Thank you for standing by, and welcome to the St Barbara briefing on FY 2022 full year results. 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 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 very much, Sarah. Good morning, everybody, and thank you for joining me on St Barbara full year 2022 annual results presentation. On the call with me today are all members of the executive team and co-presenting with me today is Mr. Lucas Welsh, our Chief Financial Officer. Moving on to slide two. What I will ask you to take note of the disclaimers and at your own leisure, please read what the disclaimer page has to offer. As always, I'd like to recognize the traditional landowners and the First Nations people of the lands of which St Barbara operates in Australia, Canada and Papua New Guinea, and pay my respects to their elders past, present, and emerging. Safety remains our number one commitment, with zero fatalities and life-changing injuries always being our target.
One of our key challenges in FY 2022 has been and continues to be absenteeism and mitigation of increasing COVID-19 numbers. Absenteeism increasing the risk of short crews trying to deliver output of full crews with perceived pressures to do so. This is not the St Barbara safety way and is managed very carefully, placing our people safety and well-being first. Along with labor shortages in general, this is placing pressure on maintenance and daily operations, including that of our contractors.
With the TRIFR of FY 2022 at 3.4 injuries per million man-hours worked, there has been a slight year-on-year improvement. However, the TRIFR performance of quarter four increase highlights the importance of not becoming complacent. We delivered a strong production and financial results in quarter four and are doubling down on ensuring safety remains top of mind. Without a doubt, FY 2022 has been a challenging year.
Headwinds include the replacing of the DSTP at Simberi, which suspended production for over seven months, shortly followed by a COVID outbreak on the island, extending the period even further. We had a seismic event which created a large rockfall at Gwalia, which forced the change in mine plan. Pleasingly, as we had invested in developing additional headings underground over the last two years, we were able to continue producing and delivered a very solid performance and a strong cash flow for the business.
In Canada, we had to contend with extreme weather events and permitting issues that delayed access to high-grade ore. Our engagement in Canada has begun to bear fruit with recent permitting successes. The operational teams have delivered a strong cash positive outcome, at the same time as advancing engineering studies associated with Beaver Dam and Fifteen Mile Stream.
Despite all of these issues, as a group, we were able to produce 281,000 ounces at an all-in sustaining cost of AUD 1,848 per ounce, which yielded an underlying profit of AUD 24 million. Our net operational cash contribution was AUD 77 million. For us, the standout achievement for the year was successful acquisition and integration of the Bardoc Gold Limited. We have been able to accelerate the development of the first mine, Zoroastrian , with the first ore now expected in Q1 FY 2024. We now begin to study Aphrodite in more detail in preparation for early production at that operation as well. The acquisition, along with organic growth in the Leonora Province, has delivered an additional 3.6 million ounces to our mineral resource.
Our balance sheet is strong and ended the year at AUD 99 million of cash in the bank. The last quarter saw a strong finish to the year. Of note, we had a net positive operating cash flow for the year, even with Simberi offline for more than half of it and further operational disruption due to COVID. All our operations are now in production, which has allowed us to start focusing on cost reductions for this year, a difficult task in a high inflation environment. Guidance for the next year sees Leonora declining due to low-grade section of the ore body. I will shortly take you through what's happening with our grade profile at Leonora. At Leonora this year, we started to deliver our strategy to fill the mill while simultaneously lifting our performance, Gwalia, as a single mine.
Productivity increases in the mill and the mine are operating strategy driven. They are not capital. The acquisition of Bardoc Gold Limited gave us access to advance Jerash and Aphrodite underground at province. We have increased our landholdings in the province by approximately 70%, increased our mineral resource by over 3 million ounces of gold. Later in this presentation, I will go through the Leonora Province Plan in some further detail. This next graph clearly demonstrates the glory days of Gwalia producing 12 grams per ton are a thing of the past. Not to forget the current grade, although 50% lower than those of the years gone, this operation and the surrounding province has become the envy of our peers. You can see the mine grade of Gwalia has gradually declined over time.
For the next two years, we are expecting all-mine at Gwalia to be above reserve grade. When combined with lower grade ore purchases, mineralized waste, and lower grade stockpiles, the combined ore mill grade falls to around 5.1 grams per ton. Still high grade compared to our peers, but nonetheless has dropped. To address this, we have deployed multiple strategies to increase ore to the mill. We source third-party ore. We've acquired Bardoc expediting production out of Zoroastrian to keep the mill full sooner and in the future for expanded periods of time. This is also enhanced by increased ore mined from Gwalia underground. As you will know, that required a full turnaround, which we now need to continue with and to be sustainable into the future. Up until two years ago, Gwalia Deep was in bad shape.
