Thanks, Darcy. Good morning, everyone, and thank you all for joining us on this call to cover both the guidance update we released and the quarterly report we released earlier today. It's certainly been a tough few days for the company. Now, just on the guidance update, what's the context? The Rosemont main pit is approaching its final stages and was planned for completion before the end of January this year. It was due to complete by the end of the June quarter. For this reason, the bottom of the pit's narrow with elevated geotech hazards requiring additional risk management. I think we've mentioned that in the past on calls. We have those protocols in place to manage those hazards.
Last weekend on Sunday, there was some heavy rain around and in accordance with the protocols, pit was evacuated and radar monitoring continued. On Monday morning, a rock slide event, approximately 800 tons, so not particularly huge, but a slip occurred and that fell through a number of the benches and some geotechnical fences we had in place with some material hitting the pit floor, keeping in mind the pit floor is actually quite narrow because the pit's near its bottom. Now, while certainly disappointing and disappointed with the commercial impacts of the slip, we are pleased to see that our geotech monitoring and safety protocols ensured no personnel were in the pit at the time of the incident, and the incident occurred without risk of injury.
This sort of thing is not uncommon, and for anyone that knows that's involved with the industry, and as usual, there's a process followed to address the need for appropriate consideration of the hazards and the risks. When the slip occurred, the company's principal geotech engineer attended the site as quickly as possible, which was late on Monday, and along with on-site personnel, undertook an assessment of the geotech and safety hazards and potential risks and options of continuing to mine. With the very tight nature of the base of the pit as it approaches the final floor, this was a real focus on assessing the ongoing risk involved with returning personnel to the floor so as to allow ongoing operations.
While the options were developed to re-enter with careful risk assessment, it became clearer that continuing was considered to have an unacceptable risk level. The decision was made to permanently stop activity in the Rosemont main pit. Now, while work had been underway to assess operational response options, at that point, the full impact on production was unclear, so we made the decision to request a halt to allow time to further assess the options and the impacts. As we discuss the impacts, I'd like to point out that this event and its impacts are confined to the Rosemont main pit and will have no adverse impact on ongoing operation of the Rosemont underground or the Rosemont North pit.
In relation to the impacts on operations, the pit was expected to deliver approximately 18,500 ounces of high grade in the vicinity of 2.6 g a ton into this financial year, after which, as I mentioned before, the pit would have then been completed. Our flexibility to respond with options was very limited. An assessment has concluded that for the remainder of FY 2022, this high-grade ore that was scheduled to be immediately fed into the mill could only practically and confidently be replaced by low-grade stockpiles, which would only fractionally offset the lost ounces in production.
We have, on a number of occasions, previously noted that we expected guidance to fall at the bottom end of the range, and upon careful assessment of this latest development, and primarily as a result of the rock fall in main pit, we've restated our guidance. Duketon, we guide now is expected to produce between 300-340,000 ounces. Previously it was 340-380. Tropicana remains unchanged. As a consequence, the new company guidance range is 420-475,000 ounces. As a consequence of this lower production and other impacts, the all-in sustaining cost range for Duketon is now $1,540-$1,610 an ounce. Previously, it was $1,340-$1,410.
The company range is now $1,425-$1,500 per ounce. The guidance, the all-in sustaining guidance for Tropicana is unchanged in relation to the cost. The increase is primarily because of the lower production of FY 2022, but I'd also note increases in prices for some consumables and labor, in particular around our mill maintenance, have also contributed, but not to the extent of the lower production. I'd like to note here that the company does not consider that this increase in AISC is a permanent reset of its cost base, as production is expected to again lift at Duketon next year. Look, this summarizes the events of the Rosemont main pit and the associated consequential impacts on our guidance.
We'll open for questions at the end, but I'll just move on to talk about the quarterly now. On COVID, to date, there have been no confirmed cases of COVID in our business. The management of COVID-related risk continues, with the response plan for our operations constantly being assessed and modified for what is a changing landscape of rules and conditions. With the very fluid nature of the situation here in Western Australia, it's proving to be a challenge at the moment.
What we are seeing is the ongoing significant travel restrictions and general COVID impacts that we're experiencing, and now expect to experience still for some time, is resulting in the same pressures on commodity input commodities, and labor costs. As our, you know, we're seeing the same increases as our peers are in the rest of Western Australia. Look, I think labor availability is the most significant risk overall, and as such is probably an ongoing risk to delivery of the medium-term plans. As such, we recognize this, and we're working quite closely with our contractors and suppliers to develop and action and execute these mitigating action plans. Operationally, Duketon saw a slight improvement, but clearly some heavy lifting in the second half.
Key points around Moolart, it underperformed certainly in the early stages there with some ongoing weak reconciliations of three new deposits that we've brought in. They're actually not new insofar as they've been in our reserves for quite some time, but we're finding that some of the historic modeling is underperforming. As a consequence now, we're going back, revisiting, rebuilding those models and testing with some additional grade control as well. We feel we have a better handle on that. We also see that as we move into the second half, the ore sourcing is shifting, so we are anticipating an improvement in performance from Moolart in the second half.
