Thank you for standing by, and welcome to the Regis Resources Limited September quarterly update. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by 1 on your telephone keypad. I would now like to hand the conference over to Mr. Jim Beyer, Managing Director and CEO. Please go ahead.
Thanks, Darcy, and good morning, everyone. Or good afternoon for those on the East Coast. Thanks for joining us on the September quarter update. I know the quarterly was released earlier today, and I'll make occasional references to some of the diagrams and the figures. Pardon me. Well, it's clearly been a tough quarter for us, mostly anticipated, but some unexpected items adding to our challenges. Firstly, on the area of safety, I'm very pleased to report our safety metric of lost time injury frequency rate continues to be better than the WA gold industry average. As we saw the twelve-month average move down just very slightly, in fact, rounded, it held at 1.3. Very pleased with that. On COVID in general, to date, we've had no confirmed cases in our business.
Regis continues to maintain a range of measures and controls, management plans consistent with advice from state and federal health authorities and commensurate with what we see as the community risk profile. I would say the company supports the ongoing vaccination rollout programs and sees this as a critical element of the long-term path out of this period of uncertainty and potential health risk. Albeit by doing so, we are introducing some short-term risks associated with implementation and acceptance. More on COVID impacts a little bit later. Onto our operations. On the production front, the September quarter, we hit about 102,000 ounces at an all-in sustaining cost of AUD 1,521 an ounce.
While the quarter was always expected to be soft due to activity schedules, we did see some unplanned short-term operational issues arise, which made it a little bit weaker than expected. While planned scheduling of activity was always understood to impact on our production relative to the prior quarter, we saw increased labor turnover and the requirement to introduce less experienced operators and training also played into our performance and the time to fill. This clearly is a trend across the resources industry, with generally increasing demand for experienced operators, certainly exacerbated by the COVID-related restrictions on labor availability in WA. Looking a bit more at the parts of our business now. Duketon, as I said, was a weak quarter as expected.
Moolart Well produced 14,185 ounces at an all-in cost of $1,720 an ounce. We did see an increase in the mill throughput as a proportion of softer oxide and transitional material was being fed, which was a helpful impact. However, this material was also a weakness in the quarter as we saw a short-term variation in actual grade to plan, as the ore was presented. This variation was associated with mining through near-surface oxides, including laterite and depletion zones in the Blenheim pit as we progress towards fresher material. This variation impacted on the feed. We've notoriously variable swings as we pass through these in grades, either way, as we pass through these depletion zones. The variability is expected to continue till the end of this current quarter.
Once we're through it, we will see head grades lift and a subsequent increase in production coming out of the Moolart operation in the second half. At Garden Well, production was down 24,243 ounces produced for the quarter, all-in sustaining cost of AUD 1,868 an ounce. The underground pleasingly has settled in and is now continuing to deliver at its planned production rates. Development was strong and gives us confidence that we'll continue at this pace. Open pit performance at Garden Well, on the other hand, was adversely affected by some relatively minor geotechnical concerns that did require a delay in operations while catchment fences were put in to manage this risk. This work is now considered to be complete.
Garden Well produced 34,646 ounces, all-in sustaining around 1,400 bucks, 1,400 Aussie dollars an ounce. Again, impacts on this quarter. We did have a major mill shut where we changed out the mill motor. As a result of that, we had some subsequent monitoring and adjustment before we could return to full production rates. We did also see some lower recoveries from the high-grade zone coming out of Tooheys Well. This area is known to be metallurgically more complex, and it was more complex than our original testing indicated, requiring more oxygen. We have added extra liquid oxygen capacity, or we are at the moment. In fact, the blower was delivered last week.
It's being installed, and we see that coming online in November to help get on top of this issue of lower recoveries, which will allow us to return to feeding that high-grade material in at rates that we planned. Total material movement at Garden Well was down a bit as well, 13%, partly because we rescheduled equipment, reallocated it, some of it to Rosemont. Also we saw some COVID-related drop in equipment performance, specifically around the drill and blast area. To recover this performance, we mobilized additional personnel, but that took some time, as well as the equipment, earthmoving, drill and blast, and some grade control equipment to get on top of this, and they're operational from this month. As I said, labor restrictions also impacted on our surface haulage trucks.
These are the trucks that bring the material in from the satellites, in the high-grade areas. Now, maintenance personnel numbers in this area have increased as we've got on top of that. The driver labor shortage has been mitigated. Certainly, the turnover in this area has been amplified by COVID. The bottom line here is that COVID-related issues are an area of ongoing exposure for us, while these restrictions are still in place. At Tropicana, safety performance continued to be strong. Production came in slightly above our expectations with a full quarter of 28,915 ounces, for an all-in sustaining of $1,204 an ounce. Boston Shaker underground continued to deliver and lifting the feed grade to the mill by about 8%.
