Thank you for standing by, and welcome to St Barbara FY 2022 Q4 June quarterly report. All participants are in listen-only mode. There will be a question and answer session after the presentation. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Craig Jetson, Managing Director and CEO. Please go ahead.
Thank you for that, and good morning, everybody, and thank you for joining us on St Barbara's quarter four June FY 2022 quarterly report briefing. I'm pleased to join you on this call from Perth, the land of the Whadjuk and the Noongar people. Please note the disclaimers on slide two. As always, I would like to begin by recognizing the traditional landowners of the First Nations people on the lands of which St Barbara operates in Australia, Canada, and Papua New Guinea, and pay my respects to elders, past, present, and emerging. Moving on to safety. Always start with our safety performance. Safety remains our number one commitment right across the organization. One of our key challenges continues to be absenteeism and mitigation of increasing COVID-19 case numbers.
This is placing pressure on our maintenance and daily operations, including all of our contractors. With a TRIFR for FY 2022 of 3.4, there has been a slight improvement year-on-year. However, our TRIFR for quarter four highlights the importance of not becoming complacent, and we all know that we have a lot of work to do in this space. In terms of our key achievements, it's pleasing to present our quarter four results. Production at all our operations has been sustainably normalized through proactive and effective management. We have reached both production and cost guidance at all sites for the year, with a very strong financial final quarter and promising outlook and start to FY 2023. The performance of the last two quarters in particular demonstrate that our results are improving and are repeatable. I have now spent time on the ground across our business.
After the hiatus of COVID, this is clearly helping the team deliver better outcomes in all jurisdictions, including Nova Scotia's permitting and First Nations relationships. For St Barbara, one of the most noticeable impacts of COVID on our business was the inability for the executive and technical experts, both internal and consultants, to spend time on the ground supporting our business. Turning to the numbers. Group production was a solid result of 86,000 ounces of gold, up 40% on last quarter. Our focus on reducing costs has contributed to a decrease in all-in sustaining costs, being down 12% at AUD 2,007 per ounce, quarter-on-quarter. A stronger realized gold price, combined with higher production, has delivered a 25% increase in cash to AUD 99 million. To note, this is after spending AUD 28 million on replacing the DSTP,
Simberi being non-operational or adding gold production for at least six months, and funding for the AUD 34 million of acquisitions such as Kin Mining and Nova Scotia Gold. We now have an aspirational target of AUD 10 million in cost reductions through the consolidation of our corporate functions to Perth. We are announcing an inaugural ore resource of Old South Gwalia, which is adding a further 1.9 million tons of resource at 3.7 grams per ton. This will add a further mining fronts and significantly shallower depths at Gwalia and help with more optionality at these lower depths. St Barbara is under strategic review. It's pleasing that multiple parties are interested, which is a testament to the strong value of this operation and the sulfide project. These quarter results also highlight the value St Barbara can add.
Our organic approach and our strategic approach in developing the Leonora Province has given us the opportunity to think about Atlantic in a similar way with a holistic Province Plan approach. This thinking will drive organic and inorganic growth across the business continuity for many years, creating further value. Our province strategy is very visible and is working. The quarter results demonstrate this. Our strategy for Leonora has been to stabilize and then improve operations, do more development, fill the mill while we progress our Leonora Province Plan. Gold production for both quarter-on-quarter, year-on-year, in fact, is up 25%. For the quarter, this was due to our ability to access stopes previously blocked by the seismic event at Leonora in November 2021.
For the year, this was driven by increased ore milled due to management's decision to remove historical waste and opening up additional mine headings some 12-18 months ago. Ore mined for the quarter was slightly down, driven by the availability of maintainers and operators, primarily due to COVID. It lagged in the last quarter, productivity for four new jumbo drills has resulted in development increasing by 25-26%. Looking back at the full year, tons milled. For the last four years, this has seen an increase of 58% from 652,000 tons in FY 2019/2020 to 1.1 million tons in FY 2022. This significant increase in mill performance shows us delivering on our strategy to fill the mill through more effective management at Gwalia. The productivity increase is an operating strategy. It's not driven by capital.
The Leonora Province Plan is well underway. Our acquisition of Bardoc certainly supports this. The Bardoc assets have been promptly assimilated into our business, with Zoroastrian on track for first production in the next 12 months. Management have identified the commissioning strategy that enables Bardoc to be brought online six months earlier than initially thought. This strengthens our position to fill the mill much sooner. Under St Barbara. St Barbara has returned to full production and has had a great quarter. The year has been impacted by the DSTP replacement, followed by the outbreak of COVID that everybody can remember in February of 2019. However, quarter four shows that we can still deliver. I have spent considerable time on the ground in St Barbara.
