Thank you for standing by, and welcome to the St Barbara FY22 March quarterly report conference call. All participants are in 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 turn the conference over to Mr. Chris Maitland. Please go ahead.
Thank you, Sarah. Good morning, everyone. I'd just like everyone to take note of the disclaimers on slide two. I'm Chris Maitland, Head of Investor Relations for St Barbara. On today's call, our Managing Director and CEO, Craig Jetson, will discuss the Q3 performance, and after which, as we said, we'll open up the call for questions. I'll just remind everyone, you just will need to press star one, and the operator will line up your questions for you. With that, I'll hand the call over to Craig.
That's great. Thank you, Chris, and good morning, everyone. I'd just like to also introduce Mr. Lucas Welsh, our CFO, who's also sitting in on the call to assist me during this call today. Thank you, Lucas. As always, I'd like to begin by recognizing our traditional owners and First Nations people of the lands in which St Barbara operates in Australia, Canada, Papua New Guinea, and pay my respects to the elders past, present, and emerging. Moving on to safety and our safety performance, and I always talk about safety remains our number one priority, and that certainly has not changed through this quarter and will not change in the quarters to come. Our safety performance in the last quarter has clearly been in line with our quarterly goals, which is great to see.
Also what has been great to see is our improvement over the previous years, and we are still continuing to improve, and I'm really encouraged by that result. Ensuring that we are improving and not maintaining and not becoming complacent, we have a renewed focus, and I've mentioned our Safety Always program in previous calls. I've mentioned it before, as we focus on safety leadership for our frontline leaders and senior management executives and beyond, and also our employees in terms of safety frontline engagement. Moving from safety into some of our key achievements in quarter three. We produced 62,000 ounces of gold at an all-in sustaining cost of $2,290. The Bardoc acquisition is now complete.
This increases our group ore reserves by 7% to 6.2 million ounces and our group mineral resource by 22% to 3 million ounces or to 16.5 million ounces in total. As the Bardoc transaction headed into closing, we started early engineering development and design work. We're now focusing on developing Zoroastrian and starting the first production from Zoroastrian six months earlier than previously expected, starting in Q1 FY 2024, producing around 30 or greater than 30 thousand ounces from 300,000 tons of ore delivered to the mill on an annualized basis. I'd like to just thank the team that's been working on expediting that design and program to bring this online sooner than we thought we could.
Aphrodite is now expected in H1 FY25 or sooner and adding a further 90,000 ounces of production on an annualized basis. We look forward to bringing that online. Pleasing to see is Simberi is now back in production. With all the issues and the headwinds it's had in the last 12 months, including COVID, it's great to see the trucks rolling through the mine one more time. We've continued with significant and positive grade intercepts during the quarter from recent drill results in what we call Old South Gwalia or the Gwalia Shallows. This will certainly support the continuity of mining as we go forward once the shallows are online, and I'll talk a little bit more about Old South Gwalia and where that fits later in this presentation this morning.
In terms of Leonora itself, the gold production has been down, and the gold production has been driven by reduced mill throughput, lower head grade, and lower contained gold from ore that we've purchased. The purchased ore, in particular, has significantly underperformed in terms of grade and tons delivered to the mill, and I'll talk about the Gwalia grade being lower shortly. The mill throughput was 9% lower due to lower ore purchase volumes being delivered than previously stated, and certainly an increase in scheduled mill downtime resulted in that 9% lower than expectation. Mill grade was also down 8%. Gwalia grade was lower due to mining of lower grade stopes longer than anticipated.
The lower grades from stockpiles used to top up the mill to close the gap created by the lack of delivery, as expected from purchased ore volumes that had not been delivered as expected. The purchased ore received did not deliver the grade as expected as well, and this lower grade and lower ton significantly reduced the expected plant production for the quarter. Three new dump jumbo development drills have arrived on site and partially commissioned and going through commissioning phases as we speak, and this will allow the site to increase advance rates through quarter four and beyond into the coming years. The higher ore sustaining cost of AUD 1,916 has been driven by lower production.
Sustaining capital guidance has been lowered from AUD 65 million- AUD 75 million down to AUD 55 million-AUD 65 million due to the lower truck and jumbo availability, predominantly stemming from lower-skilled shortages in Western Australia, creating most of these issues. The rehabilitation of the Gwalia post fall of ground event from last year is finally complete. This enables access to the high-grade stopes that we haven't been able to access up until now because of that fall of ground, putting us back on track to achieve our targets and guidance through quarter four. The acquisition of Bardoc was completed on April 13. The Bardoc development accelerates our province plan, which we're able to fill the mill much sooner than we first anticipated when we put the province plan together some two years ago.
