Thank you for standing by, and welcome to the Northern Star March twenty twenty one Quarter Results Conference Call. All participants are in a listen only mode. There will be a presentation followed by a question and answer session. 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, have Managing Director, Raleigh Finlinson 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 by Saracen 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 were 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. Rally, Stu, 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 have 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, but 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, so much of the work in the past quarter has been below the waterline. But despite this hive 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. And 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 plus 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 one assets. I will now pass to Raleigh for the corporate review of the quarter.
Thanks, Bill. This morning, I'll provide a brief update on the merger integration synergies and our planned Strategy Day in July. Firstly, integration, or what we refer to internally as consolidation, is pleasingly effectively complete, with some systems and administrative activities ongoing, all due to the 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 15, and consolidation over the first sixty days of the merger. It's worth noting that it's effectively been a three way integration between Northern Star, Saracen and KCGM, and it's 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.
And on behalf of the Board, and to echo Bill's comments, we'd like to thank everyone involved. On fifteen February, 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 one hundred company. On the synergies front, which we refer to as optimisation, we have made excellent progress to date. We firmly reiterate our total synergies articulated during the merger announcement of $1,500,000,000 to $2,000,000,000 of NPV.
Corporate and tax synergies of circa 50% of the total value remains on track, and Morgan will provide tax planning updates 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 $25,000,000 per annum of savings in FY 2022 and beyond, already identified. Plus 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. A year end operations that had no synergies attributed to the AUD1.5 billion to AUD2 billion of NPV at merger announcement, albeit optimisation work completed to date, has identified opportunities that will provide meaningful additional synergies to the group. We'll provide more information on this on our Strategy Day in July.
We've hit the ground running at our Kalgoor operations with initial trials of 24,028 tonnes passes of milling optimisation already conducted in the first quarter of the merger, resulting in improved recoveries, treatment of higher margin stockpiles and invaluable optimisation data that will feed into our Life and Mine plans. I appreciate you may have many more questions on synergies, 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 J in late July. The plan will incorporate the latest and most meaningful information from the resource and reserve update coming to market in May. Watch this space.
Key opportunities identified as a result of the synergies and optimisation work that remains ongoing but well advanced. And the 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 realised and ongoing, and the optimisation of capital, equipment and human resources allocation based on financial returns, synergies and portfolio optimization.
I will now hand over to Stuart to provide a more detailed review of the quarter. Thanks, Raleigh. So this morning, we're pleased to report our consolidated March results with 368,000 ounces sold at an all in sustaining cost of AUD $15.98 an ounce 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 Finiston South prestrip 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 twenty twenty two.
Site performed a significant planned fourteen 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 ounces during the quarter, and we also received very strong mill recoveries that were delivered in the quarter, which were up 5% to 86%. 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 Golden Mile. Mount Charlotte lower levels were further rehabilitated to facilitate drill access for exploration plans in FY twenty twenty two.
The Kalgoorlie operations of Kunowna, Kundana and South Kalgoorlie maintained steady production but remained higher cost operations, And actions are now underway to reduce resourcing levels to improve cost basis there. Synergies identified in the merger planning are being executed, with trial milling at Kanowna Belle improving the Mt Charlotte gold recovery by 3%. And excess Kandana material was milled at Carasoo Dam instead of utilising third party toll milling in the region. At Carasoo 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, and the $1,000,000 pit mining physicals increased with new equipment commissioned during the quarter.
The mill upgrade to the nameplate 3,200,000 tonnes per annum is performing exceptionally well and delivering a record quarterly throughput equivalent to 3,550,000 tonnes per annum, nearly 11% above its design. This will enable greater synergies for regional milling options for the Kalgoorlie operations. To Yandall 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 metres 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 'twenty two. And 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 prescript progressing well with efficient fleet management. The new underground development and associated infrastructure represents preproduction investment to establish multiple future ore sources. Quarter four will see continued capital investment similar to quarter three.
And once D Zone waste is removed, the open pit ounce contribution increases and restores the all in 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 Lacey, Fun Zone and South Pogo. The lower mined grade impacted ounce production by about 10,000 ounces 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 1,300,000 tonne per annum mill upgrade will be commissioned in the September, although production remains mine constrained.