The new ideas generated at the time with a highly motivated team there has led to better mine and mill productivity, better maintenance processes, and better availability and equipment reliability is certainly improving. We have achieved higher levels of production in Simberi . Roadblocks have been removed, and the operation is delivering above expectation. This has been an enabler for senior management, consultants, technical experts, being on the ground for the first time in two years to help the site management team and the operational team. Management expects improvements that have been rolled out at Simberi over this time to continue through to FY 2023, based on the quarter four results. In terms of the strategic review, discussions remain ongoing but are confidential, but I am pleased that there are multiple parties in the data room.
This quarter's results show that it is possible to operate and how it is possible to operate Simberi and grow Simberi . Looking at the Sulphide project, this extends mine life by greater than 10 years, has a strong NPV, and creating enormous value. Notwithstanding, there have been price increases and scope changes. We'll still work through those issues. It's a strong project and attractive to many companies. In terms of Atlantic, access to high-grade ore was possible following the removal of in-pit waste, which drove a 64% increase in gold production. I personally met with Premier Tim Houston of Nova Scotia. Premier Houston has been supportive of a more collaborative approach. We are working together and have already dealt with some of the permitting backlogs. For example, we can now submit multiple permits at any one time.
In this quarter, two delayed permits have already been approved the ammonia treatment plant and the clay cutback. We are confident that the new approach will secure the tailings lift permit mid-August, delivering business continuity for the rest of this financial year. The approach we're taking in Canada flows on from Leonora Province Plan strategy. The potential of our province approach in Western Australia has been recognized across the sector and will transfer well into an approach similar in Canada. The two extended trips I have made to Atlantic this year, I have been able to forge relationships not only with government, but also including the First Nations and the Premier himself. I'm heading off there again soon to continue building these relationships and looking forward to meeting with the Premier and the First Nations people once again. We are committed to the current plan at Atlantic.
Lift the current tailings wall and providing tailings capacity for the rest of the financial year. Finish mining the Touquoy Pit by the end of this calendar year. Process stockpile ore for the next two years while Beaver Dam is being permitted and constructed. Secure the in-pit tailings permit to enable tailings capacity for the remainder of the operations, and also deliver the EIS approval for Beaver Dam in quarter four FY 2023. With COVID and other roadblocks, it's taken time, but we now have a pathway. I'm on the ground supporting the Atlantic team quite often, and this is delivering the outcomes that we need. Our Leonora Province Plan strategy places Leonora as essential to any consolidation in our view. St Barbara has the largest mineral resource and ore reserves in the Leonora region.
Near-term growth from Old South Gwalia, new mines such as Zoroastrian and Aphrodite, with Zoroastrian production within the next 12 months. We have a large land holding that grew significantly this year with the acquisition of Bardoc, which delivers on our province strategy. We are also cash flow positive with AUD 177 million from Leonora this year. We can fund our growth projects organically. Our focus on Gwalia and Leonora Province is generating early rewards with expansion of reserves and resource and extending St Barbara's footprint across the region. Our Province Plan thinking is seeing undeveloped opportunities in the region, beginning to approach us for future development. That's very exciting. We have over 122 million tons of ore to be processed containing 10.5 million ounces of gold.
This represents decades of potential growth and sustainable production, all expandable at low cost. The hardest thing about gold mining is finding the gold, and we're certainly doing that, and we already have plenty of it, and it's growing. The first two mines to be developed in the near future will be Zoroastrian and Aphrodite mines, which we acquired this financial year. Bardoc assets have been promptly assimilated into our business. These two mines will not only fill the current 1.4 million ton mill capacity, but also the system expanded 2.1 mill capacity justification. This will lift the amount of material processed at the Leonora plant from 650,000 tons we did back in 2019/20 to 2.1 million tons by FY26 with minimal capital spend. Zoroastrian will be in production in 12 months' time.
This is six months ahead of our original schedule. We're expected to be delivering 300,000 tons per year on an average of three grams per ton to our mill. The ore body is open in all directions. We have plans to commence drilling as soon as possible. We have been investigating the possibility of starting some of the resource extension drilling from the surface. Originally, we thought the old open pit would make this too difficult, but our technical team has done some great work and have found locations where we can safely set up surface drills and commence this work early. Gwalia is almost 130 years old, yet we're still finding new resources.
The inaugural resource and the announcement today for Old Gwalia South adds a further 1.9 million tons of resources at an average grade of 3.7 grams per ton. This is an area between 600-1,000 meters below surface, much shallower than the depths that we're currently seeing ore transported today. Over the coming quarters, we will continue to find the rest of the ore body that looks like it may extend to the surface. In the September quarter, we are targeting the inaugural Tower Hill open pit reserve, followed up in the March 2023 quarter with the inaugural Harbour Lights open pit ore reserve. Again, this is very exciting for us. We may have the largest ore reserves in the region already, but we are keen to continue to add to our high-quality portfolio.
