announcement of AUD 1.5 billion-AUD 2 billion of NPV. Corporate and tax synergies of circa 50% of the total value remains on track. Morgan will provide tax planning update shortly. If anything, we see further upside opportunities both across corporate and operational synergies, including procurement savings tracking ahead of schedule. With over 35 supply agreement contracts signed, set to deliver over AUD 25 million per annum of savings in FY 2022 and beyond, already identified.
One-off capital savings of a similar magnitude, both as a direct result of the merger synergies. All identified since the merger announcement only six months ago, with many more opportunities in the pipeline. At Yandal Operations, it had no synergies attributed to the AUD 1.5 billion-AUD 2 billion of NPV at merger announcement. Albeit optimization work completed to date has identified opportunities that will provide meaningful additional synergies to the group and will provide more information on this on our strategy day in July. We've hit the ground running at our Kalgoorlie Operations with initial trials of 24,000 and 28,000 tonne parcels of milling optimization already conducted in the first quarter of the merger, resulting in improved recoveries, treatment of higher margin stockpiles, and invaluable optimization data that will feed into our life of mine plans.
I appreciate you might have many more questions on synergies, and we'll happily provide more detail in July when we present our new strategic roadmap. As Bill mentioned, we are eagerly looking forward to delivering our new consolidated strategic plan at our strategy day in late July. The plan will incorporate the latest and most meaningful information on the resource and reserve update coming to market in May. Watch this space. Key opportunities identified as a result of the synergies and optimization work that remains ongoing but well advanced and a consolidation of our life of mine plans. Guidance on the following key strategic pillars, amongst others, will be articulated in July, including production and CapEx outlook, synergies realized and ongoing, and the optimization of capital, equipment, and human resource allocation based on financial returns, synergies, and portfolio optimization.
I will now hand over to Stu to provide a more detailed review of the quarter.
Thanks, Raleigh. This morning, we're pleased to report our consolidated March quarter results with 368,000 oz sold at an all-in sustaining cost of AUD 1,598/oz , and a strong outlook for quarter four to deliver full year production and cost guidance. At KCGM, we continue to see improved mining physicals at the Super Pit as we advance the Fimiston South pre-strip as well as the OBH cutback. A new PC8000 shovel was commissioned, and our commitment to a new truck haulage fleet will further reduce unit costs once delivery commences in FY 2022. Site performed a significant planned 14-day plant shutdown with 900 additional contractors performing works to upgrade control systems and maintenance tasks, which were completed to protect future business continuity. This deferred around 15,000 oz during the quarter.
We also received very strong mill recoveries that were delivered in the quarter, which were up 5% to 8.6%. Underground portals were established in the western wall of the Super Pit to establish future drilling platforms. This is an exciting milestone for the mine's future, given it is the first underground activity in decades on the gold mine. Mount Charlotte lower levels were further rehabilitated to facilitate drill access for exploration plans in FY 2022. The Kalgoorlie operations of Kanowna, Kundana, and South Kalgoorlie maintain steady production but remain higher cost operations, and actions are now underway to reduce resourcing levels to improve cost base as well. Synergies identified in the merger planning are being executed with trial milling at Kanowna Belle improving the Mount Charlotte gold recovery by 3%. Excess Kundana material was milled at Carosue Dam instead of utilizing third-party toll milling in the region.
At Carosue Dam, we had a strong quarter despite underground mining of lower grade zones in the mining sequence. Capital upgrades to ventilation and paste capability were completed to meet the future mining schedule. The Million Dollar pit mining physicals increased with new equipment commissioned during the quarter. The mill upgrade to the nameplate 3.2 million tons per annum is performing exceptionally well and delivering a record quarterly throughput equivalent to 3.55 million tons per annum, nearly 11% above its design. This will enable greater synergies for regional milling options for the Kalgoorlie operations. To Yandal now. Jundee Operations maintains a development focus with improved underground mining physicals across development and stoping during the quarter. A record monthly development advance was achieved in March with over 2,000 m achieved, setting up future high-grade production areas in the mine to deliver a strong quarter four.