Rosemont is clearly impacted by the main pit, although not in the prior quarter. It was pleasing to see some of that high-grade material coming through from the main pit. The north pit is progressing okay. We're not seeing anything particularly concerning there. We are looking forward, moving back into the high-grade mining cycle at Rosemont main zone underground, where we expect to see higher grades coming through this half. Garden Well is still a work in progress. We've completed the extra oxygen capacity installation in the December quarter, and we have seen some benefits there to the extent where we are adding more infrastructure, if you like, into the process plant to improve the efficient oxygen distribution to help us with our metallurgical efficiencies.
You know, we'll see things like SlamJet spargers and shear reactors being added in to improve that O2, the oxygen distribution in the tanks, and to improve the dynamics, reaction dynamics and recoveries. This in turn allows us to increase the feed of the higher grade Tooheys Well material that we've been stockpiling. Completion of these will see us being able to increase that proportion of that Tooheys Well feed. We're also doing some work on process plant reliability and integrity. The plant is old.
We have got, we are changing the feed is increasing the amount of fresh feed, and we've got a plan underway there to improve the reliability and also helping to deal with the increase in the proportion of fresh rock feed. At Tropicana, we saw higher production for the quarter with improved ounce production from Boston Shaker underground, which is pleasing. It's in a high-grade cycle there with large stopes, very efficient or much more productive. It's pleasing to see that the underground is really starting to hit its rhythm. The team up there is doing a good job of ramping up production. We see Boston Shaker pit in the final phases, which should be finished around about the end of this financial year.
Progress at the Havana cutback continues, and the plan is expected to see a consistent access to high-grade material later on this calendar year. This, of course, allows the low-grade feed currently going into the mill, some of it to be replaced with the high-grade Havana stock feed. Like elsewhere, our site there is exposed to labor availability. I note that the Anglo team managing the Tropicana is doing a good job of working closely with its mining contractors as well as with mitigation plans, and we certainly have seen some improvement in that performance of material movement and personnel availability in the last few months.
It is certainly satisfying to see the significant contribution that Tropicana is making to our company and to see the future of Tropicana continue to unfold as we anticipated. Production rates are expected, ounce production rates are expected to lift later this calendar year on the path to return it to this 450,000+ to 500,000 range. In other growth areas in our business, Garden Well South Mine development continued. We are anticipating first stoping to commence late in June in the June quarter. We see the new potential area underneath Garden Well main pit is shaping up and we expect a study to finalize that later this quarter or late this quarter. Looking at McPhillamys, it's nothing material to add there. The permitting is progressing. It is frustratingly slow.
There have been some ministerial changes there but leadership changes, but we are seeing encouraging support from that. As we come out of the Christmas break, work there is progressing again, which is pleasing to see on that permitting front. Look, I'd also like to say there's some excellent and exciting exploration results detailed. We don't detail it in the quarterly, but we did in the biannual exploration update. Just some highlights there worth drawing your attention to, the Ben Hur extensional work, some very interesting fresh rock intercepts, underneath Moolart Well, beneath the oxide. That's particularly interesting. Also pleasing to see, works confirming the potential for extension of Rosemont underground.
There are another very interesting information as well on the Tropicana underground extensions at Boston Shaker, Tropicana itself, the underground and in Havana. I won't build on that too much. I'd just encourage people, if they haven't, to take note of that exploration situation. All right. Well, look, I will pull it up there, and kept that fairly brief, and I'll open it up for questions. If I hand it back to you, Darcy, any questions that anybody has to ask us, we're more than happy to answer.
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 Andrew Bowler from Macquarie. Please go ahead.
Yeah. Good day, James. You noted that you've been slowly increasing some of that feed into Moolart Well given that oxygen plant upgrade. I'll try to say the oxygen capacity upgrade previously. Then also talking about further increasing that with those minor upgrades to the oxygen injection into the tank. Can you talk about what proportion you did feed during the quarter and what it might improve to beyond the next round of minor upgrades please?
Yeah, Andrew, that was at Garden Well?
Yeah, sorry. Garden Well.
I think the proportion of feed that was going in from Tooheys Well during that December quarter was probably 10%-15% of that order. What we are anticipating is that once we get all of the equipment installed, we'd really like to be able to push that up to 30% of the feed. Without this well-distributed oxygen, you know, that becomes a little bit problematic. We know that oxygen allows to be able to handle some of that increased feed. That's where we're heading. You know, we'd really like to get it up to 40%. Long term, we're looking at the order of 30%.
No worries. Also just on the pit slip, you're talking about getting some of those ounces potentially from underground. Is that likely to see all of those ounces recovered or is it just sort of, you know, a certain area in the bottom of that pit now?