There was only a single mining front and four headings. There was a decline in mining performance, limited by haulage capacity to the surface due to historical waste that conflicted with ore. Ore tons to the surface and development drilling were way behind due to the amount of stored waste and production performance, preventing access to stopes to drill in. Poor drilling performance also added to that problem. These low development meters are significant for future years, and we are still in catch-up mode today. This limited both future production and our ability to respond to underground seismic events. In FY 2021, for example, we started removing the waste and increasing development. In doing so, we curtailed production somewhat.
This is now beginning to set up the mine for future years, or be slower than one would like as we balance the business performance versus the ideal mine state. In September 2020, we had a fall of ground, if you remember, which materially constrained production and our ability to meet guidance for that year. Despite these setbacks, we persisted and managed to clear the historical waste through FY 2021. Notwithstanding the second fall of ground in November 2021, we were still able to achieve guidance in this year because we invested in the developing of multiple mining fronts. This is how important development drilling is for the reliable delivery of ore and waste to the surface being in balance.
In FY 2022, we achieved 859,000 tons of ore to the surface, and we are targeting 1.1 million in FY 2023 as we progress to filling the mill. Production and productivity has increased by approximately 40% over this time, with the ounces significantly affected, unfortunately, by lower grade. In FY 2023, we need to continue to focus on balancing development and production to ensure a viable, sustainable year-on-year approach for Gwalia. The availability of skilled labor remains a challenge for the industry in Western Australia, including ourselves, as we are not immune to these industry trends. We are working closely with our mining contract partner, Macmahon, to attract and return critical talent needed to maintain our underground operations and development.
Macmahon have been very supportive and part of our strategy, but clearly in an industry that struggles with experienced people, a number of people. With the challenges Macmahon have delivered throughout the year, but with significant pressures given the current market conditions. That is certainly at risk for 2023 and certainly a major risk. At Gwalia, we have further work ahead of us to achieve optimal performance. People will remain one of the biggest risks to achieve our plans.
This is a combination of trade shortages and specialized operators. On the mining front, further mine flexibility is required by way of more headings. This can only be delivered by development drilling, removing waste in balance with sending ore to the surface. While doing this, we carefully balance improvements against maintaining steady cash stream for the company. This balance is a focus that we are committed to achieving.
As I said earlier, production at Atlantic was restricted by severe weather in quarter three and delays obtaining waste rock storage permits. COVID and other roadblocks has meant it's taken time to deliver our business continuity plans, but we now have a pathway forward. In April, I was able to get to Nova Scotia for the first time since joining St Barbara. While there, I met with the Premier of Nova Scotia, Mr. Tim Houston.
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 once. We have since attained two delayed permits. The ammonia treatment plant and the permit for clay cutback has now been achieved. Importantly, three weeks ago, we secured the tailings lift permit, delivering business continuity for the rest of FY 2023.
Two weeks ago, our application to remain grandfathered under the existing permitting process of CEAA 2012 was granted for Beaver Dam and Fifteen Mile Stream. This has ensured that all our permitting and engineering done to date remains valid and we can progress as planned. We expect that permitting for Cochrane Hill will be permitted under the new regulations of IAA 2019. In the coming year, we will finish mining at Touquoy Pit, after which we will process stockpiles for approximately two years while Beaver Dam is being permitted and constructed. We are confident that we can secure the in-pit tailing permit to enabling tailings capacity for the remainder of the operations. The EIS approval for Beaver Dam remains on track for quarter four in FY 2023. The approach we are taking in Canada flows from the Leonora Province Plan.
The potential of the province approach in Western Australia will transfer to Canada. Both provinces are based around developing multiple ore bodies in regions which are substantial opportunities for growth. As in Western Australia, we hold extreme land holdings in Nova Scotia and believe we can continue to build on our strong resource base. In the two extended trips I've had to Atlantic this year, supported by our President, Americas, Meryl Jones, I've been able to forge relationships with the government, including the Premier and his cabinet, as well as the First Nations people. There is much more to do in this space, and it is not underestimated. I am heading off there again very soon to work with our Atlantic team to continue building on these relationships. As I said earlier, Simberi has returned to full production.
This year was disrupted by the DSTP replacement, followed by an outbreak of COVID-19 in February. However, the quarter four production performance shows what this site can deliver. Roadblocks have been removed, and the operation delivering is above current expectation. This has been enabled by senior management, including myself, consultants, technical experts, being on the ground for the first time in two years to assist the site. The new ideas generated with our highly motivated team at site has led to a better mine and mill productivity and maintenance process with availability of equipment slightly but surely improving.
Management expects the improvements delivered at Simberi in quarter four to continue through FY 2023. In terms of strategic review, discussions remain ongoing and are confidential, but I am pleased that there are multiple parties in the data room. The permit for the Sulphide Project was received a few weeks ago.