The underground remains a growing operation with 15 underground diamond drills active, drilling within the underground operation. The next open pit mining activity will be the Julius Pit, which is planned to start in FY 2022. Presently, the mill is drawing supplementary feed from the Ramone pit low-grade stockpile to supplement the underground sources. The Thunderbox Operations continued in investment phase with the D Zone pre-strip progressing well with efficient fleet management. The new underground development and associated infrastructure represent pre-production investment to establish multiple future ore sources. Quarter four will see continued capital investment similar to quarter three. Once D Zone waste is removed, the open pit ounce contribution increases and restores the all-in sustaining cost profile, as well as the new underground leading commercial production to supplement the pit ore.
During the quarter, production was impacted by an unplanned mill outage, reducing quarterly throughput by 10%, which has since been rectified. Now to the U.S. operations. Our Pogo team continued to operate under a restricted environment whilst COVID vaccines are presently being delivered throughout the state and operation.
We maintained quarter-on-quarter mining physicals focused in three mining areas of Liese, Fun Zone, and South Pogo. The lower mined grade impacted ounce production by about 10,000 oz in the quarter and is a result of the deficit in development stocks from earlier in the year, which delivered a lower ounce production quarter. We expect a much stronger quarter four, as forecast in the mining sequence. The 1.3 million tonne per annum mill upgrade will be commissioned in the September quarter, although production remains mine constrained. Further efforts to address this are continuing with the March development advance of above 1,500 m, a monthly record achieved. We need to maintain that 1,500 m a month to grow production towards the 1.3 million tons per annum. Today, I'm excited to report the consolidated company results and highlight the significant effort performed to integrate two great companies.
Not only do we see a very strong quarter four to meet full year group guidance, I look forward to presenting the future value creation plans during our July strategy day, and we continue to invest in our expanded Tier 1 portfolio. I would now like to hand to Morgan to discuss the financials.
Thanks, Stuart, good morning to all. Firstly, I'll briefly touch on the ongoing acquisition accounting process. The accountants amongst you will know that we have up to 12 months to finalize the business combination accounting following the merger. Notwithstanding this, we are on track to have the provisional values included in our full-year FY 2021 accounts, incorporating the output from the independent valuation work currently being conducted. You'll see at appendix two in the quarterly, we've summarized some of the key aspects of this process. In layman's terms, approximately AUD 5 billion of net assets is brought onto Northern Star's balance sheet from February 12, reflecting the Saracen business. This amount is spread over the various assets and liabilities of Saracen at fair value.
This independent valuation and allocation process is ongoing, but it will involve a material uplift in the existing book value of the Saracen assets, as well as a fair value uplift to Northern Star's preexisting share of the KCGM Joint Venture. Further to this, in relation to the combined company's income statement for FY 2021, you can expect to see earnings, that is revenue and expenses, from the Saracen assets contributing to the consolidated Northern Star group from February 12. A non-cash gain in relation to the required fair value remeasurement of Northern Star's share of KCGM Joint Venture. An increase in non-cash depreciation, amortization, and inventory charges from February 12, reflecting this fair value uplift in the associated assets.
The company will also be required to recognize the stamp duty charge associated with the transaction, which is currently estimated to be in the order of AUD 230 million-AUD 250 million. I do note, however, that the payment of this final stamp duty amount determined is not expected to be made until calendar 2022. In a similar vein, the cash, bullion, and investment movements for the quarter as set out in the waterfall charts on page nine are not as straightforward as usual. Given the merger was completed partway through the March quarter, you will note that these charts have been prepared as if Saracen had been part of the Northern Star group from January 1, so as to illustrate the total cash, bullion, and investment movements of the combined group over the full quarter.
You can see a number of one-off items, including Saracen's cash and bullion balance at February 12, significant merger transaction costs, the payment of stamp duty by Saracen in relation to its Super Pit acquisition, and dividends paid to all shareholders by both companies. The combined entity closed the quarter in a net cash position with cash and bullion of AUD 696 million and corporate bank debt of AUD 658 million. This cash balance is after an investment of AUD 170 million in growth capital and exploration during the quarter. The market will be aware of the growth capital guidance that both companies have previously provided for FY 2021, and at March 31 on a year-to-date basis, we remain on track with this guidance.
Lastly, in relation to hedging, as mentioned by Bill during the January quarterly call, our combined approach to hedging is risk-based, subject to the needs of the business, in particular our growth capital investment profile. Further to this, you can see that the hedge book at the end of March stood at 844,309 oz, at an improved average price of AUD 2,203 /oz . This reflects a hedge book of approximately 15%-20% of production over three years. Well in line with Northern Star policy. I'll now pass you back to Harmony for the question-and-answer session.