Further efforts to address this are continuing with the March development advance of above 1,500 meters a monthly record achieved. And we need to maintain that 1,500 meters a month to grow production towards the 1,300,000 tonnes per annum. So today, I'm excited to report the consolidated company results and highlight the significant effort performed to integrate two grade companies. Not only did 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 one portfolio. I would now like to hand to Morgan to discuss the financials.
Thanks, Stuart, and 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 twelve 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 GBP 5,000,000,000 of net assets was bought 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 pre existing 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 Sarathon assets contributing to the consolidated Northern Star Group from December 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 December, reflecting this fair value uplift in the associated assets And the company will also be required to recognise the stamp duty charge associated with the transaction, which is currently estimated to be in the order of $230,000,000 to $250,000,000 I do note, however, that the payment of this final stamp duty amount determined is not expected to be made until calendar twenty twenty two.
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 part way through the March, you will note that these charts have been prepared as if Saracen had been part of the Northern Star Group from January, 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 December, 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 $696,000,000 and corporate bank debt of $658,000,000 This cash balance is after an investment of £170,000,000 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 'twenty one, and at thirty one March 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 March stood at 844,309 ounces at an improved average price of AUD 2,203 per ounce. This reflects a hedge book of approximately 15% to 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 Your first question comes from Nick Herbert from Credit Suisse. Please go ahead.
Thank you. Good morning, all. A few questions for me, please. Might start with Pogo. Just hoping if you could give a bit more detail there around the workforce and the vaccination program.
You touched on, Stuart. I'm just trying to get a sense of when you really get a free run at ramping up that mining rate. And we can see that you're running around half of what that sort of 1,300,000 tonne capacity would be. So also, it would be helpful in that if you could give your thinking around sort of what that ramp up and that bridge sort of looks like in terms of timing to get to that full rate. Thanks,
Nick. Yes, so we're running at about 80% of those volumes. So we're about 800,000 tonnes per annum of the million tonne capacity at the moment. So obviously, we're expanding the mill to 1.3 to meet that by FY 'twenty three to deliver the 300,000 ounces per annum. So that's always been the underlying goal of the operation.
And what we see with the resource the reserves, the fleet, the kit that's there. So that still absolutely remains the target. Look, to give massive credit to the team and how they're coping and managing through the current constraints, we've had nearly two ninety COVID cases at the operation. It's absolutely impacted the 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 ourselves as well as throughout the states. And I appreciate we've got Alaskans, Southern 48 state imports and expats from Australia there, all getting access to those in different levels of priority. So that's still going ahead and being rolled out. It's very difficult to predict when those changes are completely lifted. But what we're seeing is with the achievement of 1,500 meters 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 1,300,000 tonnes. So FY 'twenty two 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. And then EK JV, you've spoken to sort of needing to rightsize or sort of reduce sort of 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 time frame to get to that?
Yes. There was some rehabilitation activity that was occurring to actually set the levels. You've got extra jumbos doing that ground support, but basically reduced jumbos, loaders, trucks on that regard in those rehabilitation areas. So it is just about reallocating that staff to operations that ultimately will return a greater margin for the business. So 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 gold mine for a couple of decades. So that's really setting up for diamond drill rigs heading in the West Wall heading north. And there's a lot more plans to basically give us drill platforms to do that. So 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. And 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. East Gundana Joint venture and the Gundana 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. And then just looking to the June and be clear around there's no planned mill maintenance shuts across the group. Is that correct?
Look, it's not correct because we've got mill shuts at South Calle and at Carasoo. But 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. So that was in quarter three. So going forward, everything's in the plan.
We're still obviously maintaining group guidance, which means we need north a of 400,000 ounce per annum per quarter to get inside that band. And obviously, 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.
Thanks, Nick.
Thank you. Your next question comes from Sophie Spartalis from Bank of America. Please go ahead.
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 01/2024. Pre the merger, Northern Star was sitting at 15%.
Post the merger, you were sitting at 12%. So certainly, at the lower band, and that was a figure that I recall that you were very proud reducing that hedging book. Can you just maybe talk through why you have added the hedges to get yourself back up to that 18%, withstanding that you are within the government guidelines?