In addition, the mill had a strong quarter increasing by 11% tons throughput on the prior quarter. Now, part of this is because in the June quarter, we had a large shutdown. This improvement is also a reflection of increased capacity that we've seen in that plant, driven by changes to the thickener circuit that was made in the June quarter. All of which is very pleasing. Overall gold production at Tropicana is traveling to plan. One aspect of Tropicana I did want to discuss was a dip in the performance of waste movement associated with the Havana cutback. Much like Garden Well really off the back of inadequate D&B performance, specifically rig performance. This was impacted by spare parts availability and shortage of skilled operators. Spare parts availability obviously impacting on availability of equipment.
Operators impacting on utilization. Both of these are seen as being COVID-related. Tightness in the supply chain, tightness in labor availability, and time to fill. To date, actions have been to address the issues indicate that there will be limited impact on this year's production. However, this is an area of future production risk on timing, and it's expected to continue while COVID restrictions impact on labor availability. I would say the team on site have been working very hard with the contractors to deal with these issues, and certainly good progress is being made. Notwithstanding these short-term COVID-related risks, overall, we're seeing what we wanted to see from Tropicana, and our guidance for Tropicana is maintained for the year.
I reiterate, Tropicana is a great addition to our portfolio and is providing some key strategic elements, not the least of which is the expansion and diversification on our existing production rate as reflected by its contribution, both production and cash flow this quarter or last, in the September quarter, and clear potential future growth through life extension beyond current reserves. On the financials front, the September quarter, Regis sold 82,000, just over 82,000 ounces for an average price of $2,170 an ounce. That's after adjustments for hedging. This generated total operating cash flow of AUD 93 million, AUD 51 million from Duketon and AUD 42 million from Tropicana. The reduction in operating cash flows relative to the prior quarter are really primarily driven by the reduction in ounces at Duketon.
Now, drawing against this cash generation was capital expenditure, which saw an increase over the prior quarter. CapEx was approximately AUD 77 million, AUD 33 million of deferred waste at Duketon in the open pits. About AUD 11 million was underground development at Rosemont, but mostly at Garden Well. A bit over AUD 5.5 million in plant and equipment. At Tropicana, we spent AUD 19 million, this is at 30% in deferred waste. Probably about 3/4 of that was Havana cutback. The rest was Boston Shaker pit because it's still in operation. We also saw some capital development at Boston Shaker underground at AUD 2.5 million or AUD 2.4 million and AUD 2.7 million in plant and equipment. Now, this is a significant increase in the prior quarter of AUD 47 million.
Obviously what we're seeing now is three full months, whereas the prior quarter we settled partway through the quarter and it wasn't a full quarter. In addition to that operating or the CapEx, we saw other quite significant outflows during the quarter. 22 million in dividend payment, income tax of AUD 21 million. Exploration of McPhillamys, 10 and 16, 10 and 6 respectively, and AUD 7 million associated with some residual payments of the Tropicana deal. This resulted in our overall cash balance reducing from about AUD 269 million to AUD 209 million at the end of the September quarter. Figure 1 in our illustrates the inflows and outflows quite clearly quarter-over-quarter.
While the September quarter was weak as anticipated, we have maintained our full-year guidance across the business. This is off the back of shifting mine grades that we're expecting, along with the actions that we've taken to address other pinch points that occurred during the September quarter. While maintaining this guidance, we do know further lockdowns in WA and border restrictions have the potential to cause more issues, which right now are clearly causing pressure on businesses, including this extended period to fill vacancies and labor cost pressures. The potential impacts of the requirement for mandatory vaccine for mineworkers in WA specifically adding another level of potential level of personnel turnover and availability, and it's quite real.
Although at this stage, it's not clear exactly what that's going to cause and to what degree we're going to see any falling away, if any, of labor. It's certainly a risk. The situation remains fluid, and we do what we can to monitor the potential impacts and take actions where appropriate. I'd also note that certainly, we think in this quarter, or it could be in the second half of the year, the stamp duty associated with the Tropicana, which we've now estimated to be down to AUD 38 million, is quite possible, although that is in the hands of government timing. Looking to the future, we see some really interesting opportunities continuing to materialize, particularly at Duketon. The Garden Well South underground is progressing well.
Our meterage underground development has ramped up to 765 from 434 in the prior quarter. Figure 2, you can see where we've been adding that development in. We've also just put an underground rig in to start the grade control drilling in the upper areas for these targeting these first production zones. Just a reminder, this is about 1.85 million tons in the mining inventory. A grade of about 3.2 for circa 190,000 ounces. We are expecting to hit first ore later in this current quarter.