In terms of exploration, our exploration teams are keen to commence drilling on extensive land holdings, which came with the Bardoc acquisition. 25 priority targets have already been identified in these new areas. We are chasing high-grade deposits and have plans to drill 22,000 meters through FY 2023. In terms of plant expansion, I believe we are in an enviable position of being able to expand our processing plant at very low cost. With a modest investment, we will increase the processing capacity by up to 50%. With improvements at Gwalia, the new mines in Zoroastrian and Aphrodite, we'll be in a position to immediately fill the mill. Established infrastructure with processing capacity available today at low cost, future expansions significantly differentiates us from all the others in the province of where we operate.
I think this table clearly articulates the central region of consolidation and where we are. Our current rate of processing would take us 87 years to process all the material. Accelerating the delivery of high-quality resources that we have in our portfolio would deliver outstanding value to our shareholders. This quarter and the second half of FY 2022 demonstrate the transformation is underway. We are delivering on uplifts one and two, and three, which is our growth strategy. This quarterly performance is an indicator of our future and the Leonora Province Plan maturing. Atlantic's potential to be transformed in a similar province approach and a strategic review is underway, will also create significant and deliver significant value to St Barbara. Our Leonora Province Plan demonstrates that we have the largest mineral resource and reserves in the Leonora region. Continual near-term growth, including Old South Gwalia.
A new high-grade mine in Zoroastrian on track to commence production in the next 12 months. A large and exciting land holding, we believe, that offers the best opportunity to find high-grade additions to our leading portfolio. A low-cost new expansion and the ability to fund these exciting projects and growth projects through our own cash flow. Production is up. Per ounce is stable. Cost per ounce is stable. Some work to do to improve our safety performance. All in all, a solid quarter that reveals our potential and confirms our ability to achieve it. With that now, I will open up all the lines for questions that people may have. Thank you for joining me. Open for questions.
Thank you. If you would like to ask a question, please press star one on your telephone and wait for your name to be announced. If you'd like to cancel your request, please press star two. If you are on a speaker phone, please pick up the handset to ask your question. Your first question comes from Reg Spencer of Canaccord. Please go ahead.
Thanks. Good morning, Craig and team. Thanks for the presentation this morning. My first question's on FY 2023 guidance. At your last update to the market, you flagged that you would provide an FY 2023 outlook at the quarterly. Should we read anything into the delay of the provision of FY 2023 guidance until your results next month? You know, I don't wanna speculate. Obviously, with strategic reviews underway at Simberi, but could we read into, you know, that might mean there's a pending asset transaction, or I was just wondering if you'd help me out here.
Yeah. Look, Reg, really good call out. I think the main driver is clearly the strategic review of Simberi is number one. Also what may affect this more so than that, to be honest, would be the permitting of the tailings facility in Nova Scotia. As you would know, we need that, I guess, to be able to finish the Touquoy Pit.
Yep.
It's about a week to two weeks away before doing that. If I set guidance for the business now and something happened, I'm quite positive we'll get the lift given what's happening at Nova Scotia now. That's not really my major concern. My major concern is setting guidance and then two weeks later, if that permit doesn't come through, have to reset guidance again. We will do it in two to three weeks from now when the full year results are done.
Understood. That makes a lot of sense. Thanks, Craig. My next question is just about general industry cost pressures. Obviously you've pointed to lower grades at Leonora or at Gwalia next year. You also highlighted that you might look to suffer from some labor availability issues next financial year as well. Are you starting to see any indications of any alleviation of these inflationary or labor issue pressures? Are you hearing any anecdotes from any of your suppliers or contractors? You know, are we currently going through the worst of this and are things starting to get better?
Look, Reg, I'd like to be optimistic and say absolutely, but I can't. I'm not seeing the labor pressures any different than they were, you know, in previous quarters. What I'm seeing is we're managing the cases much better, and we're preparing and planning much better because of what we've learned over the last 18 months and the systems and standards that we've put in place. I'm not seeing an influx of labor from the east to the west, for example, now that the borders are opened up. What I am seeing is increasing cases here in the west creating significant issues for us in our operations in Western Australia. But what I think we've been able to manage around and get through, but it's certainly not where we need to be.
We're not running the equipment anywhere near capacity because of that, and I don't see that changing in the very near future as much as we try.
Thanks. Craig, does that mean that we should probably expect, when you bring out your guidance, obviously pending an outcome at Atlantic, that to be probably more on the conservative side given those?
Look.
Given those headwinds?