Hi, Sophie. Yes, 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. But essentially, we bought the Saracen book in, which was, as you know, slightly higher on a percentage basis than the Northern Star book.
So 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. So all of that comes into play when we make these decisions. And you would have seen the book, while slightly up in percentages, also up in price as well. So we're comfortable with those levels.
And 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 Yandel growth as well, which we articulated, is moving up to a 600,000 ounce a year operation. So it is protecting those capital investments that are multiyear throughout the next two or three years. So hence why we've elevated that from 'fifteen to 'eighteen.
Okay. And then just 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 'twenty one year from a production perspective at a group level?
Yes. So the consolidated businesses of both, the range of summing the parts of the premerger businesses is 1,540,000 ounces to 1,700,000 ounces for the full year of the combined businesses. And all in sustaining costs around us combined, and again, we spend that AUD $14.50 is the midpoint of that guidance range. But we've actually split it into AUD and U. S.
For Pogo, so not playing any FX gains there. It's still Pogo is still USD 1,200 to 1,400 an ounce.
Okay. So just to be clear, that 1.54 to 1.7, that's incorporating the Saracen production as at the twelfth of Feb?
It's incorporating the the full twelve months of both businesses and a 100% of KCGM for the full twelve months. So it's not just from merger implementation date. It's 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 on a because, basically, for your financials, it's as of the twelfth of Feb. And so 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 the twelfth of Feb as a combined entity, which is reflected in your revenue line?
Look. We've we've got it there in parts. I might have to loop back to you there. We've got it there in parts because we've kept the visibility by assets as they're reported by the separate businesses. So we're trying to give provide people transparency of the assets achievement against their original guidance.
And what we're maintaining is that group performance of the combined businesses. To me, it's an irrelevant time frame to go from the fifteenth of Feb. It's more to look at the performance of an asset by asset. And I think the other message there, and we'll deliver this more color in July, is where the growth is coming from the assets is from the higher margin assets. And so how we improve that cost base is largely due to that efficient growth of production.
And so there'll be some winners and losers in assets as far as resource reserve updates as well as production growth. But ultimately, our effort in energy is going through the lens of business first, it's going to our higher margin mines.
So I'd at a high level, you've got the Saracen numbers to December, and you've now got each site number for the March. Saracen was a relatively consistent producer out of Thunderbox and CDO. Thunderbox softening a bit from Q1 into Q2. So you could do some allocation based on days on the March to get a bit of a feel about how the revenue will look going towards bit.
Yeah. No, that's fine. Thanks for that. Now 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 four q to to meet production. You mentioned in the commentary that you didn't utilize any third party tolling, in the three q. 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?
Yeah. That's correct. So we'll be utilizing our own mills. We'll actually still be performing some top milling of our joint venture partners all from EKJV, so we're still doing that. But now we've got capacity in our own mills, it's largely grade driven in the mining sequences across the mine, so we've got good visibility there.
Okay. And then just a final question. Just in terms of the Pogo recovery in grades, 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?
Yes, absolutely. And look, when I say grade, it was 7.3 for the quarter. Obviously, some development ore contributed to reduced below reserve grade performance. But the first two quarters were nine grams. So what we're saying is mining at eight, above eight is our reserve grade.
Where we were stuck in the sequence was just due to areas and stopes online. So getting that metres in front is really the metric of success is the leading indicator of getting that development of 1,500 metres a month to open up multiple fronts. Ultimately, if we're not getting those metres, we're having to triage on where we go or we squashed down into to to fewer areas and take the grade we we have in front of us.
Okay. And then you mentioned that the mill expansion is September, so we'll see that increased throughput coming through pretty immediately?
Look, it will be done. And I think why I'm saying that is that the teams, it takes a lot of workforce on-site, in our camp, in restricted space to complete that work. So the relief will come to site when we can actually move those construction crews out, allows us to increase our production staff. So yes, we're carrying forward with that because it is a bottleneck to get to 300,000 ounces. So we want that work completed, remembering we commenced that sort of start last year.