I'd also note that the underground is open at depth of the existing development, presenting with clear intercepts further at depth, presenting an exciting prospect for future life extension there, much like we're seeing at Rosemont as well. I think we're just getting started at both of those. This mine underground, the Garden Well South, will be a valuable addition to our production portfolio. At McPhillamys, we continue to work with New South Wales DPI in relation to permitting the project. I must say, the rate of progress, we are making progress, but it is frustrating, surprising at a time when new projects and the associated benefits that flow to regional and state economies are what we need coming out of this major post-COVID-impacted economy.
However, we do know that senior state representatives can see the clear value as well and are working to help move the project along. Regis is continuing to work with a number of departments, DPI, planning, which is responsible for making the recommendation to the IPC. The MEG, the Department of MEG, which is the Mining Exploration Geoscience, for working on aspects of our mining lease application. The feds are involved as well. The Department of Agriculture, Water and the Environment are also a key part of the approvals that will continue to flow. As I said, progress is being made to close out outstanding elements of these approvals and licenses.
As we close in on getting a clear pathway for all the required approvals, we do anticipate, at this stage, a recommendation with IPC, certainly potential in the first half of calendar 2022. But at the end of the day, we don't have guaranteed visibility on that timing, and the actual timing of any decision is largely outside the company's immediate control. Garden Well Main Underground. Now this is a new area we've been talking about in the past. Figure 3 shows this key initial zone of interest that's marked as a potential underground area. This is certainly taking shape as potential production zone. The mineralization extends down plunge of the existing open pit, the Garden Well pit, as you can see.
Drilling results continue to firm up these high-grade plunging shoots underneath the main pit. Some of the examples of intercepts, 9.6 m at 4.4 g, 10.8 at 2.3 g, 24.5 m at 3.2g, 9.6 m at 3.7g. These are strong results, and they're demonstrating the potential value that we're looking at of establishing an early access to this zone via a decline between Garden Well South underground mine, the existing area, and the growing new area. You can see it on the diagram where we've marked that conceptual decline.
The key here is that while the drilling is broadly spaced in that area, the data collected from that drilling, along with the open pit, provides enough confidence that a potential small production area could deliver enough ounces to at least pay back the potential decline establishment's cost and may provide a modest return. We're working on that at the moment to evaluate that potential. The real extra spicy sauce that comes from this decline is not only does it give us access to this certainly quite significant Garden Well Main area, but it also allows us to follow up on the high-grade results that we've seen in this prospective area between the Garden South and the Main. You can see that area clearly marked in the diagram.
I think it's in Figure 3 as the under-drilled area with a couple of intercepts that we've got. We see there's great potential in this. We're working to evaluate and hopefully we'll be in a position to make a decision on this in the current quarter. As you can see, this is clearly a production zone that reinforces the broader strategy at Duketon to use underground extensions from the open pits to stop the inevitable production decline from our pits and maintain our production levels from these multiple underground sources. I would say we haven't included any update in this report of the Rosemont extensions, but we're also seeing some of the extra opportunities there. It's also too is exciting with its new potential production zone to the south, along with down plunge extensions that are crystallizing.
What we will be doing is we'll provide more details on that, and more generally, our exploration update across the Duketon belt, Greenstone belt, a couple of weeks' time when we provide the biannual exploration update to the market. In summary, the quarter was difficult. We experienced the variation in performance we were expecting, plus we experienced other operational variations, as I mentioned. This, along with the impacts of COVID that gathered a bit more steam in the form of turnover and time to fill roles, made it a challenging quarter. In the quarter, we did make some progress on McPhillamys, albeit slow, but progress nonetheless in the formal approvals process. We're still confident there's a pathway to get our project approved. It's just taking time. Our first full quarter from Tropicana, which was delivered as planned.
We made progress at the Garden Well South Underground Project, and that's clearly gathering momentum to be more than we thought. Excitement is certainly building around the Garden Well Main potential area as a whole new potential high-grade production zone. It's been a tough operating quarter for Regis, and the WA industry in general, I think, and certainly Regis Resources isn't out of the COVID woods yet. At least we are on a planned path forward. Hopefully, we'll see some clear air on this in the new year as the government strategies to open up borders gather traction, and we can start to access and rely again on the very important element of our industry's workforce that comes from interstate. Despite the near-term challenges, the company's bones are solid, and they're growing.
As I was just talking through some of these growth potential, it illustrates. Pleasingly, if we look beyond a single quarter or two, we can still follow in our plan of growth, our mine life, and growing our mine life as a potentially profitable business, producing at a rate of 500,000 ounces a year with an all-in sustaining cost of under $1,000, almost 5 million ounces of reserves and over 10 million ounces of resources. A challenging month, a challenging quarter, but it's still clear we have a great future in front of us with more potential being opened up. All right, look, on that note, I'll hand it back to Darcy, and we will look to deal with any questions that people would like to ask. Thanks, Darcy.