Yeah. Look, that it's still pretty early days. The interesting thing with those ounces is that probably, I think it was about 90%, just a little bit over 90% of them were high grade. There was a little bit of halo around it, but most of it was high grade, which means in an underground sense, we might be able to recover a reasonable chunk of that. But it's too early to say whether it's we can get half or a third or 75%. It's just a little bit too early. We do know that it's, you know, I think there was about another 20 or 30 m of floor to go down in the pit, and then we were going. There was a crown pillar left before the underground workings started.
You know, you always leave a crown pillar in place for safety, 'cause we don't want it to break through early in its life. We're able to, you know, lift up, put another line of stopes underground. That's what we know. We're confident that we can do that. Exactly how many ounces we'll get out of that at this stage is unclear.
No worries. That's all from me, James. Thanks.
Thank you. Your next question comes from Patrick Collier from Credit Suisse. Please go ahead.
Hi. Hi, James. Just wondering about the Rosemont North pit, and just when that was due to complete?
Later on this calendar year. It'll be finished.
Okay.
FY 2023.
Okay, thank you. Just on the split of open pit contribution at Rosemont between the north pit and the main pit.
I just have to take that one on notice. I don't have that off the top of my head what the contribution is. You're talking now or, I mean-
Oh, yeah, well, just what the, you know, run rate was, I guess, in the December quarter.
I'm not sure. Do you have a feel for that off the top of your head?
No, that's gone.
Yeah. No, look, we'd have to take that one on notice, Patrick.
Yeah.
You know, I mean, we were expecting, no, I'm sorry. Just haven't got that off the top. We'll have to take that one on notice.
Yeah. No, not a problem. Do that. All right. Then maybe just, you know, given what's happened with the main pit, is there any geotechnical learnings that you'll take on board at the north pit? Like, I think previously you've mentioned that there was precautions taken at both pits, so something similar happened at Rosemont North.
Yeah, I think what we're seeing at the North Pit is it's not as deep, you know, it's not as high. High grade pushes pits deeper. You know, logically, you can afford to go deeper and down into the fresh rock. We're just not seeing the North Pit being the same. It had, you know, it was more in oxides and had risks that had to be managed like all pits do. But we're not getting itself into the same circumstances as the Rosemont Pit, the Rosemont Main Pit was.
Okay. That's great. Thank you. That's all for me.
Anything more you wanted to add to that, Stuart? No. Any more, Patrick?
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 Matthew Frydman from Goldman Sachs. Please go ahead.
Sure. Thanks. Morning, Jim and team. Just firstly wanted to, I guess, just unpack the guidance revision a little bit further. You've cited there that you know you expected that you lost around 18,500 ounces from the Rosemont main pit. The guidance downgrade versus your prior guidance at least is 40,000 ounces or maybe it's closer to 30,000 if we account for the fact that you know you previously indicated you'd be in the lower half of that range. Just wondering if there's any particular areas where you can cite where the rest of that difference has come from, or it's just generally across the Duketon and that operations, you know, some of the challenges you've had over the first half.
Yeah. Look, historically, we'd said we were gonna come in at the bottom end, so we'd already had seen some of these impacts and communicating them. Yeah, look, certainly the largest impact was the Rosemont slip impacts. We felt that in the grand scheme of where we were, that was the material element that caused us to move. Other...
There have been, you know, I guess, the slower rates of feed too as well, and needing to get that oxygen in has probably held us back and, we're not sure, you know, we won't be able to make up those ounces, which was part of what was pushing that guidance down in the bottom end already. You know, I think, the impacts of that reconciliation that I mentioned at Moolart Well, although we do think that there's potential to recover that, but that's also had an impact. Certainly, the largest single impact has been the material one that's been the loss of all of the ounces out of the Rosemont pit.
Yeah. Got it. Thanks, Jim. Just on that, Moolart Well, I guess, reconciliation variances. I guess, you know, fairly typical when you're, I guess, mining in the upper part of new sequences or developing new pits. Is there anything in there where you know you felt like, oh, you know, maybe could have done some more grade control drilling ahead of time to I guess, tighten up your expectations around, you know, what you'd get out of those areas, or that was just par for the course in developing new pits?
Yeah. Look, I mean, it's as you say, when you're mining through these new areas, you do get that high variability in the early stages, and that was part of what we were just you know you can have wild swings in reconciliation as you work your way through. That was a little bit a part, I guess, of what we were attributing the variation to. Then we started to see a pattern, and it was clear. You know, we were getting the grade, we just weren't getting the tons. So we've gone back to the model and looked at the you know the wireframes that are used there and whether they're appropriate. There's a fundamental review of that, and we are doing more grade control drilling.
Hindsight being a useful tool, it's always useful to say it would've been helpful to do more grade control drilling to start with. Historically, when we've been through, you know, this phase in some of the other deposits, we had seen that reconciliation variation, but it tended to sort of balance itself out where it just doesn't seem to have done it here. You know, we do think there's a little bit more involved in our modeling that we have to review, rather than just relying on that variation as you go down in depth.