Look, I think it'll be on an achievable side. I don't think it's conservative. I think we'll set guidance as we know it. We've obviously gone through our yearly budgets internally, and we'll set guidance on the back of those. Our budgets are certainly taking into consideration all aspects of COVID impacts and what we may think may happen in the future, and we're planning for those. I think if you look at the grade drop, but if you also look at the productivity improvements that you're seeing at Gwalia, even with the issues we've had in the last quarter and the quarter before with COVID, the productivity increases and the ore to the surface, for example, has been significantly growing even with all those headwinds.
If it was ever one day where we had everything manned and all the development completed and our meters drilled that we would like, everything was really lining up, just shows you how good that asset could be. Guidance will be achievable and, it'll be based on the budget and the mine plans that we've currently got internally.
Thanks. One last question, if I can. Simberi' s strategic review, what would you say would be the replacement cost of the mining and processing infrastructure on the island today? And does that feed into your consideration on any asset transaction and what you guys might think is an acceptable price for that asset if there was a firm bid?
Yeah, look, absolutely. The first thing I think, Reg, to point out, there are multiple people interested in the asset, so that's great. It just shows you that people understand how much value Simberi the mine of today and the current operation can deliver, but also the strength of the Sulphide project. Yeah, it's got cost pressures and there's been scope changes. There's been all sorts of increases. The fact of the matter is very strong NPV and people in the data room now are certainly seeing that. In terms of value, I'm not prepared to go into what I believe the value of the asset would be. That would be probably not the right thing for me to say. It will not be a fire sale.
It'll be a strategic decision once we understand if there is a sale or if there is another way to be able to, deliver on the Sulfide project other than fully St Barbara owned. This is a strategic review. It's not a fire sale.
Yep.
Is it for sale? Everything is, right, at the right price. We'll have a look at all options available to us once people do their work in the data room and we do more work ourselves.
Understood. Thanks very much, Craig. Appreciate it. I'll pass it on.
Thanks, Reg.
Thank you. Your next question comes from Alex Barclay of RBC. Please go ahead.
Thanks. Morning, Craig. Looking through the briefing book, you've well highlighted the long resource life at Leonora out to 87 years. At 2.1 million tons per annum, that's still gonna be a more than healthy life as well. Would you think about expanding that capacity, you know, quite a bit above 2.1 million tons per annum at some point? Alternatively, is there a combination with some additional milling capacity in the region that via M&A could come about?
I think you're absolutely on point. What you've seen us talk about today is our province and where we're going short term to medium term. I think in the longer term, and I touched on it a little bit in the regional consolidation, there is significant opportunity in the Leonora region to be able to bank all their reserves and resources much sooner than we've got in our pipelines at the moment. The answer to your question, given the infrastructure that we have at Leo is central or the hub to all things growth, in my view, in the province. We could absolutely consolidate further, build further, expand further because the infrastructure is already there, and combining some of those assets makes absolute sense given the reserves and the resources that's available to everybody.
Okay. Was there a PFS update probably coming out Q1? Is that when we might learn a bit more about that?
We'll certainly learn a bit more about what we're doing. Tower Hill, Harbour Lights, in particular, the expansion greater than 2.1, potentially. What we find with Zoroastrian, with the drilling and what that might open up an extension of life of mine there, hopefully with Aphrodite and Zoroastrian on board. Look, there will be changes for the better going forward. I think the baseline of where we are today is exactly that. It is a baseline for potential growth.
A quick one on Simberi. Recovery was pretty good in the quarter, up to 77%, despite some lower head grade. Is that sort of an above average blend percentage of oxide ore? Should we expect good recovery going into FY 2023?
Yeah, we're gonna get mixed recoveries towards the second half. We have got a robust mine plan now that gives us a very solid result for FY 2023 that I'll talk about when I set out our guidance. I think for me, the production throughput in quarter four is normal. That's what we should be expecting quarter-on-quarter. Now, there's going to be quarters of mill shuts like, we'll have to do a mill relining or if we have a mill failure, whatever the headwinds are may slow us down. A normalized quarter with the operations running stable, that quarter four performance, in my view, would be a normal quarter.
Okay, great. Thanks very much for that, Craig.
Thank you. Once again, if you would like to register for a question, please press star one on your phone and wait for your name to be announced. Your next question comes from Jeffrey Cranfield of Rover Investments. Please go ahead.
Thank you. Good morning, Craig. Congratulations on a great turnaround. Good results. As you know, my comments and questions come more from a shareholder's point of view rather than an analyst point of view. Look, probably the first and most pressing concerns. We do have serious concerns regarding what we've been reading and what's been reported in the media more so than anything regarding merger talks with Genesis.