This project extends mining life for more than 10 years. The project has a strong NPV. It creates enormous value, notwithstanding that there have been price increases and scope changes. It's a strong project and attractive to many other companies. Before I hand over to Lucas to go through the financial results, I wanted to highlight some of the preliminary work the business has been driving in sustainability space. In 2020, we announced the 2030 and 2050 carbon intensity targets, and we recently completed a study of opportunities for greenhouse gas emissions reduction. The study concluded that Leonora was the best place to focus our efforts to reduce carbon emissions, given its long life and mining permit certainty. This slide articulates how we are thinking about achieving our targets as we set out.
In February 2022, we commenced a PFS at Leonora and focused on the installation of solar and wind power to offset gas usage, and we expect to complete that within the FY 2022 calendar year. We are proud that our decarbonization process is driven by switching to renewable energy rather than offset schemes. More of this to come in the future, I'm sure. With that, I will now pass over to Lucas to talk about our financial results and performance for the year. Over to you, Lucas.
Yeah, thanks, Craig. I'll start by looking at the key financial highlights for FY 2022. Note that everything on this slide is underlying, with the difference between statutory loss and underlying profit largely due to the non-cash impairment, which I'll touch upon in a moment. The impact of operating headwinds in FY 2022, as Craig has just outlined, has of course flown through our financials as well. Underlying profitability and cash generation was down year-on-year at a consolidated level. The underlying EBITDA was AUD 197 million, down 34% on last year. Now, this result reflects the lower operating performance compared with prior year, mainly from Simberi, with the DSTP down for half the year, and Atlantic impacted by the severe weather, waste rock permit delays and the lower grade.
The EBITDA margin for the group remained healthy at 29%, and the underlying net profit after tax was AUD 24 million. The result was lower than last year and driven by reduced production across the group and higher costs, mainly at Simberi and Atlantic. I do note that the statutory net loss after tax was AUD 161 million. As I mentioned before, the difference between the statutory and underlying is largely the non-cash impairment. But Note 3 to the year-end accounts provides a detailed breakdown of all significant items and an explanation of each item. Cash flow from operating activities was AUD 88 million, as we continue to generate cash from our operations despite the cost headwinds and Simberi being offline for half the year.
At 30 June, the cash position was AUD 99 million, with interest-bearing debt, excluding right of use asset lease liabilities of AUD 163 million, comprising mainly the AUD 139 million syndicated debt facility and AUD 19 million for finance leases. As Craig noted, in terms of NPAT, Leonora had a good year, which is reflected in its profitability compared with prior year. This was offset by the operational issues at Atlantic and Simberi as already discussed. Just a quick note, the increase in income tax expense here, compared with prior year is largely driven by the increased profitability at Leonora. Now, looking at the Atlantic carrying value, as we had flagged recently, we knew it was likely we'd book an impairment in relation to Atlantic's carrying value.
Although we have recently had some success with two permits, including the tailings lift permit recently and confirmation remains on the CEAA 2012 permitting process, the Beaver Dam and Fifteen Mile Stream. The historical delays we have experienced have driven some of the reevaluation, as noted in the graph. Other things impacting the impairment on Atlantic are the revision of the Touquoy resource model, which we disclosed back in February. And clearly with COVID and impacts we're seeing as an industry through cost inflation and supply constraints and so on, this has had an impact on estimated future costs for the projects, both the CapEx and OpEx. As a result, we've recognized AUD 159 million non-cash after-tax impairment.
Breaking down the current carrying value, the operations value of AUD 353 million represents the future cash flows from all our current plant operations, including Touquoy, Beaver Dam, Fifteen Mile Stream, and Cochrane Hill. As Craig mentioned before, we also hold an extensive land package across Nova Scotia, which we value at AUD 110 million, which includes the recent NS Gold acquisition. Now, this underpins the prospectivity in the region, which we'll take into consideration in our Atlantic Province plan strategy. The cash flow Leonora is clearly the standout here owing to its strong production results. The 61 million of growth CapEx was mainly spent at Simberi and related to the DSTP pipeline and the feasibility studies for the Sulphide project.
At Leonora, growth spend related mainly to capital projects for the underground mine, the tailings storage facility, and the project feasibility work associated with the Leonora Province Plan. At Atlantic, growth spend was for studies associated with the development projects of Beaver Dam, Fifteen Mile Stream, and Cochrane Hill. The exploration spend there was focused mainly on Leonora and Atlantic. As noted, during the year, we paid last year's dividends, which amounted to AUD 13 million cash outflow. As people are aware, we spent AUD 31 million on the purchase of Kin Mining shares, the acquisition of NS Gold, and costs associated with the acquisition of Bardoc. These outflows was offset by the sale of our Duketon investment.