Thank you. If your 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. Your first question comes from Peter O'Connor from Shaw and Partners. Please go ahead.
Hi, Jim. Hi, John. A couple.
Yeah.
McPhillamys, you said first half calendar year 2022, but in the release, if I read it correctly, it says first half FY 2022. Just could you clarify the timing that you do expect or hope to get the approval?
Yeah, look, there's a very slim possibility in the first half, but realistically, we think that even that would flow. Certainly, IPC would flow into the first calendar half.
Okay. Working capital, the build of ounces at Tropicana you noted in the release. When are we expecting release of those?
If you're talking about the buildup of ounces on hand that we've got, Peter, that's just, you know, there's nothing special in there. It's just, you know, there's ounces on site at Tropicana, ounces on site at Duketon-
Just, just-
Ounces being output by the mine.
You're talking about the gold on hand as part of our cash and gold balance?
Yeah. Yeah.
That's probably already gone. Yeah, that usually goes within a couple of days, Peter. We don't tend to hold our gold stocks for long. Particularly during the first quarter and the third quarter, we sort of let that roll pretty well, but we'll push hard to get that all out the door at the end of the first half and second half because it's obviously more important then. Yeah, that stuff just moves very quickly.
Just timing.
Yeah.
Yeah, I just thought I'd call it out 'cause you called it out, that's why I wanted to ask. Jim, the Garden Well Main, fascinating. Just to understand what you're talking about. The decline will be funded via potential ore that you'll pick up on the way from south through to the main area. Is that how I understand your comments? Then the prize is at the end of that, which is the drilling you've done under the main pit at Garden Well North?
Yeah. Look, the concept that we're pushing hard on, and we haven't approved it and finalized the work yet, but what it is. We had the option. You know, we could spend another year drilling out that area underneath Garden Well Main and prove it up to be, you know, arguably the same size and scale as the Garden Well South area. The drilling in that area is slow. There's some pretty hard schists, slow and expensive. We've taken a view on this to drill up enough confidence for a relatively small area that warrants and would pay for a decline across and make a modest margin on it. You know, it doesn't need to be hundreds of thousands of ounces.
By doing that, we can commit to the area earlier, and we'll put a decline across, as you can see on that conceptual decline. Our objective would be to get to Garden Well Main as quickly as we can. Once we're there, we can then start to open that area up as a production source and continue to drill out more of the ounces down plunge. We're looking carefully as to where that decline would be to give us the right pitch and angle. The added benefit that we get is that area in Figure 3 called, that's marked as being under-drilled. You know, you can see some of the intercepts through there that just haven't been followed up. Clearly, there's mineralization there because it was mined out as part of the open pit. It just hasn't been drilled out much.
It gives us a platform to drill that as well. We see that. It's a similar strategy to the one that was followed at Tropicana, where we've opened up Boston Shaker. Found enough material underneath the old Tropicana pit to warrant a decline going cross, which is effectively an exploration decline that's paid for by the ounces that we'll get to when we get there. Then we use that as a platform to drill off more material, which, by the way, is proving to be a pretty appropriate strategy there, as well. That's the concept here, Pete. We prove up enough reserves, enough material to give us confidence we're not wasting our money going out there. There's no potential for loss.
You know, in a modest return, and that will give us the platform to continue to grow production underneath Garden Well Main. The added benefit of opening up that new area, we don't need the area to have any ounces to justify it, but we certainly see that as being a very attractive exploration target as well.
Okay. When you say a decision is possible during December quarter 2021, is that likely to come out with the exploration update, or is it a separate part of that? And when would a decline kick off towards this area if you got the approval this quarter?
Yeah. Look, we'd look to push that. It will be separate to the biannual exploration update. We'd be looking to do that sometime over the next, you know, 2-4 weeks. The decision on Garden Well Main is still a bit further down the track. I'd like to think that we can get that done before the end of the year. If we did, I think we've already. If the potential's there, it's a stub break off from the existing development, and we can push on. I don't think there'd be too much of a delay there. We just need to make sure that we're not drawing away unnecessary resources from the development program for the Garden Well South, you know, things like ventilation and stuff.
That's all being looked at at the moment.
Last-
You know, we're not talking about a major delay waiting to get onto it.
Okay. Last quick one. Figure 2, you've got in green the underground development previous. You've got in red underground mining June quarter 2021. Is that supposed to be September quarter 2021? If it's June quarter, where's the September quarter development on that slide?
Yeah, that's the September quarter.
Okay. Got it. Thanks.
Thank you. Your next question comes from David Coates from Bell Potter Securities. Please go ahead.
Thank you. Good morning, Jim. Morning, John.
Morning.