The short answer would be, yeah, if we look back and consider what might have helped us mitigate, it would certainly be a bit more grade control drilling. But you know, on the basis of what we've seen historically elsewhere, that wasn't something that we normally did. But it's certainly front of our mind of things to think about managing risks in some of the others now as well.
Yeah. Got it. Thanks. Thanks for that, Jim. Then just finally, on the Rosemont mine, you've talked a little bit about the potential underground opportunity there and accessing or leaving a smaller crown pillar or accessing some of those reserves that have been left behind. I think you mentioned there's a study due later this quarter. Just wondering if you've got any sort of indicative timing around when the underground might reach that area or that part of the pit.
Yeah.
Yeah.
There's a couple of things there. The extension study work that I mentioned was actually related to underneath Garden Well mine. That's a whole new potential mining area that we've been drilling out. Actually, if you have a look at the release, there's a little bit of detail on that on page 8. That's a separate area, and that's a separate study area.
Yeah. Mine's stayed there.
No. That's okay. It just gave me an opportunity to talk about it. The underneath the Rosemont area. One thing that you did say was, you know, we'd be looking at making the crown pillar smaller. That's not what we would be doing. We still want to maintain the right safety factor on the crown pillar. Because the Rosemont main pit has now pulled up at an RL that's higher, we have a bit more material to move, work with. We'll still leave the crown pillar at the same factor of safety thickness, but we can go up a little bit, up. We can, in an RL sense from the underground, we can mine a little bit higher. When do we have access to it? Well, actually, we've already mined.
That's where we started mining at what we saw as being below the limit of the crown pillar under the old pit design. We're actually there. You know, we can't go in and start mining it straight away because there are stops that we need to fill, and we need to make sure that we've got the grade control drilling sorted out. You know, I don't think we could get in there and mine. You know, we certainly can't get in there and mine next week. I think it's highly unlikely we'd be able to get in there and mine before the end of the financial year. After that, it's probably fair game.
Certainly, you know, thinking whether we could pick up any more of that this year was something that we contemplated, but we just didn't see the timing working out, so we had to exclude it from our recovery options.
Got it. Thanks for the clarification there. Just finally, I guess a bit of a broader question on your exploration results in this release, and then also your, you know, your update late last year. Clearly the investment in exploration there yielding some good results. Just wondering how you think about what kind of economic returns you need to justify in order to start bringing some of these areas into reserves? Or I guess maybe to put it in the context of you know, current gold prices, fairly healthy at, you know, $1,800 an ounce or even north of there.
You know, is there the option that you're locking some hedging to underpin development of some of these areas, whether it's a, you know, an additional cutback or a satellite pit, that has cropped up of interest from these exploration results in order to maximize what you can feed into the Duketon infrastructure over time? Maybe just accept that, you know, obviously Tropicana is lower cost, it's gonna provide the leverage to gold prices. I guess, you know, is the economic hurdle for developing some of these areas in Duketon and some of these new reserve areas, is it higher than that and really they need to stand alone from an economic returns perspective?
Yeah. Look, we actually had a look at that, a year or so ago with the Duketon North. We had some lower grade, higher costs. You know, we have been looking at this idea of can we identify a high-cost material that we could actually lock in by the hedging. When you start to risk analyze it, you know, you'd have to commit to it now. It doesn't really generate, you know, you gotta put it at the back end of your mine life. You really have to start committing to it because some of it is quite expensive. The reason it's expensive is 'cause it's got a high strip ratio.
It's a real trade-off, you know, you've got to be confident you're gonna return them as well. We actually couldn't get it to work adequately when we did look at it in some of the existing resources that we've got. In terms of looking at it for exploration, it's way too early. You know, we are seeing intercepts and early stage exploration results that are telling us that, you know, we've got the potential to find good quality, large scale deposits that don't need hedging to make them viable. And that's what we're after. It really is too early for us to, in effect, I guess you'd say, maybe throw in the towel at finding the quality that we're after.
We just believe that the area is so underexplored, that whole Duketon Belt, that there is way more opportunity there to find, you know, another Garden Well or another Moolart or another Rosemont. You know, that's what we're pursuing at the moment, so it's way too early for us to sort of be looking at those options with hedging. I mean, it's part of the equation, but certainly not front of mind at the moment.
Yeah. Got it. When we're looking at these exploration updates, we're really looking at the target being something that's at least equal to or potentially better quality than your existing business, you know, and in order to develop that pipeline and, you know, justify more exploration spend.
That's right. You know, the makings are there. You know, as we've said in the past, this, the Duketon Greenstone Belt is like, well, it's a bit like the Albany-Fraser Belt. When you compare it to some of the other more mature belts, the only reason the other ones have got many more ounces on it is because they've been explored for, you know, 40+ years . Really, our belts only had, you know, high quality detailed exploration really, for the last 10 to 15 years. Even some parts of the Duketon Belt that we now are holding has really not had, you know, high quality is not the way, you know, a focused, well-funded, both financially and intellectually, exploration program.