We see this as just a ridiculous thing, a merger of equals, you know, St Barbara shareholders have taken a fair bit of pain with, you know, as a lot of shareholders and gold mining companies in Australia have, with share prices being beaten down. Are you able to? Quite frankly, we don't have a lot of confidence in the board of St Barbara to negotiate following a series of bad decisions, going back to the way that Atlantic was purchased, basically relying on the due diligence report's lack or lack of relying on what Atlantic Gold had told them.
Are you able to tell us anything about where those talks might be, or if they are ongoing, or if they've been ceased?
Well, Jeff, let me start by saying it's great to have a shareholder dial in and ask some questions, and I really appreciate you taking the time out today to do that. I think there's probably many hours to be able to answer your questions effectively. Let me start with, I think the Atlantic purchase. Look, I've spent significant amount of time at Atlantic this year now. Now that COVID's gone, I've been up with the team, as I've stated in the release today. I've met with the Premier, met with the Minister, Halman, who's the Minister for Environment and his team and everybody else. I think, for the first time, I can actually say everybody's working together to achieve a business continuity outcome for the Atlantic assets.
The acquisition of the assets are still strong in my view. They are good mines, they are good operations once developed, and they'll certainly deliver good NPV and good cash once permitted. The headwinds have been the permits up until now, not the asset purchase, not the assets themselves. In actual fact, Touquoy has been a very good cash generator over the last three to four years and the last two and a half, three years since St Barbara's owned it. That in itself has been producing safe, reliable cash. Unfortunately, it's running out of life of mine now and running down, and we'll be into low-grade stockpiles. It still has a couple of permitting headwinds.
What I will say, working very closely with the government, having the executive team, including myself, being able to be on the ground now, working with the team, working with government, working with the regulators, we've been able to achieve two approvals in the last month or so, which gives me courage that the process that we've put in place that's been cooperative with the government, working together for business continuity, we'll get the other permits in time. I think that business over time will be developed into the cash machine that was first envisaged during the acquisition. The gold is still in the ground. It's gone nowhere. We will get it. We will permit it. We will move on. It's just this hiatus between how long does it take and when can we do that?
We are getting closer to be able to nail that and realize the benefit. I think the acquisition itself was very, very sound. Obviously not here at the time, but on the ground looking at it has the potential to be a very, very good business once permitted. There are some strategies to be had, and I won't talk about that in this call, but there are some changes potentially in strategy in how we operate, what we commission first. We'll do all that work in the internal washing machine and come out with the best strategy we can once we've got the permits in place. In terms of the talks, there's a lot of chatter in the market. Is there ever?
I do take on board your comment about the pain that the shareholders have endured, particularly over the last, what, three and a half years and more so in my time in the last two and a half years. That's been for a lot of reasons, not one single reason. I won't go into the backlog of excuses. When people start to see and other business leaders start to see the opportunity that Leonora would provide as a centralized hub, a lot of people start talking. A lot of people want us. A lot of people approach me about, is there business continuity opportunities between us? Is there synergies between us? Absolutely. In terms of Genesis, yep. I've spoken to them and talks are continuing.
I'm not ruling out any business opportunity at this point in time. What it will do is make good sense and create value to the current shareholder proposition, shareholder value, and to our business. It won't be a reckless change or consolidation, if at all, any. There are other opportunities of the Bardoc in the region as well. As I've said today in today's call, people now are coming to me, asking me about their business opportunity, what they've got and the synergies that they could bring to Leonora. It's great that we are the center of attention in terms of value creation. I'd rather people be saying, "Gee, I wouldn't mind a piece of Gwalia or I'd like a piece of that Province Plan.
I wanna be part of that" than "Don't do that. I don't want anywhere near where they are." We've got the right strategy. We've certainly got the right endowment. We're talking to the right people, not just one group of people. We're talking to multiple groups. That's what business development do. Andrew Strelein, the chief development officer, is doing a great job in that space, talking to multiple parties on a whole range of different opportunities. Which one we land on, Jeff? Not decided, no decisions, but we'll certainly do everything we can to support the growth and the value of our share price.
Yeah. Okay. Look, thanks, Craig. Look, appreciate the acquisition of Bardoc. And as you say, it's going ahead of plan. Extremely positive, and you know, other consolidations in the area would be great. You know, we do have concerns with Genesis, but anyway, look, thanks very much for that explanation, and we look forward to St Barbara, you know, really making some positive moves from here on in. Thank you.
Yeah. Thank you, Jeff. It's great to get your feedback and the questions that really bother the shareholders. You know, as I said, we've delivered two quarters now. One, two quarters that are very solid, one in particular. Just watch this space, and we'll keep delivering. Thank you.
Great. Thanks.
Thank you. Your next question comes from Peter O'Connor of Shaw and Partners. Please go ahead.