Aphrodite and Zoroastrian lie adjacent to the rail and road infrastructure, which connect them directly to the Leonora plant. This uniquely places Leonora in a position to add value to the ore bodies which would otherwise need construction of a new processing facility. Construction of the surface works at Zoroastrian is to start in Q2 FY 2023, previously planned for Q3 in FY 2023. First production from Zoroastrian is now six months earlier than previously stated now in Q1 FY 2024, and again, producing 30,000 ounces from 300,000 tons of ore delivered to the mill on an annualized basis. Aphrodite is expected in H1 FY 2025, again, to add another 90,000 ounces to our production, also on an annualized basis.
Along with the Bardoc acquisition, it has substantially increased our mineral reserves and resources and significant land package, which we have now consolidated to our reserves and resources. Zoroastrian is open in all directions. We intend to drill the resource extensions once the decline has been established. Once that decline is established, we will continue with further potential ore feed to the mill as we drill and search for other opportunities in this new mine. This was clearly a focus by the team during the due diligence and was part of the decision-making in terms of the Bardoc transaction and potential upside. As previously stated, the group ore reserves are up 7% to 6.2 million ounces, and the group mineral resource is up 3 million ounces to 16.5 million ounces, or an increase, a total increase of 22%.
Further updates are expected in quarter one FY 2023, and this will include Old South Gwalia, which internally looks very promising and will add not just incremental uplift production, but gives us much flexibility to Gwalia, the mine, to deliver consistent feed to the mill. Along with the development of more open headings at the deeps and by adding the shallows, sets Gwalia Mine up for flexibility and consistent ore delivery, which has not been seen, and not been the case for many years at this operation. Early preparatory work in Zoroastrian is now completed, which brings forward the commencement of the decline and construction to quarter three FY 2023. All efforts will now focus on resourcing and productivity for the mine to deliver first ore as soon as possible.
First ore from Zoroastrian is now anticipated in quarter one FY 2024 or sooner, compared to H2 FY 2024, as previously stated. The first full year of production contributes 30,000 ounces, as I said, of contained gold from the 300,000 tons of ore that were delivered to the mill at an average grade of 3.5 grams per ton. The first ore from Aphrodite Mine is expected in H1 2025 or hopefully sooner. The first full year production of Aphrodite is expected to contribute a further 90,000 ounces to our gold profile from the 900,000 tons per annum, again, at 3.5 grams per ton. I look forward to seeing those flow through.
In terms of short-term to fill the mill plan is to develop Zoroastrian as soon as possible, and its high-grade free milling ore body is compatible with the Gwalia ore. At this stage, we will be transporting the ore by road initially at a rate of about 400,000-500,000 tons per annum, potentially, until the rail solutions are able to be realized. Aphrodite will soon follow, coinciding with the refractory ore capability of the Leonora plant. In terms of our Province Plan and our vision and strategy moving forward around a processing hub, we plan to transform the Leonora into a processing hub with a 2.1 million ton capacity uplift and eventually a refractory ore processing capability. Combining the known refractory ore sources today from Aphrodite and Harbour Lights continues to be the strategy in the future.
The PFS has identified a cost-effective opportunity to expand the mill from where it is today at 1.3-1.4 million tons up to 2.1 million tons per annum for approximately AUD 30 million, and I have stated that in previous releases. To treat ore from Harbour Lights and Aphrodite, we have selected the Glencore Albion Process as previously mentioned as a preferred technology at a cost of around AUD 110 million-AUD 120 million, and work will continue on in that space to understand more. The acquisition of Bardoc allows us to accelerate the delivery of our regional processing hub and vision.
We think that this will provide many new opportunities for acquisitions and discovery in the future, particularly in the Leonora Province, which will expand on the Leonora Province Plan over time, over the years to come. With its numerous ore sources and expansion to 2.1 million tons, we have a pathway to produce approximately or greater than 270,000 ounces for at least five years starting from FY 2025, or if I have my way, and if possible, even sooner. In quarter two, the drilling program intercepted multiple high-grade zones in the upper portion of the Gwalia, which we call Old South Gwalia. The drilling program is mostly completed, achieving further encouraging results through quarter three. At this time, we are targeting an update of mineral resource in quarter one FY 2023.