Yeah, tough quarter. We've ticked most of the boxes I think, apart from safety, thankfully. Just in terms of, you know, geotechnical issues, some grade issues, more shutdowns, all that kind of stuff, and labor and stuff, you know, also all kinda causing, you know, disruptions across the board. You know, some of those things, you know, seem like, you know, they're sort of delaying production as opposed to losing production. Some of those things might also end up in kind of lost production as well. Can you just give a sense of, you know, how over the balance of the year, what strategies you guys are putting in place to make up, that delayed production, I suppose?
Yeah. For example, if you're looking at Rosemont open pit, where we had to hold up work to get to putting some catchment fences for some unstable ground. You know, we're getting to the bottom to the end of the Rosemont pit in certain areas. As a result, it's very tight in the space. Therefore, you know, if you get some loose rocks, it causes some, you know, things that you can deal with when you're much higher up in the sequence or you've got a much bigger floor, you can manage the risks differently. We had to pull back and put the fences in and make sure that they were adequate before we went back in.
Now, part of the reason that we're obviously sort of in that space is we're getting towards the end, so end of that pit and those areas. It's more of a medium-term timing issue rather than lost production on that front because we've just had to shuffle our production around. That's basically consistent with some of the other areas as well, which is, you know, a key reason why we're still holding firm on our guidance. These issues, you know, apart from maybe some of the transitional recon we've had as we passed through this transitional area up around Blenheim, the rest are all, you know, sort of timing. Even the transitional area, you know, the ounces that we've lost there because it was...
It's a highly variable zone. It's quite possible it could swing the other way, which is what we tend to see over time. We're not banking on that, but that's always a possibility. We just know that we gotta get through this ground, and then we'll be in the high-grade area as planned, which we have, you know, more confidence of because our experience tells us that you get this variability. You know, the bottom line is, yeah, we have seen movement around. Some of it's resulted in us having to change our timing on when we feed material in.
We're still confident that we're on top of those variations, and that we can still come in within our guidance range at Duketon and obviously at Tropicana as well, because we've held our corporate guidance. The key there is our recovery at Duketon, and we're still confident that we can come in on that in that range.
No worries. Thanks, Jim. Just a question on Tropicana which you touched on. You know, the drill and blast issues, you know, so it sounds like they're kind of, I guess, delaying the completion of that cutback and access to the ore that's underneath it. You said, I think, that FY 2022 production okay, but it might delay perhaps production growth that you'd been looking for in FY 2023. Is that kinda how I should interpret that?
Yeah, that's the potential. We think FY 2022, our current year is still fine. Obviously it's being monitored pretty carefully. We were up there last week looking at that and so we've sort of got pretty new information there. Certainly the potential impacts of a slower cutback at Havana, because that's a longer dated new production source, has an impact on when that comes on. But again, there's actions underway there and a recovery plan to get back on top of that. So at the moment we're watching that very carefully. You know, I guess to some extent we've got a you know, the unknown that's around is whether the COVID impacts will continue to cause a problem there. That's a bit of an unknown for us.
We know that the team on site and the contractor have been working to lift the performance. We have seen that performance of the drilling fleet and the overall material movement sort of lift back up to where we're needing it to go. It's not quite there yet, but it's on its way. We're still watching that carefully and not ready to make too much of a call on that negative impacts on that. It's just a risk that we're monitoring at the moment.
No worries. Thanks so much, Jim. Cheers.
Thank you. Your next question comes from Patrick Collier from Credit Suisse. Please go ahead.
Hi, Jim and John. Just two from me, please. First one just on the elevated turnover. Do you mind giving some sense of quantifying maybe what the turnover in the last quarter or so has looked like compared to the last year or two?
Yeah, sure. The industry generally runs when things are normal, you know, I don't know, probably somewhere between 20%-25%, maybe a little bit percent turnover. We've certainly seen, and some of our contractors have seen, and granted in some areas of the business, even in normal times, turnover, you know, can be much higher than that. We've seen, you know, elements of maybe 40%-50% turnover on an annualized basis in the last quarter in certain sections, not everywhere, but in certain areas. You know, truck drivers are hard to come by, the surface truck drivers, you know, and although, yeah, we know that our mining contractor has always had a strategy of taking on and training greenhorns. They always have an element there.
They've got an excellent training program that they run to keep themselves fed with the right type of operators. Where we have seen in some of our other contracting areas, you know, surface haulage, those truckies have been drawn off to other operations or other parts of the resources game, or they've just lost access to interstate drivers because you know, the border restrictions have just made it virtually impossible to fill. You know, yeah, normally we'd see turnover 20 to mid-25%. We've seen that step up in certain areas of our business to 40 or 50%. It's not just the turnover that's causing the issue, it's also the time to fill because skilled labor is scarce.
That means it just takes time to fill roles. You know, they are being filled, but it's taking time. That just adds to the issue.