Thank you. If you wish to ask a question, please press star one on your telephone and wait 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 Nick Herbert from Credit Suisse. Please go ahead.
Thank you. Good morning, all. A few questions from me, please. Might start with Pogo. Hoping if you could give a bit more detail there around the workforce and the vaccination program you touched on, Stuart. I'm trying to get a sense of when you'd really get a free run at ramping up that mining rate. We can see that you're running around half of what that 1.3 million tonne capacity would be. Would be helpful in that if you could give your thinking around what that ramp-up and that bridge looks like in terms of timing to get to that full rate. Thanks.
Thanks, Nick. Yeah, we're running at about 80%.
Of those volumes, we're about 800,000 tonne per annum of the 1 million tonne capacity at the moment. Obviously we're expanding the mill to 1.3 to meet that by FY 2023 to deliver the 300,000 oz per annum. That's always been the underlying goal of the operation and about what we see with the resource, the reserves, the fleet, the kit that's there. That still absolutely remains the target. Look, give massive credit to the team and how they're coping and managing through the current constraints. We've had over 290 COVID cases at the operation. It's absolutely impacted availability of people at the site. We have been rolling out vaccines from March. I think we've got nearly 60 odd done at site, which we're administering ourself as well as throughout the states.
Appreciate we've got Alaskans, Southern 48 state imports, and expats from Australia up there all getting access to those in different levels of priority. That's still going ahead and being rolled out. It's very difficult to predict when those changes are completely lifted. What we're seeing is with the achievement of 1,500 m in March, that just shows that we're capable of doing it. We just need to do that as an average to set up the development stocks to then feed into the production to meet the 1.3 million tons. FY 2022 will be a year of continuing to build the mine. The infrastructure, the people, the fleets are there to deliver that growth. It's really just about trying to mitigate and manage the current circumstances for the operation that's there.
Okay, great. Thank you. EKJV, you've spoken to sort of needing to right size or sort of reduce costs across those operations. Can you give a bit more detail on that in terms of targets and what that cost base aspiration is and timeframe to get to that?
Yeah. There was some rehabilitation activity that was occurring to access other levels. You've got extra jumbos doing that ground support. Basically reduce jumbos, loaders, trucks on that regard in those rehabilitation areas. It is just around reallocating that staff to operations that ultimately will return a greater margin for the business. You'll see post quarter, we've established two new portals in the Super Pit on the western wall. That team that came out of Kundana went across and got those portals established. They're the first portals in that Golden Mile for a couple of decades. That's really setting up for diamond drill rigs, heading in the west wall, heading north. There's a lot more plans, to basically give us drill platforms to do that. In total cost for the company, we're moving the labor around.
It's part of the synergies of removing joint venture structures and bringing down the fences. The ability to move fleet and people to where it's going to give us the greatest return is how we're doing that. That's also in light of potentially facing scarcity of labor coming forward in the next year or so. We're making sure that we're applying the labor in the best, highest margin operations. Yeah, East Kundana Joint Venture and the Kundana Belt, really just trying to work to get as much as we can with the resources we have there to reduce the unit costs.
Okay, thank you. Just looking to the June quarter and be clear around that there's no planned mill maintenance shuts across the group. Is that correct?
Look, it's not correct as we've got mill shuts at South Kal and at Carosue. As far as it being material impact, it's all in the plan and the schedule. The only unplanned outage was Thunderbox in the quarter, and mill motor failure on that. That was in Q3. Going forward, everything's in the plan. We're still obviously maintaining group guidance, which means we need a north of 400,000 oz per annum, per quarter, to get inside that band. Obviously, we see great forecasts of performance across all the operations.
Okay, great. Thanks, Stuart. I'll save the synergy questions for July. Look forward to that update. Cheers.
Thank you.
Thank you. Your next question comes from Sophie Spartalis from Bank of America. Please go ahead.
Good morning, guys. Just a few from me today, just firstly on the hedging, Morgan, you touched on this. From my calculations and my forecast, you've gone to around 18% of total production out to one half 2024. Pre the merger, Northern Star was sitting at 15%. Post the merger, you were sitting at 12%. Certainly, at the lower band, and that was a figure that I recall that you were very proud of reducing that hedging book. Can you just maybe talk through why you have added the hedges, to get yourself back up to that 18%, with stating that you are within the government guidelines?