In the first half of the year, we drew down AUD 50 million on the Australian tranche of our syndicated debt facility to prudently manage our cash flow and working capital. The other AUD 9 million in the graph was drawdowns on finance lease facilities. Turning now to the balance sheet and net debt position. We finished the year with cash of AUD 99 million, giving a net debt position of AUD 64 million, excluding right-of-use asset lease liabilities. Total interest-bearing liabilities, excluding those right-of-use asset lease liabilities, was AUD 163 million, which includes AUD 139 million outstanding on syndicated debt facility net of costs. In relation to that debt facility, syndicated debt facility, we have drawn down CAD 80 million of the CAD 100 million Canadian tranche and AUD 50 million of the AUD 200 million Australian tranche.
That leaves us with just over AUD 170 million equivalent available to be drawn. During the year, we also extended the maturity of this facility out to July 2025. With that, I'll hand the presentation back to Craig.
That's great. Thank you, for that, Lucas. Turning back to our province plan. Clearly, at Leonora in particular, our Leonora Province Plan strategically places Leonora central to any regional consolidation. This is an enviable position that St Barbara finds itself in with an exciting future and many possibilities to increase our value to our shareholders. We're also cash flow positive at Leonora this year at AUD 172 million in cash contributions after sustaining capital and growth CapEx. This gives us confidence that we can fund our growth projects organically. With the expansion of reserves and resources and extending St Barbara's footprint across the region, our focus on Gwalia and the Leonora Province Plan is generating early rewards. Our Leonora Province Plan strategy is seeing undeveloped opportunities in the region beginning to approach us for future development.
This is at a time when the industry performance in general across our sector is in decline. St Barbara Limited is growing and becoming the gold business of the future, in particular, essential to regional consolidation and being the envy of most and the interest to everybody. We have over 122 million tons of ore to be processed containing 10.5 million ounces of gold. With the productive mill certainly centrally located in the province, our vast resource base represents decades of potential growth, sustainable production, and strong cash flow generation, all expandable at low cost. I previously mentioned the hardest thing about gold mining is finding the gold, and we already have plenty of it, and it's growing. Our acquisition of Bardoc assets has given us access to two high-grade mines were already permitted.
Through this acquisition, we have added 3 million ounces of additional mineral resources to our portfolio and access to a significant landholding as well. Our Leonora Province Plan identified the opportunity to rail to our processing plant, which nobody else saw. By rail, the new St Barbara assets are about 180 kilometers away. They are daily trains, and there are daily trains that pass by the operations every day that are empty.
The board's ambition to fill the mill back in 2019 and 2020 is being realized and has a life of its own with a flight plan to be delivered. This in itself is a whole company transformation. Zoroastrian will be in production within 12 months time or less, six months ahead of our original schedule. We have all but finalized the underground decline location, and engineering is progressing very well.
We expect it to be delivering approximately 300,000 tons in the first year of production at an average of 3 grams per ton to our mill. While on the topic of resource extension, we increased resources early in the year from Tower Hill. By challenging the railway line status, that we are able to modify our approach to the way that we intend to mine Tower Hill. We are now confident in our ability to move the railway line, and it enables us to mine Tower Hill as an open pit rather than an expensive underground mine. Ultimately, this drives a 600,000-ounce increase to its resource base, adding 15.5 million tons of material to be milled. Furthermore, in September quarter this year, we are targeting the release of an inaugural ore reserve for the Tower Hill open pit.
We also have Old South Gwalia. One of my first visits to Gwalia, I challenged the inherent assumption that new reserves could only be found at depth. This led to a review of the shallows at Gwalia. As a result, the inaugural resource was announced in the fourth quarter report for Old South Gwalia, adding a further 1.9 million tons of resources and an average of 3.7 grams per ton. This is the area between 600 and 1,000 meters below surface, far shallower than the current 1,800 meters below surface that we are mining at the deeps at this point in time. We are working hard to develop a new mining front at Gwalia, improving production flexibility to improve mining rates. As you can see from this slide, we have plenty of growth in front of us.
Over the coming quarters, we will continue to define the rest of Old South Gwalia ore body as it looks like it extends close to the surface. We are targeting the announcement of the inaugural Tower Hill open pit ore reserve in the upcoming September quarter as a stretch. This will be followed up in the March quarter, 2023 with the inaugural Harbor Lights open pit ore reserves. We also have a very large land package holding in the province comprising of some 475 sq km. There are 25 priority targets in this package known so far, which have been identified as high potential areas and new areas. We are chasing high-grade deposits through these areas and have plans to drill 22,000 meters in FY 2023.
We have a lot of gold in the ground and a lot of ore that we need to mine and process. We are in the enviable position of being able to expand our processing plant at a very low cost. With moderate investment that will increase the processing capacity by 50%. With improvements at Gwalia, along with the new mines, Zoroastrian and Aphrodite will be able to immediately fill the mill. We had always planned to install equipment capable of treating refractory ore at Harbour Lights production. The Aphrodite deposit complements this approach, giving us access to additional 6.7 million tons of refractory ore. The ability to process refractory ore will be unique to the Leonora processing plant within a 200 km radius.