So it's that needs to be just done and completed and the teams move off-site. 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. So we will not be meeting 1,300,000 tonnes per annum the September run rate. It's more to feed into FY 'twenty three, and FY 'twenty two will be a year of building out, growing from our current rate at 800 up to 1.3.
Okay. Very clear. Thanks very much, guys. Thanks, Ash.
Thank you. Your next question comes from Al Harvey from JPMorgan. Please go ahead.
Good morning, guys. Just flicking over to Jundee. So you mentioned that Julius will be coming in from FY 'twenty two. 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 and maybe an approximate grade of the stockpiles if you got it handy?
Yes. So it's a pretty low strip ratio, Julius. So we'll commence it in quarter one, but ore will really come quarter two forward. It's better grade than current stockpiles, so it will sort of displace some lower grade stocks and just gradually fill us better ounces across the full mine. But it's just important that we kind of 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 2,000,000 tonnes per annum, and obviously an extra million tonnes will be coming from open pit sources. So as we see us depleting down the Ramone stockpile, it's important we start the next pit and get that feeding into the plan. And you'll start to see us just daisy chain those pits that continually supplement the underground over time, and Julie's is the next ones off the cards.
And then we could also utilise the fleet by moving around from pit to pit.
Cool. And a quick one on the super pit. So 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 basis of ore zones and things. There was nothing material in the plant that structurally changed that. But from the final part of the shutdown, what we did do in the shutdown was modern all the control systems. So 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.
So there are things there that are just managing reagents, managing all the inputs into the plans will ultimately get us a more stabilised, better recovery result. So it's a significant uplift from where we were, but the beauty is we get to see what it can do, and the idea is to to maintain at that. And so that's yeah. At this stage, it's it's great news, and it's a lot of gold coming in on that size accounts profile.
Thanks, Steve.
Thank you. Your next question comes from Andrew Bola from Macquarie. Please go ahead.
Good morning, guys. Actually, all my questions on program are answered by and Sophie's question, so nothing from me. Cheers.
Thank you. Your
next question comes from Kate McCutcheon from Citi. Please go ahead.
Morning, Bill and team. Just at Kalgoorlie, so commentary before was that you were going to play a volume game around that three, three point two million tonne per annum rate. Is that still the plan? And are you still confident on confident on meeting guidance at Cal?
Yes. So let's just go. Premerger, we were mill constrained. So 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? So one significant asset that's probably under recognised is the low grade stockpiles at KCGM. And ability to fast track or bring that through gives us significant cash flow at a very low all as a starting cost on that stockpile. So we're just making sure at the group that we're utilising the mills the best they can be. And it's not just about trying to fill Kanauna with Northern Star mine sites.
You've seen movements of Mt Charlotte ore to Kanauna plants, Kandana ore to Karasu Dam plants in the quarter as trials. And we're just making sure we're getting the metrics back on all the benefit of that before we come with the forward plan. So to roughly answer that question, no, we do not see Kalgoorlie falling short, and it's not a mill issue. We have ample milling capacity to meet that guidance.
Yep. Okay. So still comfort in that $2.70 to 300,000,000 range?
Look, it's tight for the Kalgoorlie alone operations. There's plans there to demonstrate that it's there, but it is a difficult stretch to get the Kalgoorlie operations. And obviously, they're at our highest all in sustaining cost operations. So 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, but it will be amply offset by the performance performance at other higher margin better assets.
Okay. Got it. And then just strategy wise, is there anything that you're doing differently or changing from the premerger model now you've got the Saracen team on board that you kind of want to comment on? I know you've mentioned a few things, but interested in if there's anything you wanted to call out.
Kate, it's Raleigh here. I think a really good example is what you just touched on, bringing the walls down around Kalgoorlie. Sue talked about KCGM and being able to access that lower grade stockpiles. That delivers obviously lower production profile but far better margins, so that's about a 65% increase on margins relative to the other stockpiles we're putting through the mill premerger. So that's a really good example of optimizing the portfolio.
We're obviously going to come out with a lot of information as we continue to work up all these synergies. And 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 businesses around a part 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 complementary skill sets. We spoke about a little bit pre merger, but that's been a massive opportunity. So Northern Star coming in, really good example, bringing in Northern Star Mining Services particularly last quarter into Mt Charlotte. You'll start to really see the benefits of that coming through moving forward. And then also Saracens pit mindset around certain portfolios, and I won't give too much away, but 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, Riley and Bill.