We think that time is still on our side. You know, we're only just getting started. We think there's plenty of opportunity to find more deposits of the scale that have made Duketon the success that it is. We just think there's more there, and that's what we're looking for.
Got it. Thanks for the detail, Jim.
No worries. Thanks for the questions.
Thank you. Your next question comes from David Coates from Bell Potter Securities. Please go ahead.
Good morning, Jim, Jon, and Stuart. Thanks for the call this morning. Just a quick delve into that question from Matt a little bit further, just on the guidance. Does that sort of compensate a little bit more for the lower end of the range that you were talking about before? Should we be sort of thinking about that as aiming for the middle of that downgraded range?
Dave, I mean, our approach on guidance range is, you know, we give a range either side of where we think we're gonna come in. But, you know, the reason you give a range is because there are some factors that we think could improve that performance. You know, if a couple of things go against us, you know, not everything has to go right to come into the middle of that range. You know, that's the way we've set our guidance here. We've looked at what our plans are, what things that we need to go right to deliver that, and, you know, it doesn't have all assumptions dialed in the red. We think that range is quite a genuine range.
It is a range around a midpoint.
Okay, cool. Just, you know, looking a bit more on the pit wall incident itself. You know, it went down through a couple of levels and a couple of geotechnical fences you mentioned. What is that leading to a review of, you know, some of the protections and stuff you have in place on other pits? What's this incident trying to trigger in terms of, you know, future prevention?
Yeah, look, that always happens, right? Every time you have some geotechnical event or frankly any safety event, you always go and look at it and see is there a learning from this that we need to pick up. You know, Rosemont main pit is a bit different to our other pits. You know, it is fresh rock, it's steep, it's deep, and it's right down in the bottom, it's narrow, and it's high grade. You know, if a pit is tending to be more, you know, middle of the range, you don't always get this sort of bringing going right down super deep. You just hit a more of a economic limit that just doesn't make it worthwhile continuing on.
This was the beauty of Rosemont in its early days. It was just really good grade and something you could easily dip into to make up for other variations across the business. You know, we've tried to squeeze every last ounce out of it. You know, as you get down into the bottom, it had risks that we felt we were adequately managing. You know, as I said, it is a bit unique relative to all the other pits we're running.
It was despite the attractiveness of the ounces that were there to be got still, we just felt that, you know, when we balanced the risk and well, when we looked at the safety risk that was involved in continuing on, particularly in with the context of that, the slip that occurred, we just felt it wasn't appropriate to continue on. You know, I don't think any amount of ounces would have convinced us to keep going on that front.
No, fair enough. So in terms of, you know, additional protections, is there anything you'd be changing at your other operations as a result of it? Or is it 'cause of that uniqueness, it's not really applicable?
Yeah. I'll just ask Stuart to put some color on that question.
Yeah. Look, Dave, there's an ultramafic unit in the wall in that pit that we've been basically having to deal with for the life of that pit. Over the last year we've been
Watching, managing, and correcting that as we get down to the bottom of the life of the pit. Over the last 12 months we've been increasing the geotechnical measures that we've had in place to specifically in Rosemont because it's specifically got this ultramafic unit. It's just that we've noticed an increase. There has been an increase in activity over the last sort of 6 weeks or so. You know, with the event that happened on the weekend, that's what got us thinking about whether long term we can keep dealing with it or not, which is the reason why we got to where we got to.
It's quite a situation that in itself is unique to that pit. You know, we go back and we have a look at what other protections we've got elsewhere. As you mentioned, you know, there was Rosemont North. We do see this one as being a little bit unique.
No, no, it's good. Gents, thanks very much for your time this morning.
Thanks, Dave.
Thank you. Your next question comes from Peter O'Connor from Shaw and Partners. Please go ahead.
Hey, Jim, Jon, Stuart. I missed the first little part of the call, Jim, so apologies for doubling up. Hey, is there statutory obligations with a geotech issue of this nature? And if so, what directions, if any, did the mine department impose upon you in terms of rectification, remediation or future requirements?
Look, I guess that's still. Yeah, the short answer is always that oversight. But as part of our own work and our own risk assessment, we've just decided that it's the continuing on is not appropriate. So, to a large extent.
Yeah. Yeah
We didn't ask a question that needed answering.
Okay. Decisions at this stage have been wholly Regis management and board to take the steps you've taken.
Correct.
Okay, great. Just back to Stuart on the uniqueness of the Rosemont main pit, and you mentioned the ultramafic unit. The slip relates to structure or. You know, I just didn't quite understand your comment. If you could just describe to me the uniqueness of this pit so that if I was trying to pitch to somebody, I can explain why it's unique to your other pits and therefore why it's less of a systemic risk.