Good morning, Craig. Your energy and enthusiasm is clearly noted today, and the presentation was very well-rounded and a great narrative, so thank you. First question's on Gwalia and the Leonora hub. Just a free milling ore opportunity, Craig. So within that expansion to 1.4 and then to 2.1, and I note on slide 16, you do add the Albion component as well. How long can you free mill with what you've got at higher rates before you need to take that extra step?
Yeah, look, as soon as I guess we get Zoroastrian on, that goes a long way to filling the current 1.4 million tons. We really need the mill expansion over the next 18 months, close to that, to be able to accept, you know, up to 2.1 million tons from Aphrodite or even beyond in our view. I think, you know, the Albion timing on that, we'll put out a lot more information at the full year to give people an idea of where the capital cash is going to flow and on what project on the timing. We could, and we will, and we plan to put Aphrodite material with Zoroastrian and with Gwalia.
This will hurt our recovery somewhat, but it's still good business to be able to mix them if the Albion expansion plan is not ready. Really, we need the Albion plant and one other mine other than Aphrodite online at the same time to maximize the benefit from the Albion circuit, and we're still working through that. Again, as I said, we're, you know, Tower Hill and Harbour Lights. We'll talk a lot more about where they fit in the scheme of that, which will tie into the Albion expansion at the same time at the full year result.
Okay. Switching to Simberi. The data room, can you give any more detail about the point at which you're in the process? Are you at non-binding stages, binding stages? When you talk about the parties involved, are we thinking multi, geographically located parties, not just from China? Also, are we thinking about operators that are currently in the PNG or looking to get into PNG or both?
Yeah, look, there are operators in PNG that are interested for sure. There are operators in Australia that are certainly interested in PNG as well, and people like myself have got plenty of PNG experience are interested. There's a significant shift in mining in PNG at the moment, with quite a few assets being reviewed or in strategic reviews or just blatantly up for sale. That's an interesting field at this point in time. The thing that we're looking for, this is not a fire sale to remove Simberi. This is a strategic review of what's the best outcome to achieve the Sulphide project. If that's not with St Barbara, then who's it with? Let's look and see who's interested.
The other part would be, you know, we're not going to sell it just to anybody. There's a lot of reasons for that. You know, we have values of operating in PNG, and that's going to be a significant important piece to whoever's successful if we do go into a sales agreement of how they would operate in PNG. Past experience in PNG would be another one. Our St Barbara values would be a third one. There's quite a bit of, I guess, non-financial thinking going into that. What I have to say at this point in time, there's nothing binding at all. People are having a look in the data room that are interested in purchasing.
Thanks, Craig.
Thank you. Your next question comes from Matt Graham of Credit Suisse. Please go ahead.
Thanks. Good morning, Craig. If I could just ask on Atlantic, so sounds like you've been there a fair bit, and also from your comment sheet, sounds like things are sort of on the permitting side, stepping up a bit. I guess, just with the benefit of hindsight here the last few years, you know, being on the ground there, what do you get the sense has caused all these delays? I appreciate this is always an issue with this industry on the permitting side, but what's your sense? Was this more a bureaucratic issue or was it a St Barbara personnel issue in Canada?
Yeah, look, certainly a combination of both, Matt. Let me say, we are not squeaky clean in everything that we do. In hindsight, whatever, we could have done things much differently. One of the stark surprises that I got was when I went to the Premier's building, not his office on the first day, on the second day, sorry, but the first day when I went to his building. That even though COVID restrictions had lifted, and I'm going to blame COVID a little bit here, but over 80% of Nova Scotian government was still not back at work. I found that incredible.
Of course, the frustration for me, buried in Australia, not being able to get out, and most of the time buried in my house in Queensland, not being able to get out, getting the frustrating emails, the lack of response and whatever. I now understand why when people are actually not at work. Government people work in significant teams supporting each other. Without those people being able to do the inspections on the ground, the face-to-face meetings, the technical challenges, being able to resource the technical people just stalled all applications of many different types. It made the whole process dysfunctional.
For two years, we've been in this dysfunctional state of not being able to work together on the ground, in the office or anywhere to be able to deliver, you know, significant projects in a timely manner. People were not making decisions. On our side, we certainly struggled with, you know, technical drilling, geotech drilling. We struggled with all sorts of different technical people not traveling, not being able to bring in technical experts from other jurisdictions in mining to help us answer the questions, whether it be from an information request, some of the IRs, whatever it was. It was really a combination of many different fronts of inability to be able to continue growth or continue development or continue business processes.