Hi, Sophie. Yeah, sure. Obviously, it's still a bit of a work in progress. We need to sit down and go through our budgets and our strategy. Essentially, we bought the Saracen book in, which was, as you know, slightly higher on a percentage basis than the Northern Star book. That's been a contributor to it. In addition to that, as Bill said, we're very cognizant of protecting our capital investments in the business, and we've also seen a softening of the gold price in the last few months as well. All of that comes into play when we make these decisions. As you would have seen the book, while slightly up in percentage, is also up in price as well. We're comfortable with those levels.
Sophie, just to add on to that, like Morgan says, we've got capital in KCGM with the three cutbacks we've got on there, and obviously our Yandal growth as well, which we articulated, is moving up to a 600,000 oz a year operation. We're just protecting those capital investments that are multi-year, they're out in the next two or three years. Hence why we've elevated that from 15 to 18.
Okay. The next question, just in terms of the guidance, can you just, so there's no confusion here, reiterate your guidance as of the implementation date that we should be looking at come the end of the FY 2021 year from a production perspective at a group level?
Yeah. The consolidated businesses of both, the range of summing the parts of the pre-merger businesses is 1.54 million-1.7 million oz for the full year of the combined businesses. All-in sustaining cost around us combined, and again, around that AUD 1,450 is the midpoint of that guidance range. We've actually split it into AUD and USD for Pogo, so not playing any FX gains there. Pogo is still $1,200-$1,400 an oz.
Okay. Just to be clear, that 1.54 million- 1.7 million, that's incorporating the Saracen production as at February 12?
It's incorporating the full 12 months of both businesses and 100% of KCGM for the full 12 months. It's not just from merger implementation date, it's the sum of the parts of both Saracen and Northern Star for the full financial year.
Okay. Are you willing to provide what it is? Because basically for your financials, it's as of February 12. Just to eradicate any confusion, because you do have a much stronger second half than you did in the first half from a production perspective, are you willing to provide what that production guidance is from February 12 as a combined entity, which is reflected in your revenue line?
We've got it there in parts. I might have to loop back to you there. We've got that there in parts because we've kept the visibility by assets as they were reported by the separate businesses. We're trying to provide people the transparency of the asset's achievement against their original guidance. What we're maintaining is that group performance of the combined businesses.
Okay.
To me, it is an irrelevant timeframe to go from the February 15th. It is more to look at the performance of an asset by asset. I think the other message there, we will deliver this more color in July, is where the growth is coming from the assets, is from the higher margin assets. How we improve our cost base is largely due to that efficient growth of production. There will be some winners and losers in assets as far as resource reserve updates as well as production growth. Ultimately, our effort and energy is going through the lens of business first, is going to our higher margin mines. If you are at a high level, you have got the Saracen numbers to December, you have now got each site number for the March quarter.
Saracen was a relatively consistent producer out of Thunderbox and CDO. Thunderbox softening a bit from Q1 into Q2. You could do some allocation based on days on the March quarter to get a bit of a feel for how the revenue will look from the Feb 15th.
Yeah. No, that's fine. Thanks for that. Just to eradicate any confusion in the market with the consensus numbers as we come into the full year, that's all. Okay, next question. Just in terms of third-party tolling, you're obviously having to punch out a pretty big 4Q to meet production. You mentioned in the commentary that you didn't utilize any third-party tolling in the 3Q. Do you anticipate that you'll need to use that in the 4Q to meet your guidance? Or you've got sufficient capacity within now the expanded operation?
That's correct. We're utilizing our own mills. We'll actually still be performing some toll milling of our joint venture partners or from EKJV. We're still doing that. No, we've got capacity in our own mills, and it's largely grade-driven in the mining sequences across the mine. We've got good visibility there.
Okay. Then just a final question, just in terms of the Pogo recovery in grade, you did say that you expected to get a much higher grade in the fourth quarter. Are you still comfortable that you'll meet the Pogo guidance?