Okay, sure. That's very clear. Thanks for the detail. Just secondly, on the drop in head grades at Moolart Well, just are you able to give a sense of how much of that is from the lower grades through that transitional versus just the processing of stockpiles?
Well, it's probably a combination of both because when you go through the transition, you know, if you're not getting the material that you want in terms of tons, then you go to your stockpile and you pull off your low-grade stockpile, which is what we've been doing. The other issue as you go through the transition, sometimes you mine through it and you find the grades are better or you get more tons than you planned. Other times the grade's not as good.
What we experienced during the September quarter was that we didn't get the same number of tons, and the grade that we did get was a little bit lower than what we were expecting, so we had to supplement the feed with more of the low grade. We sort of, you know, got the impacts from a couple of different sides. Exact proportions of that, look, I don't have the exact breakdown on that. Probably, you know, I reckon we probably lost 10%-20% of our ounces associated with that for the quarter at Moolart, but that's just an estimate.
Okay. No, that's great. Thanks very much.
Thank you. Your next question comes from Mat Collings from Morgans. Please go ahead. Pardon me, Matthew, you may have yourself on mute.
Sorry, I was double muted. Being cautious. I think everyone's ticked off most of the questions, so Jim and John. Garden Well, just a quick one on the Tooheys ore comment. It notes feed grades and recoveries were lower as higher grade Tooheys came in. Was the grade down because that's a recovery challenge, meant you put less Tooheys Well ore in than expected? Or was the grade of the Tooheys ore lower, and it was more complicated?
No, it was the former. We've got some carbonaceous material in that Tooheys Well feed, and the grade is a good grade. But it required more oxygen to get the recoveries that we were planning on. Rather than fritter it all away, we adjusted our schedules and fed low-grade material in while we got additional oxygen capacity to help deal with it. Once that additional capacity is commissioned, it should be running early in November. We'll see recoveries lift, and we'll also see the proportion of feed from Tooheys Well increase, which will deliver the better grade. The grades are fine from Tooheys. We just backed off because we weren't getting the recovery, and we didn't wanna lose the ounces.
Fair enough. That's very clear. On the COVID vaccinations, Dan, have you guys got a pretty good handle on the vaccination status of your staff and things as we get close to this 1 December deadline from the state government?
We've got a handle on it. You know, we've got a major program of educating people, collecting the data on how many people are vaccinated. You know, as with any population, a fair proportion is a bell curve here. Fair proportion are coming and telling us without asking. Others are telling us reluctantly. Others don't wanna tell us until closer to the date.
Yeah.
The point that we're emphasizing to our workforce is you need to get your first vaccine. If you haven't got it, you need to get your first vaccination now. Because if you wait until the first of December, there won't be enough time to get your second vaccination, which you have to have by the 31st of December. That's our drive, making sure that people are getting that message. You know, I think generally we've seen, you know, people, you know, quite frankly, people who decide not to vaccinate. This is the concern, sort of underlying around the industry. Is there generally a reasonable chunk of people who decide that they don't wanna be vaccinated?
Obviously they're making a conscious decision to leave the industry in general. I think generally people, we all think that number is very low, but pushing hard to get all those that may be reluctant, but you know, still, what's the word, resign themselves to doing it. We need to get them done quickly because they're at risk of not being available in early January because they just haven't. They're not in a position to get the second vaccination yet, which will be frustrating if we get there. You know, there's a. We're just pushing hard with the communication. You know, we know we've got, you know, over 50%, but, you know, capturing the data on people is a little bit more challenging.
We just drive it and keep requesting it and telling them where they are and pushing and cajoling them where we need to.
No worries. Thank you very much.
Thank you. Your next question comes from Daniel Morgan from Barrenjoey. Please go ahead.
Hi, Jim and team. I was wondering if you could just address a longer term question. Can you just reiterate how long you are looking to keep the open pits running? You know, how long can they keep filling the mills? You know, where does the ore come from? Also with a particular focus on the Duketon North mill. Thank you.
Well, look, our reserves that we have at Duketon are predominantly open pits. We're not talking about running out of open pits in a year or two. You know, our life there, albeit I think we've got a couple of years at Moolart or a year and a half or so at the back end of low-grade stockpiles being processed. We've got, you know, a good solid 4.5-5.5 years of life in the operation. We'll continue to be feeding in open pit material. The key is that the undergrounds allow us to maintain our total gold production because of the grades.
You know, I think it'll be quite a while yet before we are a pure underground producing operation. We, you know, as far as I can see out into the five- to seven-year profile, we'll continue to be a combination of surface and underground feed. And probably that's really the way we would wanna be. The undergrounds are great, but the surface, the pits give us the cornerstone of, you know, the base load of production. And the undergrounds are the cream on the top. You know, we don't see ourselves running out of open pit ore anytime within the next, you know, anticipated life, which is five- to 5.5 years of reserves and seven years of mining and processing.