Of this specific pit, we've got an exposure of a rock type, which is an ultramafic rock type. It's pretty common to Western Australia. Yeah, the nature of it has been that it can be challenging to manage, specifically when it's exposed for long periods of time. It can be difficult for the geotechs to get their heads around what's the best way to deal with it. I mean, the guys have been continually looking at and assessing it. We've been deploying...
Like, we've got, apart from rock wall angles and bench widths and all that sort of stuff, we deployed radars to some of our pits, and there was a radar specifically on this pit as we were working it. We also implemented some catch fences and mesh and all those sorts of things. I think, you know, yeah, the challenge is what the geotechs are trying to do is to make sure that the operations and the operations personnel working around on the pit floors are safe, and they're doing what they can to make sure they're safe. You know, at this point in time, the guys are, you know, finding it more and more difficult to try and figure out how to manage that.
Just take a step back from the detail, Peter. What we were saying before was Rosemont main pit was a little bit different to the other pits that we run. It deserves, you know. The reason for that is, first off, it's high grade, so it tends to be. It's deeper and it's steeper. You know, it's an attractive target to go on, after because high grades pay for, you know, the higher strip ratios and removal costs that are involved with going deeper. This particular area was, you know, it's not. This is not common across our other pits. They all tend to be, you know, lower grade, shallower, and you know, the pit floors don't have the same risk profile as this particular pit did.
As Stuart said, there's a, you know, a rock sequence in there that we know is problematic. We were observing it and watching it, and put in place mechanisms to manage it. That's what we were doing. We did get movement, we responded to it, and everything that we put in place, you know, effectively worked. After that movement, we made a decision that the risks that we saw there going forward were now such that we were uncomfortable with them, and we decided to leave it.
Jim, would it be a correct statement to say one of the two things, that there are no ultramafic units in any of the other pits? Or there are in other pits, but they're just not as deep, and therefore they don't present the same risk?
More the latter.
Latter. Okay, got it. Hey, one last thing on the guide.
I'd actually love to have the high grades that we got out of the Rosemont Main Pit all over the place, but we don't. You know, it was a problem. It was a technical challenge that had to be managed or a technical hazard that had to be managed that was being driven by those grades that we got out of it.
Got it. Just if I may go back to the guidance, just for clarification to Matt's question. You were steering us at the September quarter to the lower end of the guidance range that you gave, and then the drop we've got now. From the lower end of the range to the midpoint of the new range, as you just answered before, is the smaller proportion of a drop than the absolute mid to midpoint. Is that the way we should be thinking about it, just to clarify your previous answer?
Sorry, Pete, could you say that again, please?
In September quarter, you were guiding us to the lower end of the.
Yeah.
Prior guidance range. Doing the way we do math, we look at, okay, that was the lower end. You've now set us a new midpoint. We look at the math between the two and look at the percentage downgrade. Is that simplistically the right way to look at it? It's not 8% downgrade from midpoint to midpoint. It's less a number than 8% because it's from a lower end to the new midpoint.
That's right. That's right.
Okay. Okay.
I mean.
Thanks, Jim.
You know, in effect, the bottom end of the old range is the top end of the new range. Well, it's not an overlap, but there's a connection there between the two. We needed it. We've been discussing and communicating that bottom end outcome for production. This slip was really it wasn't a straw, but it was a factor that just indicated said, "Well, you know, we need to change our guidance quick.
Just, can I ask a nerdy question? You talked about the underground is near or already underneath the main pit where the slip occurred. What is the vertical difference between the two? What would be the thickness of a typical crown pillar in that area? Can you get it with a similar stope, shape, and sequence to what you're using now, or do you have to go to something more elongated to play around?
You're right, Pete. That is a nerdy question. I'll get Stuart to answer that.
The previous crown pillar was meant to be about a 20 m pillar that we would have taken out at the end of the life of the underground. It's now. It looks like with what's happened now, it's gonna double in height, so it goes from 20 m to 40 m. These are the, this is the stuff that we need to work through now is, does that mean that we have an intermediate level that we could take out in the meantime? You know, what's the timing for how we would take this crown pillar out? How we would do it? And the nature of what we might, how we might mine those top now two levels rather than the one level.
How far are you from the pit floor to the underground workings at this time? What's the vertical distance?
In simple terms, Pete, the pillar was going to be between the original design bottom floor of Rosemont Main. There was gonna be 20 m between it and the top of the nearest stope from underground. The mine has now pulled up short and is probably about another 20 m above that. That means that instead of being 20 m between the bottom of the pit and the top of the stope, there's now 40. Now, that's more than needs to be there. We're looking to go back and take another 20 m, potentially. How much exactly, we're not sure. But that's in rough terms, you know, that's what we look at. Does that make sense?
Sorry. Yeah, no, I get all of that. What I was asking was, you said you were basically underneath the open cut now. What is the vertical difference where you are mining today, development-wise or stoping versus the pit floor?
Well, because Rosemont mine, we have a top-down mining approach.
Right.