Yeah, absolutely. Look, when I say grade, it was 7.3 for the quarter. Obviously, some development ore contributed to that reduced below reserve grade performance. The first two quarters were 9 g. What we're saying is mining at 8, above 8 is our reserve grade. Where we were stuck in the sequence was just due to areas and stopes on the line. Getting our meters in fronts, really the metric of success is the leading indicator is getting that development of 1,500 m a month to open up multiple fronts. Ultimately, if we're not getting those meters, we're having to triage them where we go, or we get squashed down into fewer areas and take the grade we have in front of us.
Okay. You mentioned that the mill expansion is September, we'll see that increased throughput coming through pretty immediately?
Look, it will be done, I think why I am saying that is the teams, it takes a lot of workforce on site in our camp, in restricted space to complete that works. The relief will come to site when we can actually move those construction crews out.
Allows us to increase our production staff. Yeah, we're carrying forward with that because it is a bottleneck to get to 300,000 oz. We want that work completed, remembering we commenced that start of last year. That needs to be just done and completed and the teams move offsite, and then it's around us having fresh space in the camp to bring in production staff to keep the mining physicals to feed that mill. We will not be meeting 1.3 million tons per annum in the September quarter run rate. It's more to feed into FY 2023, and FY 2022 will be building out, growing from our current rate at 800 and up to 1.3.
Okay, very clear. Thanks very much, guys.
Thanks, Sophie.
Thank you. Your next question comes from Al Harvey from JPMorgan. Please go ahead.
Yeah, morning, guys. Just flicking over to Jundee. You mentioned that Julius will be coming in from FY 2022. I was just wondering if you could perhaps give us potentially what quarter that might come in and if you'll be keeping the mill full with stockpiles until that time? Maybe an approximate grade of the stockpiles, if you've got it handy.
Yeah. It's a pretty low strip ratio, Julius. We'll commence it in quarter one, but ore will come quarter two forward. It's better grade than the current stockpile, so it'll displace some lower-grade stocks and just gradually fill with better ounces across the full mine. It's just important that we give a lead. We're not sinking too much capital too early and building big stockpiles for the sake of it. It's more about balancing enough buffer of stockpile. The underground will run at about that 2 million tons per annum. Obviously an extra million tons will be coming from open pit sources. As we see us depleting down the Ramone stockpile, it's important we start the next pit and get that feeding into the plan. You'll start to see us just daisy chain those pits that continually supplement the underground over time.
Julius is the next ones off the cards. We could also utilize the fleet by moving around from pit to pit.
Cool. A quick one on the Super Pit. What drove the higher recoveries this quarter, and can we expect that to continue going forward?
Look, we enjoyed it. We're still getting to the bases of ore zones and things. There was nothing material in the plant that structurally changed that. From the final part of the shutdown, what we did do in the shutdown was modernize all of the control systems. We have a lot more visibility on all the settings, and we have some ability to put more autonomous changes rather than very manual reactions and responses to lagging data. There are things there that just managing reagents, managing all the inputs into the plants, will ultimately get us a more stabilized, better recovery result. It's a significant uplift from where we were. The beauty is we get to see what it can do, and the idea is to maintain at that.
At this stage, it's great news, and it's a lot of gold coming in on that size ounce profile.
Thanks, Stu.
Thank you.
No, thanks, Al.
Your next question comes from Andrew Bowler from Macquarie. Please go ahead.
Morning, guys. Actually, all my questions on progress were answered by Nick and Sophie's question. Nothing from me. Cheers.
Thanks, Andrew.
Thank you. Your next question comes from Kate McCutcheon from Citi. Please go ahead.
Morning, Bill and team. Just at Kalgoorlie. Commentary before was that you were going to play a volume game around that three, 3.2 million tonne per annum rate. Is that still the plan, and are you still confident on meeting guidance at Kal?
Yeah. Let us just go pre-merger, we were mill constrained. We were working hard to prioritize grade and talking about volume, we were utilizing third-party mills. I guess the synergies that were identified mean that we look at the whole business now and say, "Where are the better sources to go?" One significant asset that's probably under-recognized is the low-grade stockpiles at KCGM. An ability to fast track or bring that through gives us significant cash flow at a very low all-in sustaining cost on that stockpile. We're just making sure at the group that we're utilizing the mills the best they can be. It's not just about trying to fill Kanowna with Northern Star mine sites. You've seen movements of Mount Charlotte ore to Kanowna plants, Kundana ore to Carosue Dam plants in the quarter as trials.