We think this will provide many new opportunities for acquisition and discovery, opportunities which are of limited interest and value to other companies. Established infrastructure, processing capacity available today at low cost, high returning future expansions differentiate us from others in the province. These next two tables clearly articulate why we are central to the regional consolidation. At our current rate of processing, it would take 87 years to process the material we have. With this feed and gold available, we continue to look at creative, low cost ways to increase production capacity. Accelerating the delivery of high-quality resources we have in our portfolio will deliver value for our shareholders much sooner. Of course, it begs the question, is the expansion to 2.1 million tons per annum actually enough?
We are studying the possibility and the economics of adding further milling capacity into the mix, and we look forward to updating the market as these studies mature. Not only are our resources large, we also have 12 years of reserves at high grade. This underpins strong operational cash flow for the next decade. In terms of our strategy, I'd like to leave you today with a couple of key messages. It has been a tough year, but we are now showing progress at all our sites. We are delivering our Leonora Province Plan, which has strongly positioned us for regional consolidation. We have the largest mineral resource and ore reserves in the Leonora region. Near term growth, including Old South Gwalia, Tower Hill and Harbour Lights, soon to be realized.
A new high-grade mine in Zoroastrian on track to commence production in the next 12 months that will enable us to fill the mill of our 1.4 million ton rates as we have it today. We also have the ability for a low cost mill expansion. The ability to fund these exciting growth projects from our own cash flow. Let's not forget, Leonora generated AUD 172 million cash contribution after sustaining capital and growth capital this year. A year of unprecedented headwinds due to COVID-19, supply and labor shortages and inflation. Our engagement with both the federal and provincial governments in Canada is delivering as we continue to progress with our permits. Our province plans have always been about maximizing our shareholder values. The future of Leonora and Atlantic will be delivered from these plans.
Simberi finished the year very strongly, back in full production with cost decreasing. We are looking forward to progressing the strategic review. With that, I'll now pass back to Sarah and open up the call for any questions that people may have. Thank you very much. Sarah, over to you.
Thank you, Mr. Jetson. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speaker phone, please pick up a handset to ask your question. Your first question comes from Alex Barkley from RBC. Please go ahead.
Thanks, Craig and Lucas. Thanks for putting in your presentation on the Atlantic asset value reduction to AUD 463 million. Just wondering how that reconciles to the carrying asset and equity value in your financials, because that number is a bit different to both of them. Thanks.
Yeah, certainly. Yes. Lucas, I'll refer to you for that.
Sorry, Alex, when you're saying the current value, you're talking from our segment now, are you?
Yeah, that's right. The 463 doesn't match your asset or the equity value.
One of the things that we're looking at the carrying value. When we recognize the acquisition of Atlantic Gold back in for accounting back in FY 2020, with the mineral rights asset that was generated, there was a very large deferred tax liability that was recognized as well. When you net that off with the value of the mineral rights, that's what gets us down to that AUD 600, AUD 400 million.
Okay. On the Simberi asset value, I noticed that one's up AUD 100 million. Is that around the Sulphide Project? I mean, is that the change or the new absolute level in any way indicative of what you might be hoping for in the sale process?
No. Really the main change in the asset base in Simberi is obviously the reestablishment of the DSTP. There was also quite a bit of waste stripping that was done during the year. That's a capitalization of that waste stripping. They're probably the two main movers there.
Okay. I think the CapEx number was a bit lower, though. Was it like AUD 50 million or something? Is it just the
Yeah, that's right. Sorry, Alex. We also, through the inventory with obviously shipping and everything else closing down, did order a bit more in terms of consumables to make sure we were covered in case there were, you know, any shortages or any shipping disruptions.
Okay. The last accounting one. On the Building Brilliance operating cost, I do appreciate it's dropped this financial year. Why have you called that an extraordinary item rather than capitalize that cost? Is this sort of the last financial year we should be expecting that?
Really, in terms of calling that out as a significant item, this is really just consistency with the prior disclosure, where last year it was, you know, AUD 20 million. It's really just consistent with that. Probably as we see going forward next year, this will just be normal operating costs for us.
What was that expense this year?
I think in the significant notes, we had about AUD 3 million of that off the top of my head, and there was probably about another AUD 1 million that we expensed just as operating.
Yeah. Okay. All right. Thanks for that, guys.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Andrew Bowler from Macquarie. Please go ahead.