It was really about can we survive of what we've got today? Can we support the sites to safely deliver gold ounces? That's where the focus was. All things permitting, all things government, all things outside the mine just stalled and stopped. It's only just opening up now. It's great to see the recovery plan. Now, we've got a change of government in Nova Scotia as well. I'd have to say that, Premier Houston is certainly across business development and growth, very encouraging in terms of what St Barbara want to do and need to do, and very supportive. The teams that we've put together now that sit together on a weekly basis to go through the permitting together, have been able to backlog two permits that have been in the abyss all through COVID.
with that, I think that's why I'm really confident to be able to get our tailings dam raise permit in 2-3 weeks from now. that should fall due at the time when I'm actually back in Nova Scotia for my next trip. as you can see, I'm spending a lot of time developing those processes and relationships with government, but also the First Nations. yeah, I'm a little bit more confident now about the asset that we have.
That's great. Thanks, Greg. I guess, you know, we've seen, you know, similar stories here in Australia on the permitting during COVID. I guess there's not a huge amount of mining in Nova Scotia, so hopefully the backlog isn't too bad. If we take the view here that you don't get your tailings permits in time and you're forced to wind down operations there, and of course this is the worst-case scenario, but what could that look like on care and maintenance? Is this a case of wind down, keep the labor pool on the payroll until you get, I guess, get the permits and also, you know, some Beaver Dam permits in place and then look to restart?
Could you look at a more extended period of care and maintenance if you're about to go through a capital-heavy spend at Leonora? I'm just trying to get my head around what that could look like. Also just to add to that, once you do get these permits, does that trigger a timeline as to when you first have to start mining?
I'll start with the last question first. If we got the permits, then we'd be in development Beaver Dam. If the Beaver Dam, for example, we're still probably 18 months away from getting that permitted. 12 months I would hope. Now the actual construction of Beaver Dam is very simple, and it's very short in terms of cutback and delivering ore, it's very shallow, so it's not gonna take a long period of time. The day that I got the permit, providing First Nations were okay in that part of the permitting process, I would actually start mining or start the cutback. That's okay. Now the
I guess the elephant in the room is about what to do with Atlantic Operations if we don't get the tailings dam lift and we don't get follow-up within the next 12 months. The in-pit tailings solution, what do we do? We've looked at internally many different scenarios, as you would expect our planning to do that. One is a genuine care and maintenance. You have a minimal team. You have basically a cold team making sure that the asset is kept in a state that's acceptable. And you...
All I would run at that time would be the permitting team to make sure our permit sequences were continuing on and probably some engineering at the same time, making sure we don't fall behind on the development, further development of Beaver Dam and Fifteen Mile Stream and of course Cochrane Hill. A bit of engineering. We've costed that. We've costed that to be very, very cheap. It's probably in the order of about AUD 1 million a month to keep that on complete cold care and maintenance, but still keep the continuity of permitting and construction of Beaver Dam, Fifteen Mile Stream in train. It's not a lot of cash outlay to put it on care and maintenance. The issue will be is.
This is where I talk to the government quite a lot, is we've got a couple of years of processing low-grade stockpiles that puts the operation, it still puts the operation in the black from a St Barbara perspective. It still makes some free cash. It also keeps a lot of the, not the mining team, but the processing team, and some of the mining team employed for the next two years as well. The last thing we wanna be doing is be laying off people and then in 18 months' time trying to restart up again with no one.
If we've got the business continuity, and what that means is the tailings dam lift and the input tailings, we can process for two years low-grade stockpile, be profitable doing that, and by that stage have the dam permitted and have it cut back and delivering ore as an option. I think the second part of what I've just played out for now is my preferred option, but we're looking at, you know, all three. Now of course, if you go into care and maintenance, then it's. We've completed the thinking and we've looked at the plans if you might wanna stay down until you get business continuity, not just to finish, and you wouldn't finish low-grade stockpiles.
You would look at, well, do we stay on care and maintenance until we've fully permitted Beaver Dam, Fifteen Mile Stream, or one or the other and bring them on together. You know, the thinking is multi-faceted. I'm just trying to give you the thought that we're looking in the future. We've got some scenarios mapped out, and we could execute any of those. What our holy grail is now, in 3-4 weeks time, get the permit for the tailings lift and move on.
Thanks, Craig. I appreciate all the context as always. That's it from me. Yeah, all the best getting the permit through.
Thanks, Matt.
Thank you. Your next question comes from Andrew Bowler of Macquarie. Please go ahead.
G'day, Craig. I think you've certainly answered all my questions on Atlantic. Just circling back to Gwalia, obviously in the quarterly, you talk about the grade decline over this year. I assume that's talking about the Gwalia Deeps grade. Can you just give us a little bit more clarity on a longer term Deeps grade outlook? Is it at the end of this financial year, we'll be exiting at roughly that sort of 5.1 gram per ton Gwalia Deeps grade, or will there still be some lumpiness in the next couple of years in that ore coming out from the deeps of Gwalia? Cheers.