Thanks.
Thank you. Your next question comes from Mitch Ryan from Jefferies. Please go ahead.
Good morning, really quick question here. You started to see some initial parcels from Mt Charlotte and Kundana traded for Kanatabelle and Carastoo Dam. Just wondering if you could comment on sort of what improved recovery, if at all, you saw and what that was and whether
that offset the cost of tracking? Yes, good. So look, the parcel we put through with the Mt Shallow parcel we put through Kanowna, it's a free milling ore source. So we've actually we put it through the free milling circuit of Kanowna, and we achieved an extra a bit over 3% gold recovery. So that's stuff that would have got lost through the refractory circuit through the Finiston plant.
Now they're not massive volumes that Mt Charlotte's contribution is, but it's absolutely not throwing gold at the back end just because of the it's all going through a refractory plant. So that was pretty very promising. And look, the other ore going to Karasu 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. But 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 3,500,000 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. Yes, we'll just keep testing some of those plans across the rest of the group to lock in what the FY 'twenty two and strategy is going forward.
Thank you. Your next question comes from Nick Evans from The Australian. Please go ahead.
Yes. Good day, guys. One for Stuart and Riley, I think. Is are you seeing we saw both Rio and Minrez this week. It was over the last week talk about sort of labor shortages and cost inflation coming from it.
Are you guys seeing that much in your business? And if so, where is it really hitting you guys?
Yes. Thanks, Nick. It's Stuart. So look, we are. We're probably sitting close to 10% vacancy, which on a growing company, it is a challenge to meet that.
So really what we've been able to do is just prioritize where we put our resources. And it's no 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. And then look, we're trying to encourage people to relocate to Kalgoorlie and feed the growth of KCGM. So 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 and fly out to Kalgoorlie to support the City of Kalgoorlie Boulders.
So 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 relocate. So it hasn't materially come through, but we are still expecting pressure in that regard.
And just
to follow that up. I mean, have you seen, I guess, an increase in staff turnover? And can you sort of quantify what that is? And are you doing things like I've spoken to a couple of other companies, contractors over the last week who were talking about having to pay retention bonuses or recruitment bonuses to get new staff on?
Yes. So look, turnover has probably moved some low teens up to high teens, so not quite 20% turnover. But it's the difficulty of replacing. So the turnover is not the issue, it's the availability of the staff to fill those roles. But one thing we've always done and we will continue to do and increase is the investment in training, whether it's apprentices and graduates, entry level operators.
We keep doing that because ultimately that's the way to solve it, is upskill, reskill to add that to the pool as opposed to just competing and driving up costs and trying to steal other people's staff. Look, other side of things is underground is currently roughly 7580% 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. So I think we're not getting attacked so much by some of the bulk commodities that drive to that labor. But I'm not saying it's not there.
Excuse me.
Thank you. Your next question comes from Jason Menell from Kalgoorlie Minor. Please go ahead.
Good morning, Rally, Bill and team, and congratulations on 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 gold fields is well known. It's a long term problem.
Is the labor shortage blunting production at all? I mean if you have another 500 staff come in and get on board, would you be able to churn out some more ounces?
Yes. So we've volumes our total volume movements here at KCGM, we've been up sort of 65,000,000 tonnes. We've lifted that from a bit over 30,000,000 tonnes that we inherited, and we want to build that up to 90,000,000 tonnes to 100,000,000 tonnes per annum. With that, you need a lot of people. We've invested in a new fleet, dollars $250,000,000 of new trucks over that investment.
And so we are expecting and need extra people to drive that business growth. And we're working on all those creative things to attract and retain and bring people to the city. So they're all real things. There's no single way to solve it. But there's lots of 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.
So 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 in our business going forward.
But Stuart, it's a long term problem. It's it's it's not new. Is is 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. But 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.
So I think that's what you've seen the combined businesses do in Kalgoorlie in the last eighteen 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, Stew. That's all from me.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Beament for closing remarks.
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, so thanks so much for supporting the company and myself over the past fourteen years, and thanks for joining us today.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.