We actually took out some of the first stopes that we took out. In fact, they were the high-grade stopes that gave us the big kick of production at the end of the June quarter last year. They were the stopes that were basically butting up against what was the design crown pillar. We were
Got it. Sorry. Okay. Yeah.
From an underground sense, right? Because we're just looking at it. In fact, I think probably two weeks ago, we were looking at it and saying, "All right. Well, let's just make sure that crown pillar is still the right thickness and the time that we want it to be. Now that the existing pillar there is twice as thick as what we need it to be. That means that we can take some of it away.
Perfect. I got it now. Yeah.
Okay.
Fantastic. Appreciate the color. Thanks, Jim. Thanks, Stuart.
No worries.
Thank you. The next question comes from Matthew Frydman from Goldman Sachs. Please go ahead.
Thanks. Sorry to have a second bite of the cherry, Jim, but just wanted a quick one. I guess, just to put things in context, I mean, you cited that, you know, the rock slip was 800 tons. I mean, that's probably only four or five truckloads at best. I understand that, you know, at the moment, you've taken the decision to manage risk to cease activities in the pit. You know, is there a potential that with appropriate controls and monitoring that you put in place, you know, once you assess the options of accessing that material from underground versus maybe restarting operations in the main pit?
You know, is there a potential that it might actually be more attractive to go in and do whatever remediation's required to access that last sort of couple of cuts in the main pit?
Yeah. Matthew, look, you can never say never. However, one of the things that is a key factor, because normally what happens when you have a slip or a rock fall, you know, the rock sort of rolls its way down, it gets caught on benches. That's why you have benches to capture rocks so that they don't continue to roll all the way down. Then they hit the bottom, you know, they hit the bottom of the floor. The way that, you know, normally a pit is very wide and there's plenty of real estate for you to operate in.
You can have people, you know, 100 m or 200 m away on the other side of the pit doing work while you watch these small slips, you know, not put anybody at risk. You know, we're not talking about, you know, hundreds of thousands of tons movement. However, a couple of things, as we've said, the bottom of the Rosemont pit is. We're right at the bottom. You know, we've pushed this all the way down. If you go and stand there, it's not quite like this, but, you know, it's not too much longer and you'll be able to touch both walls with your arms. And it's like if when a rock hits the bottom, it actually rolls almost all the way across to the other side of the pit. It can do.
It's very tight. You wanna make sure that you know, in that circumstance, you can understand, you'd wanna be pretty confident that you're gonna be able to, your people will be safe working in that pit under that tight circumstances. Some of those benches that were designed to catch the rock have done exactly that. They have caught the rock, but as a consequence now they're full up. The rock can't be caught. It'll just run straight over the top of the other benches. That's the immediacy of the issue. Can we figure out a way of going back in there? Longer term, we probably can.
I mean, ultimately, we'll probably we may look at, you know, I don't know what's the options. Is it safe to mesh that whole wall and go back in. Really, you're gonna be countering that with the option of coming up from underground, which would be a lot more conventional in attacking those areas. I suspect that's probably more inclined to be the solution. You know, we might look at the alternatives, but I don't think they'll be, to be frank, I'm not sure whether they'd be taken too seriously, certainly not at this point in time.
Yeah. Got it. Thanks, Jim. That's pretty clear. So you've lost a bit of catch bench capacity further up, and that makes it an unattractive option. Yep. Thanks.
Yeah. Yeah.
Thank you. Your next question comes from Alexander Papaioanou from Citi. Please go ahead.
Hi, Jim and team. Regarding McPhillamys, has there been any recent updates to the plan towards supply pipeline, given the community contamination concerns?
No. We're still finalizing the water offtake agreement with the counterparties. The pipeline, you know, I mean, I think some of the community concerns about the write-ups that have been some of the statements that have been made by some individuals are probably inaccurate at best. They're certainly not toxic material. In fact, the standard of that material that'll be traveling down that pipeline will be feedstock quality. We don't see any issues on that front. It's still working through the approvals of course, but we don't see anything material on that front causing a problem.
No worries. Thanks.
Thanks, Alex.
Thank you. Your next question comes from Alex Barkley from RBC. Please go ahead.
Thanks. Morning, guys. I just had a question on why processing the low-grade stockpile at Rosemont Mill rather than some other regional open pit ore. It doesn't seem like you had those other open pit options ready to be sent to the mill from FY 2023 onwards. What pits are planned for FY 2023 onwards, and is there any potential they could be brought ahead into this financial year?
If there was potential, we would have done it. The bottom line.
You know, we don't go and develop and ready pits for production a year ahead of when we need it. It's not a particularly sensible use of cash flow. You know, while we try to avoid just in time, because sometimes that can be just too late, but you know, we basically don't have pits lying around waiting to cover these sorts of events. Sometimes you can speed the mining up in a particular pit and maybe make up for it. Obviously that's all of what we went through. You know, we've been pulling a lot of levers pretty hard this year, and our options were quite limited on that front.