As previously mentioned, this potential new mining front at the shallow depths could increase rates of ore delivery to the processing plant and adding mining flexibility to the current mining operation. This is now beginning to see Gwalia as a healthy, well-engineered mine, turning instability and unreliable past performance, returning its reputation to be a very reliable and healthy asset that it once was. Simberi produced 10,254 thousand ounces after recommencing production in January. Production was then again impacted by staff availability due to increased COVID-19 infections in country and on the island. At its peak, 270 of our regular 600 daily workforce were in isolation. This limited operations and maintenance resulted in low truck availability and a maintenance backlog.
The low truck availability drove a decision on site to target shorter haul distances, but this meant a mine plan change and in turn processing greater amounts of sulfide material, which had a negative impact and drove lower grade and recoveries than previously anticipated. The increases in site costs to manage COVID-19, combined with the low production, has resulted in, obviously, in a higher all in sustaining cost than we previously had stated. Simberi now remains on track to achieve its recent revised guidance of FY 2022 of 25,000-30,000 ounces and a cost guidance of AUD 3,200-AUD 3,600 per ounce. We have been notified of the replacement of the PNG Minister for Environment and the head of the PNG Conservation and Environment Protection Authority.
Permitting of projects have been delayed now because of these changes, and permitting of projects have also been delayed because the PNG national elections in June 2022. I'd like to state that I am currently in PNG and have meetings with the ministers planned for tomorrow, and I'll be talking to key government ministers while in country to see if we can find a workaround together to complete the permit approval process prior to the elections. Our FID for the Sulfide Project will be delayed until CEPA grant the environmental permits that we seek. We're using the extra time to test alternative capital solutions to address cost escalation for equipment and construction. Currently, this is seen across Australia and been experienced across the industry.
Moving to Atlantic, Touquoy grade declined, as predicted and previously stated when we changed guidance, by 32%, as the mine approaches the end of life. Touquoy remains on track for cessation of mining in H1 of FY 2023. Production this quarter has been impacted by the frequency and severity of storm and weather events. A little bit unusual in terms of severity for this time of year, but it clearly has been impacting crushing and milling throughput rates. Also, unforeseen and something that's not normal is it also caused 9 power outages in the quarter, which is significant production delays as well. With spring arriving, these events are expected to subside, so Atlantic Gold remains on track for guidance. That involves sustaining cost, in particular of AUD 2,013 announced due to lower head grade and lower throughput rates.
The capital guidance reduction at Atlantic Gold as sustaining capital has been reduced from AUD 10 million-AUD 15 million to AUD 5 million-AUD 10 million. The growth capital has been reduced from AUD 20 million-AUD 30 million in guidance to AUD 15 million-AUD 20 million. Scope changes and the deferral of spend to FY 2023 is to align with the permit approvals as we look forward predicting the timelines as we know them today. In terms of Beaver Dam, our next mine in our province plan and our sequence, round three of the information request received back in January, we remain on track to submit the answers to the IR 3s in quarter one FY 2023. This aligns with our target for approval of the EIS in September 2022.
The work at Fifteen Mile Stream, in particular, the modeling and sampling is underway, and we're responding to the round one information request for the EIS. This is expected to be completed in H1 FY23. In terms of the Atlantic Province Plan, the vision for Atlantic operation as a processing hub servicing multiple satellite mining operations to remain our strategy and focus. This is not too dissimilar to our province plan thinking and growth that we are currently seeing at Leonora. Just to recap, the Bardoc acquisition is now complete. It increases our group ore reserves by 7% and group mineral reserves by 22%. Production from Zoroastrian is now six months earlier in Q1 FY24, producing greater than thirty or around 30,000 ounces or greater from the first 300,000 tonnes annualized of ore delivered to the processing plant.
Aphrodite is now expected in H1 2025, adding a further 90,000 ounces to our production uplift. Pleasing to say, Simberi, where I am today, is back in production. We continued to have positive grade intercepts of Old Gwalia South. Gwalia, this is going to obviously assist Gwalia the mine continuity and consistency of ore feed to the mill from this area, which is known to be Old Gwalia South as we refer to, ore at 600 meters to the 1,000 meters below the surface. With that, I'll certainly like to take the opportunity to thank everybody for dialing in and their attendance today and listening. With that, I'll now pass back to Sarah, our operator, and open up for any questions that people might have. Thank you, Sarah.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speaker phone, please pick up your handset to ask your question. Our first question will come from Peter O'Connor with Shaw and Partners. Please go ahead.