Yeah, Andrew, grade is a interesting beast at Gwalia. We are going to take a dip in grade for the next couple of years, at least. Post two years, it does jump back up a little bit. As you know, as we go deeper, in theory, the ore body knowledge we have at the moment would suggest that as we go deeper, the grade drops off. Now, I've already criticized myself by saying in a couple of years, it jumps back up a little. Not back anywhere near I'd like, but it does pop back up again. In terms of life of mine grade, we're going to have to reset that at some stage.
It's not going to be, you know, the 6.5 grams per ton that's been in the market for 2-3 years. It's going to be much reduced, and we're finding that as we get deeper. As of this year, you know, it will be in the fives, no doubt.
I guess just expanding on that grade question, I mean, obviously the old Gwalia resource update, you know, resource grade a bit lower than what that deeps grade is. But obviously, you know, cheaper to mine as well. Is that? Will you be looking to convert into reserves a fair amount of that resource, or is there sort of a high grade core you can chase to sort of, you know, keep as close as you can with dilution to that resource grade?
No. Look, that decision hasn't been made yet, and the team will come out with their reserves and resource statements and will elaborate and expand on that further shortly. But I think the whole issue of grade at Gwalia. We need to do some more extension drilling. We need to do a lot more development, and we certainly need more grade definition drilling as well. So there's a lot of activity to be able to answer that question, Andrew, with any sort of accuracy from me at this point in time. I think the technical people are in a better position to make that assumption, and I'll certainly talk about it at the half, at the full year.
No worries. That's all from me, Craig. Thanks very much.
Thanks, Andrew.
Your next question comes from David Radclyffe from Global Mining Research. Please go ahead.
Hi. Good morning, Craig and team. A lot of questions have been answered, so just a couple of quick ones then. Just coming back to the new resource on South Gwalia. You do talk about that you're still sort of working that up, and I guess you see upside both up and down, sort of plunge there. Just trying to understand the potential scale of this. If I look at the section in the presentation, it does look like the main resource catches the bulk of the tonnage potential. Is that a fair assessment? You sort of look at it, and you see there's a bit of upside, but it would be unlikely to double, or is that maybe that diagram a bit deceptive?
Yeah. There's certainly upside, but I wouldn't call it double.
All right. Thanks. Just maybe a follow-up one. I mean, you're talking about business continuity and the like. I mean, given what's happening with the corporate office, you know, you're cutting and relocating that at a time when there's so much going on in the business, how's that going? And are you actually able to find you can fill the key roles that you need to in WA, given this market where everyone says that it's very hard to find people?
Yes. Certainly, what we're seeing is our ability to be able to do that. We've got it in a plan. We're still working through what critical and key roles need to be and can be relocated. Our people in Melbourne in key positions will be offered the opportunity to relocate, and some people are very keen to do that. Most are not, which is fine. We're also not replacing some of the roles and people that are leaving, and we're working through that. The fact of the matter is, if I look at, you know, the future St Barbara without a Simberi.
And then I have two provinces, Atlantic and potentially Atlantic Gold as a province, and Leonora in the west. If I was managing 70% of my assets, 80% of my assets here at Leo, which takes up most of the management and the support and the corporate time, I would want them here in the West. We're doing that. From a technical perspective, the office here won't be full of Melbourne people, full of equivalent roles. What we're doing is making sure that everything that we can do at the site is done at the site by the site people. Anything from governance, risk, capital, all other and technical is supported here in Perth.
We're asking the sites to be more owners of their business unit than having corporate buildings full of transactional people, if that makes sense. At the same time, looking at our own operating model because you know, the executive operating model will change over time as the business matures, as the business changes, as the business focus certainly changes. It is time for St Barbara's always had two offices. There's been an office here in Perth for a long period of time. To have the executive here, to have the major technical hub, the risk management processes, the finances, all here, makes perfect sense. The duplication or the extra in Melbourne is probably outdated now. There are flexible work. There are working from home.
There's all sorts of ways to achieve the Melbourne office closure that we're currently working through. Now, we're getting back to our people in the end of October, November, to talk about the next steps. The office may cease sometime in calendar next year.
All right. Brilliant, Craig. Thanks a lot. I'll pass it on.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Jetson for closing remarks.
Okay. Thank you to everybody for your interest in dialing in today. Some great questions. It's great to see shareholders dialing in and asking some difficult questions as well, so I really do appreciate that. I just want to recap by saying the management team are delivering on the strategy that we put out on 2020. It's been a difficult couple of years with COVID, whatever it is. If you look at the last half, the last quarter in particular, very strong results. I just wanna reach out and thank the team, my team in particular, for delivering that on behalf of the shareholders. Thank everybody for your interest today in dialing in. It's much appreciated. Thank you.
That does conclude our conference for today. Thank you for participating. You may now disconnect.