As I think we've said that, you know, by the time we looked at it all, really the only practical option within the time frames was to just put through the low-grade feed to replace it in the mill. While that recovers some of the ore, you know, you might be putting in 0.5 g per tonne, that in no way matches 2.6-2.7 material.
Yep. Okay. No problem. Thanks, guys.
Thanks, Alex.
Thank you. Your next question comes from Peter O'Connor from Shaw and Partners. Please go ahead.
Thanks, Jim. You just answered my low-grade stock grade, so thank you. Financials, impairment, is there anything likely re Rosemont main pit, capitalized stripping or anything of that nature or will there be no impairment on the back of this recent event?
Look, obviously there's a couple of different elements of that. But we've had a look to see, at a very high level, Peter. It's very forthcoming that, if we decide that, you know, we can't get to the material at all, or we decide that it's appropriate to impair it's of the order of about AUD 4 million or AUD 5 million was the current estimate that we've got. You know, that's not. Of course, that's unaudited and all of that. That's still looking through as we look at our options because that wasn't front and center, but we just wanted to get a bit of a feel for it. You know, I think, Jon and I were discussing it. It's a number, but it's not material.
That's pretty much just related to capitalized stripping of the Rosemont mine?
That's right. That's exactly right.
Can I wrap up with another geeky question? Ultramafic material is the best way to support that. Is it with geotech fencing or bolting, or is it with shotcrete? What's the best way to manage that in the future? What lessons have you learned?
Yeah, look, it is a whole bunch of things. The lesson number one in geotech, the most important thing for stability is time. The longer you leave a wall exposed, the more likely it is to start to crumble and move. As Stuart said, you know, this ultramafic unit that was in the wall at Rosemont, we were watching it, and we were trying to get out as quickly as we could, because it's a long, relatively long aged pit that was being exposed for an extended period of time. What can you do about it? Yeah, you could bolt it. You could do all of those things. But of course, we're talking about large expanses. We're not talking about localized requirements.
The other thing you can do is put in a shallower angle. You know, that's the challenge of geotech. You're always trying to work out how to manage the tension of risk and value, and making sure that you don't let dollars run in the way of managing risk. You know, there's many different ways to manage unstable ground. The key is that, you know, if something like the ultramafic where this one failed, it looks like time was probably the most significant element in why it let go.
Jim, with regards to this incident and just the general Duketon area, when do we next expect to hear an update? Will that just be an update with the financials at the half year or next quarterly, or are there any milestones coming out of this where you'll be coming back to us just to report how you're going, remediation or updates?
No, there's no plan on that. No plan to update on any physicals. As you say, the next scheduled is, I think it's late February when Jon and the team finalize the half year accounts, and we'll be coming out with that. And we'll look to see what other information we've got there, but we don't plan on providing any. You know, we have no need and no plans to give any further update on how operations are progressing at this stage. Unless just something, you know, unless of course we think it means that guidance is-
Is there anything on McPhillamys we should be expecting? Any dates, timelines, triggers, with DPIE or anything that we need to be thinking about?
Look, you know, I'd like to say that there is, but we are dealing with government departments. You know, keep in mind that, well, I say keep in mind, over here in the west, we're somewhat isolated from Omicron. You would know as well as anybody, Pete, over in, over there. It is causing an issue.
It's coming to get you, Jim. It's coming to get you.
Yeah, we know that. You know, there's been some, as I said earlier, I think there's been some minister changes there, but we don't see that as being bad apart from the fact that it's just a, you know, there's a department that comes back up the learning curve. The department and the minister is well aware of the project. The Deputy Premier of New South Wales is the local member. We think the project is valuable. We know that there's good support for it. It's just taking time to get that last element of the water licensing resolved. There's progress being made, it's just taking time.
Is it to do with the absenteeism of people because of Omicron or is it other? Is it more the changes in staff?
What's that? Sorry.
Sorry, is the delays or the time that it's taking?
Oh, no.
Is that about absenteeism?
They're just factors, right? It's just taking time. If Omicron wasn't there, I don't know. I'm not sure whether it'd be happening any faster than it is. Naturally, when there's a change of ministers, there's a degree of people needing to get up to speed. I think that's happening quite quickly from the message I'm getting from our New South Wales team. I don't see that as being too detrimental. At the moment, it's the Department of Planning, DPIE planning is in constant discussion with our team and everybody's working to get this last element completed so that we can demonstrate there's a pathway forward.
As soon as that can happen, the better we'll be, but I just can't put a date on it. It's not in my control.
Thanks, Jim. Happy New Year, by the way.
Yeah, thanks. Same to you, Pete. Same to everybody else.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Beyer for closing remarks.
All right. Thanks very much, Darcy. Thanks, everyone, for joining as always. It's certainly been a difficult recent period for us, and we've got some challenges that we're working through, but we are certainly looking forward to delivering to you our guidance for the rest of this year. If anybody has anything that they wanna follow up, please drop us a message, and let us know, and we'll do our best to help answer your queries. Thank you for joining us.