We're just making sure we're getting the metrics back on all the benefit of that before we come with the forward plan. To roughly answer that question, no, we do not see Kalgoorlie falling short. It's not a mill issue. We have ample milling capacity to meet that guidance.
Yep. Okay. Still confident in that 270-300 range?
Look, it's tight for the Kalgoorlie Operations. There's plans there to demonstrate that it's there. It is a difficult stretch to get the Kalgoorlie Operations, and obviously they're at our highest all-in sustaining cost operations. On a group, what we're maintaining is group company guidance. Individual assets like Kalgoorlie Operations may be a challenge to achieve that on a full year basis. It will be amply offset by the performance at other higher margin, better assets.
Then just strategy-wise, is there anything that you're doing differently or changing from the pre-merger model now you've got the Saracen team on board that you want to comment on? I know you've mentioned a few things, but interested in if there's anything you wanted to call out.
Yeah, Kate, it's Raleigh here. I think a really good example is what you just touched on, bringing the ore down around Kalgoorlie. She talked about KCGM and being able to access that lower grade stockpile. That delivers obviously lower production profile, but far better margins. That's about a 65% increase on margins relative to the other stockpiles we're putting through the mill pre-merger. We're obviously going to come out with a lot of information as we continue to work up all these synergies. As I mentioned, there's probably a lot more that we're seeing early days, relative to pre-merger, and that's just with time starting to pull each other's business apart in more detail. You'll see a lot more of that.
I think the other thing that you'll see coming through is really taking advantage of the complimentary skill sets. We spoke about a little bit pre-merger, but that's been a massive opportunity. Northern Star coming in, really good example, bringing in Northern Star Mining Services, particularly last quarter into Mount Charlotte. You'll start to really see the benefits of that coming through moving forward. Also the Saracen's open pit mindset around certain portfolios, and I won't give too much away. Some pretty exciting developments around some of the assets that we can see, which again, we'll give you all more detail in July.
Okay, great. Thanks, Raleigh and Bill.
Thanks.
Thank you. Your next question comes from Mitch Ryan from Jefferies. Please go ahead.
Good morning, all. Really quick question here. You started to see some initial parcels from Mount Charlotte and Kundana treated through Kanowna Belle and Carosue Dam. Just wondering if you could comment on what improved recovery, if at all, you saw and whether that offset the cost of trucking?
Yeah, good. Look, the parcel we put through with the Mount Charlotte parcel we put through Kanowna, it's a free milling ore source. We put it through the free milling circuit of Kanowna, and we achieved an extra bit over 3% gold recovery. That's stuff that would've got lost through the refractory circuit through the Fimiston Plant. Now, they're not massive volumes that Mount Charlotte's contribution is, but it's absolutely not throwing gold out the back end just because it's all going through a refractory plant. That was very promising. Look, the other ore pit going to Carosue Dam, given that the grind size is favorable, we ended up getting some better recoveries. It's hard to really put a hand on exactly what that was, 1% or so on that.
What we do say is giving away toll margin to third parties, and obviously even with the haulage and the lower unit cost on that impressive 3.5 million tonne per annum upgrade, it's saving us cash on costs as well as giving us more gold in revenue. They're things that are really promising for us. Yeah, we'll just keep testing some of those plans across the rest of the group to lock in what the FY 2022 strategy is going forward.
Okay, great. Thank you. Thanks, guys. That's it from me.
Thank you. Your next question comes from Nick Evans from The Australian. Please go ahead.
Yeah, good day, guys. One for Stuart and Raleigh, I think. We saw both Rio and MinRes this week, over the last week, talk about labor shortages and cost inflation coming from it. Are you guys seeing that much in your business? If so, where is it really hitting you guys?
Thanks, Nick. It's Stuart. Look, we are. We're probably sitting close to 10% vacancy, which on a growing company is a challenge to meet that. Really what we've been able to do is just prioritize where we put our resources, and it's no particular discipline across tech staff or blue collar. Probably where we're seeing we're not reliant on FIFO, interstate or international necessarily, but because of the state, the demand then comes from us, for those that are reliant on that, so potential poaching in that regard. Look, we're trying to encourage people to relocate to Kalgoorlie and feed the growth of KCGM. That is extra truck drivers and extra labor in the plant and growing all the projects, exploration, all of that activity, so that we're not reliant on fly in, fly out to Kalgoorlie to support the city of Kalgoorlie-Boulder.