Good day, gents. This is a couple from my side. First, just on Gwalia, you just comment that you're expecting a bit of a slow start to the year with grade improving in the second and third quarters. I was just wondering if you could just give us a rough first half, second half production split for that asset, or is that grade tonnage we're talking about the Gwalia underground itself and it's sort of smoothed out by those ore purchases you talked about earlier?
Andrew, there's a few, I guess, moving pieces to that particular question. One is if the production profile is always going to be a soft start for the first quarter. We've certainly struggled with, I guess, the trend of shortage of labor, shortage of technical people around maintenance and experienced operators, which also affect us. We'd always planned on a slow and soft start for the quarter and ramping up for the next three quarters to get back on track. That was in our plan, and we certainly see that unfolding. The grade, I guess, stays constant for most of the year. It does pick up in year two as we go through and transition through this particular sequence of the ore body.
That will be short-lived. I guess clearly with the lower grade material being fed to the mill from ore purchases and tolling material and stockpiles being lower, lowers the head grade. Of course, the grade dropping off by itself. There's been quite a few headwinds that we've got into our plan that we're currently dealing with. You know, it's still producing some very strong cash position and very good operational results. The productivity of the mine is actually up 40% from a couple of years ago, which is great, but that's clearly offset by grade.
No worries. But you can't give us a rough first half, second half split, just so we can get a quantum of that? That lower grade in the first quarter, or is that something you will find out at the quarterly call?
Yeah, look, I'd rather keep that to the quarterly, because, you know, we're only halfway through the first quarter at this point in time, so it would be remiss of me to take a guess. I'll give you a number, 'cause as soon as I do, that's something that will materially change the way that the world works. Look, I think we've got a few headwinds to combat. We've predicted a slow start. It will be. We're certainly on track to deliver what we said we're going to extract with some upside, and levers will pull during the year.
I think the health of the mine at this point in time, with multiple headings, different mining fronts, with Gwalia, shallows coming online hopefully later in the year, you know, we've got a very robust and good outlook. We just make sure that we continue looking after the asset, keep making sure we do the development drilling, removing the waste, getting the right balance of ore to the surface for a good business outcome as well. It's a little bit slower than we'd like for the first couple of years, but we have certainly made headway into that for a reliable business going forward, and we'll sustain and maintain that. We're going to have soft quarters, there's no doubt.
Every quarter, you know, unfortunately, as you would know, Andrew, we're not going to give a guidance and then divide it by four, whatever the quarters are. We will have soft quarters, and we'll have better ones. We'll certainly work through that.
No, thanks for that. Just the last one from me, just referring to slide 14, just talking about your planned reduction in carbon intensity. I just noticed on that slide, there's no mention there. I don't think I can see from Simberi at all. I was wondering if that does include the outlook, including Simberi, and if it does, what might that look like if you do happen to reach an agreement on the disposal of Simberi?
Yeah. Look, Simberi is an interesting one in terms of what we're talking about here because it's so difficult to achieve. I mean, if I look at the overall business outcome for St Barbara allowing all of our targets, achieving our targets, Leonora is the standout investment opportunity to be able to achieve those. As I said during the deck presentation, it's a standout because of its permit certainty, long life and the investment that goes along with that. Also, it lends itself to building a solar power and wind generating facility, which is not an offset program. It's actually generally replacing the gas that we would use. Simberi is a very difficult one because nothing from the technology perspective at this point in time actually fits there.
You know, we have got some work going on in Atlantic in this space that's achieving some good early results. While the strategic review is on, while clearly the feasibility study shows that Leonora is the best place for investment, that's where we'll concentrate at this point in time.
No worries. That chart does include Simberi for the time being. I think from what your commentary, it's fair to say on a carbon intensity basis, it's probably higher than Atlantic and Gwalia?
Yeah, Andrew, it's way higher, absolutely. Because, you know, with respect to everything that goes to that island is shipped in, including all the diesel, all the power, and then we have to generate it, then we have to rectify it, then we have to distribute it. It's a very power expensive, intensive operation. Unfortunately, things like solar and, you know, plenty of sunlight and plenty of heat, but there's also way too much cloud to make solar all that viable. We've done the studies and had a look at it, but at this point in time, we won't be going there with it.
No, it sounds like another benefit of the disposal. Thanks very much. That's all from me, gents.
Thank you. Your next question comes from David Radclyffe from Global Mining Research. Please go ahead.
Oh, hi. Good morning, Craig and team. My question just is looking at Tower Hill, and maybe if you could expand a little bit on just where your current thoughts lie as that as a potential open pit when you think about resizing the mill for the future of Gwalia. Appreciate you working on a reserve, but is there any color you can provide about your current thoughts about, you know, what the lead time might be given that you've got to dewater that pit, volumes, and if maybe you can produce for a period without needing to maybe move that nearby infrastructure?