Just your questions on guidance. I mean, you reiterated guidance today, but you said that there's some risks to that emanating from the external environment, i.e., you know, COVID and this vaccine issue as well. In your thinking, is there a time you're thinking about border reopenings that goes to your view? Or maybe another way of putting it is, you know, when do borders in WA need to open for you to meet your cost guidance? Or, you know, is that a risk if that's prolonged?
Yeah, well, you know, how long's a piece of string? The reality is that we've seen you know, these issues that we talk about at Duketon have been issues that we've struggled with and then got on top of at the Duketon operation. You know, if the border closures remain in place, you know, for another half a year, I can't quite quantify. There's a combination of issues here around COVID that we've, I think we're all grappling with. One, in part, is the border closure. I mean, you know, before the borders closed, hundreds and hundreds of workers in the resources industry in WA were flown in from the East Coast, particularly up in the big operations up north, and that's stopped. Clearly there's a labor shortfall.
We've had our company's had a number of people that have actually moved as part of the COVID impacts, and they live here in WA. All those that are, I think, are willing and able to move have moved, not too many more. You know, we've now got not many, but we've had a couple of people leave in the last quarter that just said they can't, you know, the restrictions are just causing them too much life grief, so they've resigned and gone back to the East Coast. Not huge numbers. But the piece that's the, you know. I think if it doesn't, we're managing it reasonably at the moment.
The piece that I guess I'm trying to emphasize is there is a little bit of an unknown around as to what the implications will be when the two things. One, the mandatory element of vaccinations gets locked down. You know, exactly do we know how many people are going to basically resign themselves to not working in the resources industry? We'd like to think that that number is low and very low. But you know, I guess we've gotta see what happens there.
The other element is, you know, what really will make a difference to, in general, manpower availability and the pressures that we're dealing with on things like labor rates as well, will be when the borders ease and the ability for our workforce to be as mobile as they were two years ago starts to come back. Now, the time, you know, there's clearly a path forward there. The state's working on vaccinations, but as we all can see, I think, and has probably been expressed, we're not gonna see much movement there until the new year. Exactly what that looks like and the timing, I don't know. I mean, it's gonna happen. You can see, you know, it, we know that it has to happen. It's the timing.
I guess what we're trying to do is just highlight the fact that it actually, it's just a risk to us and quite, you know, frankly, I would be surprised if there isn't people, you know, everybody in the industry is just cognizant of the risks that we're and the unknowns that have continued to float around, and we head into in the near term with this mandated requirement. Which by the way we support. We think it's important to protect our site and our people, particularly as borders open up. It just, you know, you manage one risk, and it creates another one that has to be managed as well.
Last question from me. I mean, I think this will be hard to answer, but I'd like to hear your perspectives on it. It's about the industry and, you know, I think there's a thought that border reopenings for WA and the rest of the country and internationally would lead to, you know, a drop in this cost inflation that the industry is experiencing. But just wondering if potentially people on the, you know, the East Coast and elsewhere maybe are reluctant to, you know, trust that these borders are gonna be open and they can do FIFO operations and things like that going forward.
Like, you know, can I ask about your perspectives on that and what engagement you might have had with the government to see situation normalize in, say, I don't know, late 2022 or that may enable FIFO to begin, or is there a risk to it not normalize?
I think, you know, there is engagement with government on this clearly at the representative element. Paul Everingham and the team at the CME have, as well as AMEC, are doing a lot of work representing the industry on this front. You know, what do I think is gonna happen? You know, what I'd like to think will happen is that, you know, whatever the definition of normality is, we return to it in the new year, in the first half of calendar 2022. You know, the actions that are being taken around Australia and more globally, but specifically within Australia, starts to give us the confidence that the country can deal with this issue.
You know, from a health management perspective and allows us to return to some semblance of normal operation in terms of intrastate mobility. You know, until that occurs, these pressures are gonna be on us. I'd like to think that that's gonna be dealt with and managed in the new year, you know, in the first half of next year. I'm not Nostradamus or a clairvoyant, so we just have to continue to engage. I don't think the government authorities are oblivious to the issues. We're just trying to manage this and everybody's just trying to manage it as best they can.
Thank you, Jim and team.
Thank you. Your next question comes from David Coates from Bell Potter Securities. Please go ahead.
Hi. Good day, guys. Yeah, I just had a follow-up, which was pretty much along those lines. I don't know if you have any additional comments you wanted to make about industry lobbying or representations to the government on how much pressures maybe they put on to open the borders up. You've made a few comments on that already.
Yeah. I mean, it's happening, clearly, and there's good discussion. You know, I think there's good relationships that are being worked on there. We just gotta work our way through this, period.
All right. Look, thanks very much, guys.