Good morning, Craig. Thanks for the call. Can I ask a couple of high-level questions first? There's been a lot of reports out today, so there's a lot of headlines about what's happening in WA. I just wanted to focus on WA and think about the June quarter. I know you made comments during your prepared remarks, but quite different comments from a range of companies both today and over the last few days about the impact of COVID to the extreme of one company withdrawing guidance today and others saying that it's not an issue because they're not a FIFO operation. I'm just wondering, given your experience of the March quarter and April to date, you know, how do you see the June quarter panning out? Is COVID more of a risk? Again, I'm thinking specifically more of WA at the moment.
Yeah, Peter, that's a really good question. I think there's two answers to that. There's part A and part B. I think the site and clearly we've been able to manage to date. As you know, Western Australia's been able to manage reasonably well up until this point. I'll talk about that in a bit more detail shortly. I think the biggest thing that has hurt us somewhat in this quarter in particular that I'm reporting against is our ability to get you know, trained operators where we need them. Some of the ramp up and effects of COVID in the state, in WA itself, has certainly made that shortage of labor even shorter than we saw you know, the quarters previous.
We're seeing it starting to ramp up and affect us. I think one of the biggest issue is equipment delivery on time, and certainly our ability to provide technical resources from different areas of Australia that normally would come in at a technical base to help us maintain and troubleshoot and technically resolve some of the issues on fleet has certainly been very, very thin on the ground and high demand. That's been the problem leading into this quarter. The quarter's generally been affected by the ramp up of COVID in WA and the amount of development and work and the resources demands that are currently occurring. We're starting to see that overflow. I think there's a bit there.
We've been able to manage around and, you know, if I look at the total material move from Gwalia mine, even though I'm flagging we've been affected, the current production rates from underground to the surface are higher than what they've been for many years. Even with those shortages, we've been able to move the material from a TMM perspective. I think now the threat that we're certainly looking to manage closer is now WA opening up pretty much to the rest of the country. What seems to be the increased explosion in COVID cases in the state is certainly a threat moving forward.
It's something that I'm not planning for, but it's something that we're managing very, very closely, and we're putting our control hats on as best we can to mitigate those controls by having different rosters, having extra people in areas that are critical, and certainly ramping up. I'd have to say that Macmahon mining contract has started to really deliver some good results in the hole. The work that Macmahon have been doing, resourcing from different parts of not only Australia, but different parts globally, internationally, has certainly been encouraging. We're trying to manage the best we can, but I see WA opening up as a further and potential threat to us, Peter. Yeah.
Craig, just to follow up. Your comment about the technical skills, that's interesting. Is that about dollars or is that about people, bums on seats?
Yeah, look, both. I think that when we have, I mean, we've had a couple of shuts in this quarter. We've had, you know, a lot of planned work. At times we've had 30%-40% of the contractors that were supposed to come to site not turn up for the plane because on the day or the week before or whatever, they've found, you know, a dollar an hour extra somewhere else and they've gone off to do another shut somewhere else. Dollars are playing a part of it, and we're seeing that pressure certainly flow through in some of our costs.
I think the technical labor in particular, there are a lot of technicians, you know, from Caterpillar and from Epiroc and from a whole range of different specialist fields come from the eastern states. Access to those people and the demand is extremely high. Look, I'd have to suggest that people in the eastern states have learned how to work in the eastern states, and a lot of people are not traveling anymore, which is causing, you know, further pressure on getting the resources. It's something the industry is managing with as best we can with what we've got.
Could I shift gears to PNG? It's good that you're there because you're on the ground, and you obviously got a much better sense than most people, and you've got a great experience in PNG prior to that as well. Your remarks, do I take your optimism as wishful thinking, or are you confident that you could get progress prior to the election?
Yeah, look, it'd be nice to have this call tomorrow because I'm meeting some of the ministers on my way back to Australia today and tomorrow. I'm currently at Simberi heading to Pom tonight, and I do have meetings tonight with some ministers to try and get that answer. Clearly, with the elections in FY22, it's an interesting change politically here, where normally a caretaker government's been put in place for business as usual. For the first time, I think first time in history, that's not the case this time, where the current ministers are still sitting, and it's business as usual as they campaign for the 2022 elections in June, they still stay in their portfolios, so I've got access to them. The issue will be the distraction.