Yeah, sure. I think there's a wider picture to look at, not just in silo because if I look at the reason we acquired Zoroastrian and Aphrodite is to short-term fill the mill as soon as we possibly could. Because when I look at things like Tower Hill, Harbor Lights, Gwalia, Shallows, et cetera, not so much the Shallows as such, but certainly Tower Hill and Harbor Lights, there's permitting to go through. There's mine design to go through. There's a rail that needs to be removed and an intermodal system that needs to be built and constructed in conjunction with many different bodies of people, including government, local and state in WA.
It's a journey to get to those development opportunities, and the sequencing of that will be just in time, if you like. We're not going out and spending, you know, money on studies, although we're doing the engineering work, and we're doing what we need to do in preparation for pre-feasibility, if you like. We've got a really good pathway forward now to fill the mill to 1.4 and potentially 2.1. It's really then the sequential timeline of when do we actually need Tower Hill, Harbour Lights to come online is what we're working through.
I suspect it's possibly up to another three years from now, as a stretch to be able to have all those pieces put together to where we're deconstrained and have both Tower Hill and Harbor Lights online. At the same time as we've got refractory material coming out of, I guess, the Bardoc assets that we purchased as well with Aphrodite. It's really in the balance and it's sequencing everything to keep the mill full, for as long as we possibly can.
Okay, great. Thanks for that. I'll pass it on.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone. Your next question comes from Stuart McKinnon from The West Australian. Please go ahead.
Oh, g'day, Craig. Just a query on the talks with Genesis Minerals. I think the last thing you've announced on that is that, yeah, talks are ongoing. I know since then, there has been a bit of a backlash from key shareholders over those talks and what the, you know, a potential merger might look like. Can we assume that those talks are now off or have certainly cooled since your last announcement on that, or are they ongoing?
Yeah, look, I'll start by saying that they're certainly ongoing. I mean, there's no reason to call opportunity discussions down, and there's certainly no reason to look to stop looking at potential growth, different strategies, consolidation, whatever it is. I've been saying since joining St Barbara, consolidation in the province, which was certainly the board's vision, and the ability to do that over time was sensible and a sensible thing to do. I'm certainly open to that. Genesis is not the only group of people that I've been talking to and Andrew and the business development team have been talking to. I mean, we talk to many different parties, many different people, and we put all the pieces together from our perspective, and then we pursue what's the best for our shareholders in return.
Keeping in mind, the board strategy of three years ago was to fill the mill. Certainly, part of that strategy is coming to fruition with Aphrodite and Gerastra in particular. There is clearly now St Barbara has become the jewel in the crown in the province, and this is. That's my language. The fact of the matter is, we are the hub of that province that's got a lot of opportunity to grow, the infrastructure to grow, and I guess, drive integration and consolidation across the group. What that looks like at the end of the day, you've got to have a bit of courage, and you've got to have some vision. We are open to talking to anybody.
I'm not shy from saying the Genesis discussions at times are ongoing, along with other discussions as well. There is more than one train in this station that we need to make sure that we're analyzing, we're getting the right view as we do our diligence and go through our business development thinking, our strategy to grow in the province. I'm not suggesting for a moment that conversations have stopped.
Okay, thanks, Craig.
Thank you. Your next question comes from Peter O'Connor from Shaw and Partners. Please go ahead.
Good morning, Craig. Good morning, Lucas. Craig, to the last question, how many trains are in this station? How many platforms does it have? How many parties are out there?
Peter, I think there would be four or five that are genuinely contenders, to be honest, in terms of consolidation in our priority, I guess I wouldn't consolidate bits and pieces just for the sake of consolidation. I think if you're gonna be transformational, you have to back yourself, and you have to do a lot of work with a lot of different parties. I think there's three-four real opportunities that sit on the table that we're analyzing, we talk to people about. One of the things that I think is great for St Barbara's perspective, one, the board's vision of two-three years ago to fill the mill as best we possibly could, as soon as we possibly could.
That is such a shareholder value contribution that we will pursue with rigor. The second part of that is giving our situation and where we are. We're now becoming clearly an interest to a lot of people because of the phone calls we get, the conversations that we have. We're also the envy of a lot of businesses as well to have what we've got in our portfolio. What we need to do now is to maximize that benefit with the best consolidation that makes sense at the time. We will certainly do that. We won't be rushed into these things, but we will make strategic decisions and it will be to the benefit of our shareholders going forward.
Quite excitingly, there are as we grow as a business, as people understand the Province Plan thinking, fill the mill thinking of a couple of years ago, people are getting really interested in the value proposition that St Barbara currently has. What we need to do now is join the dots and start delivering against those flight plans and strategies.
Craig, to St Barbara, I know you talked about confidential process, but can you give us a sense of the timeline, where you are at in that timeline? Is it just at data gathering stage? Are there site visits underway? Are we at non-binding bids? Could you give us a sense how this is playing out and how long it could play out for?