Thank you. Your next question comes from Peter O'Connor from Shaw and Partners. Please go ahead.
Can you just clarify the stamp duty comment you made in your opening remarks? What was the number, and what was the timing?
38.
The timing was?
The original estimate was 44, but we pulled it back to 30-38. We've submitted the necessary paperwork to the government. We've yet to hear back. We, you know, the timing's in their hands. Jon, we think it could be this number.
Yeah, that's right. I mean, the advice that we've had is that it may be towards the end of this year, but like Jim said, the timing is really up to the government there, Peter. We've certainly done everything we need to do in the timeframe that we needed it.
End of year, Jon, that's calendar?
Calendar, yeah.
Yeah. Okay. Got it. Jim, Tropicana, you talked on one of the early questions about you were on site there, I think you said just recently. How many times have you been on site? How many JV interactions have you had? And if you could sum it up in a word or a sentence, how's that going? And is it what you thought it would be or different?
We've been up to site a couple of times. Three times if you count the original DD view. We've had multiple interactions locally here in town with the management team, with Michael Holmes and his team. You know, I think the relationships are great, very open. You know, I think we've certainly been asking probably a lot more questions and, you know, getting into some of the detail that they may not have had with their prior JV partners. That's no surprise to them because we're new to the game and we're just pushing into things. You know, they've been very understanding of that and quite cooperative.
You know, what they're doing and what Tropicana is looking like in relation to, you know, what we thought we were buying into, we're very pleased with what we've seen. We like, you know, where there were no, I guess what's the word, no surprises on the downside that we've spotted. It's the potential for the long-term growth, which is really what Tropicana is about. You know, the getting back to this 450-500,000 ounce production for the next few years, that's underway. You know, as I said, the timing on that is really being driven hard by the team. Obviously COVID impact. You know, we're pretty.
In terms of what we've seen from Tropicana, we're happy, very happy with the relationship, very happy with the engagement, operationally and life of mine planning and where the opportunities lie and the results that we're getting from the diamond drilling. All of that is consistent, if not a little bit better than what we're anticipating. So overall, we're very pleased with the deal that we've done. We're very pleased to have it in our portfolio. You know, we look forward to continuing to deliver as to, you know, what we were expecting, plus a bit more.
Okay. Can I swing back to the vaccination because it's been a fascinating discussion, and thank you very much for being so open with your thoughts and comments. If I was to try and look at what are the critical dates, not just for you, but as an industry, is it this December one looming vax date then January one? Are they the two critical points where we have an, oh, shit moment and go, "Who's not coming back to work?
Well, they're the key dates. There's a lot of detail in the government directives that we still need to see and understand, and that will clarify things like ability for, you know, reasons for not getting vaccinated. Although, I think understandably we expect that to be pretty tight. The first date that we're all working to is the first of December, by which time, if you're visiting or going to a work site, you must have had your first shot. The next key date is that by the end of the thirty-first of December, i.e., the first of January, you must have had your second.
You know, there's obviously, as I said, there's usually a little bit more information in the detail of the directives as to how that works, and we haven't seen that yet. As I said, I understand that our groups with Paul Everingham at CME and AMEC are both working with the government, with the state to try and get that clarified so that we understand a bit more of the detail. At the end of the day, you know, if the way it's running at the moment, if somebody hasn't had their second vaccination shot by the first of January, they won't be able to travel to a mine site in WA. Full stop.
Have you, as a board, had thoughts or discussions about mandating vaccinations as a business risk mitigation?
We don't have to, Peter. It is mandated. It's a requirement of government for anybody that's going to a mine site must be vaccinated. It's not an option.
I was thinking more about your opportunity in the shorter term to make sure you're ahead of the curve. That was all.
We could mandate it from tomorrow, but then there's the practicalities that everybody has to deal with it. You can't say, "Tomorrow morning from 8:00 A.M., everybody must have it," because it takes time. You know, it's becoming a lot easier to get your vaccination shot. There's no doubt about that. I think we were talking yesterday that, you know, when you go to Bunnings now and get your sausage, you'll be able to get your shot at the same time. Just make sure you get onions with the right thing. You know, you can't. We've looked at it and said, it's a mandated obligation from the first of December, because that's what it is.
It really wasn't a decision that the board had to make.
That's all right. Now I understand. Thank you very much.
Yeah, no worries.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Beyer for closing remarks.
All right. Thanks, Darcy. Thanks, everybody, for joining us. Obviously a fair bit going on, and with this quarter, but we're certainly looking forward to getting on top of things. As I've outlined in there's a couple of exciting opportunities for further growth. You know, if we look beyond the end of our nose and into next year and the future, there's certainly some great things that continue to come on track for us. As always, if anybody's got any follow-ups, please drop us a line or give us a call and we'll be happy to, where we can, answer any queries. Thanks, Darcy.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.