They're real things. I think what happens next is either costs drive up due to that labor pressure, or relaxation of borders and labors relocates. It hasn't materially come through, but we are still expecting pressure in that regard.
Just to follow that up, have you seen an increase in staff turnover? Can you sort of quantify what that is? Are you doing things like, I spoke to a couple of other companies, contractors over the last week who are talking about having to pay retention bonuses or recruitment bonuses to get new staff on.
Yeah, look, turnovers probably moved from low teens up to high teens, so not quite 20% turnover. It's the difficulty replacing. The turnover's not the issue, it's the availability of the staff to fill those roles. Look, one thing we've always done, and we will continue to do and increase is the investment in training, whether that's apprentices or graduates, entry level operators. We keep doing that because ultimately that's the way to solve it, is up-skill, re-skill.
To add that to the pool, as opposed to just competing and driving up costs and trying to steal other people's staff. Look, the other side of things is underground is currently about roughly 75% - 80% of our total revenue, and a lot of those staff, highly skilled staff, are very sticky to our business and preference gold above other commodities in that space. I think we're not getting attacked so much by some of the bulk commodities that drive to that labor. I'm not saying it's not there.
Thanks, guys. Thanks, Stuart.
Cheers, Nick.
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 Jason Mennell from Kalgoorlie Miner. Please go ahead.
Good morning, Raleigh, Bill, and team, and congratulations on a solid quarter. I'm just expanding a little bit on Nick's question there. Stuart touched on the labor shortage earlier and again a moment ago. The skills crunch in Kalgoorlie and the wider Goldfields is well known. It's a long-term problem. Is the labor shortage blunting production at all? If you have another 500 staff come in and get on board, would you be able to churn out some more ounces?
Yeah. Our total volume movements out of KCGM Super Pit, we've been up sort of 65 million tonnes. We've lifted that from a bit over 30 million tonnes that we inherited, we want to build that up to 90 million - 100 million tonnes per annum. With that, you need a lot of people. We've invested in a new fleet, AUD 250 million of new trucks over that investment. Yeah, we are expecting and need extra people to drive that business growth. We're working on all those creative things to attract, retain, and bring people to the city. They're all real things. There's no single way to solve it. As you would know, there's lots of other challenges with accommodation in Kalgoorlie we need to overcome, working on all of those things to feed the business.
Yes, they're real, working on all of them, and we don't want to see FIFO dominate in the Goldfields. We want to see people relocate and see the longevity of that asset and the significance of KCGM and our business going forward.
Stuart, it's a long-term problem. It's not new. Is there a temptation for Northern Star to perhaps start considering FIFO, particularly at operations like KCGM, and given we do have an accommodation squeeze in Kalgoorlie at the moment?
Look, not at all. You'll often rely on it for small parcels of contract work, where it's very stop-start type activity. What we want to demonstrate is the multi-decade operation gives people the confidence to up and relocate and establish themselves there because they've got that longevity. I think that comes down to people's personal decisions. As soon as we can demonstrate strong mine life, people start making longer-term decisions, and their confidence is there. I think that's what you're seeing the combined businesses do in Kalgoorlie in the last sort of 18 months, is demonstrate that KCGM has a bright future, and people can start making their own personal decisions around that in longevity.
Do you think you hold an advantage over the bulk commodities like iron ore, then?
It's clean. I like gold. Don't come home dirty.
Thank you, Stuart. That's all from me.
Thank you. There are no further questions at this time. I will now hand back to Mr. Beament for closing remarks.
Northern Star is a company in positive transition. That requires us to meet our short-term guidance, while at the same time unlocking the massive medium and longer-term potential of our outstanding assets and people and realizing the full benefits of our merger. It is unquestionably an ambitious multi-pronged strategy, but its execution is going to plan, and the rewards for getting it right are enormous for all employees, business partners, and stakeholders and shareholders. It will make Northern Star a very rare, if not unique, company in the global gold industry, characterized by a strong growth profile, outstanding free cash flow generation, and an asset base in tier-one locations. This is my last call. Thanks so much for supporting the company and myself over the past 14 years. Thanks for joining us today.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.