Yeah, Peter, it's good. They're reasonably well advanced. The business development team, led by Andrew, has certainly been working hard in this space along with other areas of development for the company. I'd have to say it's well advanced. There has been site visits. There are multiple people that are credible, and I mean that in the right sense, in the data room looking. A lot of great questions have been asked because of the level of interest. You know, it's not a fire sale. It's not something that we're offloading and walking away from at any cost.
It's a strategic play to be able to make sure that that mine continues on with a life for the next 10-12 years under the Sulphide Project, and does so very, very well, and does in a way that fits the St Barbara values in terms of operating in that country. Pleasing to say, there are some really good operators in there looking at it in that interest. Not a fire sale. Won't be overnight, but it won't be a drawn-out process either because it's well advanced at this point.
If I was to say that, given recent transactions in the sector, this is an FY 2023 closure deal or completion either way, given where we're at this part of the year.
If I understand the question correctly, Peter, yeah, I think so for sure.
Okay. Can I ask you about resources, Craig? In the Leonora area, you talked about the refractory mill being the only one within 200 km when you do that update.
Yeah.
What proportion, broadly speaking, across the Leonora district within that 200 K radius is refractory versus free mill? Just to get a sense for the option that you've got there.
Yeah. Look, I think there's a significant more that could come into the portfolio if we successfully negotiated our way through and navigated our way through to get our hands on them. I think there are other resources out there that won't be developed because the standalone, they don't really support building another mill and building another processing plant. There are enough mills in the region now for good consolidation. There's enough processing capability to be able to do that. If we consolidate it in the right way, then that opens up a whole range of different flexibility in terms of the way you could operate, what gets fed to what mill and what goes where.
I believe there's two or three more refractory ore sources to be had, and I think there are more in the pipeline as people realize that now they can transport their ore to one of many mills post further consolidation. I think that's still emerging of exactly how much is out there. Given what we have with Aphrodite and already what's in our portfolio, we've got a significant holding on refractory material enough to just well and truly justify a plant expansion to be able to accommodate for that. What I am keeping my eye on and the business development team are keeping an eye on is what else is in front of us that we could bring into the portfolio as well.
In terms of resources in the Leonora area and exploration spend, are you just looking at resource-to-reserve conversion, given you've got such a long tail or should that money be actually put into BD?
There is a balance for sure. I think I'm clearly excited about the acquisition of the Bardoc assets because of the amount of ground that come with that and the high potential and high identified targets that have been identified, rated high by our geology group and our exploration team. I'm keen to focus some drilling in that area. At the same time, we believe some extension drilling on particularly Gwalia Shallows and particularly on Zoroastrian could extend the life of those mines substantially. We'll be focusing in those areas. Not so much in Simberi for the obvious reasons. We've wound back a lot of.
We still hold some tenements, obviously in Papua New Guinea that we need to turn over, and we need to do some drilling in to keep them. The same thing applies to Atlantic. Now, while we go through the permitting over the next couple of years at Atlantic, there are some minimal amount of work that we have to achieve and do, and we'll keep those tenements live and do that, because we still believe in the Atlantic business as being a very strong business going forward once we sort some business continuity out. The real opportunity is to grow and extend what we currently have in the Leonora Province. That is a huge opportunity.
If you sit back subjectively and map out what's available, bringing into our portfolio future development, future growth, along with high rating targets, that's where the best bang for our exploration dollar is at this point in time.
Okay. Last question. The revaluation at Atlantic Gold for Lucas, the first part on the waterfall, Lucas, is the economic assumption change. What was involved in the economic assumptions? Is that currency? Is it gold price? Is it anything else?
Yeah. Thanks, yeah, it's pretty straightforward. It's just changing gold price as well as discount rate, those are the main changes.
There's been quite a few impairments, Lucas, in the last couple of weeks from different companies, and many of them used a part of the impairment was gold price lower. What assumption did you or your auditors use for gold price going forward? Was it consensus numbers, or was it forward curves?
It's a mix of both. If you go to Note 8 in the accounts, we actually say what the prices we are using there.
Okay.
So we.
Right.
We didn't use the forward curve at the end of June because it was quite high. We went for something a bit more conservative there.
Okay. Thank you.
Thank you. There are no further questions at this time. I will now hand back to Mr. Jetson for closing remarks.
Thank you, Sarah. I appreciate that. Look, thank you, everybody, for dialing in and listening to Lucas and I this morning. Hopefully we'll give you some confidence that we've finished the year very strong, and we'll continue to do so and grow our business, and continue on through this year, delivering safe ounces to our portfolio and clearly some safe cash to our business as well. Thank you, everybody, for participating today and joining us. It's well appreciated. Thank you. Thanks, Sarah.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.