Of course, one of the things that I raised was the minister for environment has been changed. Up until yesterday, the MD for CEPA was also changed in the recent week. That has been problematic. They're both sitting on the approval for us, which are imminent, and we thought we'll get the approvals in like now. One of the things that I'm doing when I'm here is meeting with the ministers tonight and tomorrow to see if there's a workaround and we can possibly work through those potential issues. They now have reinstated the MD, the past MD back into his role, but the politics continue on. I'm not confident. I'm optimistic, and I'll know a little bit more in that space tomorrow.
Maybe we should convene a call on Monday.
Absolutely.
Thanks. Bye.
Our next question comes from Reg Spencer with Canaccord Genuity. Please go ahead.
Thanks. Good morning, Craig. Just following on from earlier questions on labor availability issues. Can we presume that the risk of further disruptions or impacts from that is factored into guidance? How then should we think about potential impacts into FY23, both from labor availability issues but general industry cost inflation as well?
Yeah. Look, I think there's a couple of controls that I've got in place to protect us somewhat around that threat. One is, I know how much material is on the ground. Our development is not where I'd like it to be underground at Gwalia in particular, and we're doing some work to improve on that. I know that, for example, the rehabilitation of the areas that resulted in the fall of ground last year, I now have access or the team has access to. They are high-grade areas, which is great. I know how much material is on the ground and I clearly have a good understanding of the grade that's in that material.
I believe the quarter, as I know it now, the quarter coming, we've got a great start to that, with a huge percentage of the contained gold required sitting on the deck, and we just need the trucks to cart it to the surface. We'll put every resource we can if we get short of resources into moving that ore. I don't believe, as I sit here today talking to you, that Q4 is a threat, nor should I be thinking about changing guidance. Although keeping a very close eye on all that. Q4, although some risk is not as high, and I'm not as nervous about that.
I think future quarters may unfold a little bit differently, but depending on the COVID situation in the state and how that unfolds. Again, you know, as you know, our mining contract is with Macmahon, and they're doing a really good job in manning up and resourcing and future plans to do that. We're all working hard on controls. In terms of quarter four, I'm a little bit more comfortable than I probably would have been in any other quarter, knowing what's on the ground, underground.
Yep. Just on industry cost inflation and how, you know, one might think about costs into next year. If you had to put a percentage number on just overall average cost inflation, where would you put that, Craig, from what you've seen to date?
Yeah, that's a tough one because when I put my operating hat on, just my pure operating hat, you know, I'm seeing a 15%-20% increase in a lot of things. Some of our reagents and whatever, as high as 50%-60% increases. You know, that's huge. Overall, I think it's got a you know, a 10%-25% impact. What's really concerning me, given the projects that I have in front of us, like the expansion of the mill at AUD 30 million, that's where we see it sitting on today's numbers. That could escalate because of steel prices, because of contractor availability, whatever. Our sulfide project, you know, in-country construction, steel prices, whatever, seeing the increase in those.
What I'm also seeing is overseas things, like anything you have to ship to our operations from internationally, you know, it's tripled in price. So when we talk about buying an oil cube for diesel generation or power generation for the sulfide project. It's not only from the fees of pre-feasibility time to now, some of those components have quadrupled in price. So I'm seeing this global effect affecting all growth projects. I see some business, some companies have put some of their larger projects on hold because of that. We're much smaller scale, but I still see a significant increase in cost pressures for sure.
That's very useful. Thanks, Craig. Just one last question on some Simberi sulfides. If we were to take a maybe a worst case example and, you know, you're pending your discussions with the various ministers and government departments on the permitting. Let's say that you got your approvals and construction starts. I don't know, I'm just gonna pick a date. Let's say back half of 2023. A 12-month construction, then you're into 2024. Your mining license expires in 2028. You know, that period in which you've got to recoup your capital for that project starts to dwindle, assuming you don't get an ML extension there. How do you think about the project as it stands? Is an FID still subject.
Well, I guess up in the air, subject to the permitting, but also the fact that, you know, your runway on the mine life is now looking a little bit shorter as well.
Yeah. Let me talk about that. You know, the runway on the mine, I think we, in 2019, said somewhere around 2021 we'd be out of ore. We've been able to extend that ore at least for this year and next year. I've certainly spent this week here talking to the team, and we have opportunity to extend the life of this mine and from an oxide perspective more than what we've currently know it to be. I'm looking forward to putting the extra drills in here and getting some of that work done. But we have 12 months at least of full oxide material available to us in front of us at the moment. Now, it's not that efficient mining.
It's small areas and it's selective mining in small areas. It's a bit inefficient. Still, it's ore source that's available to us, and we will use that. You know, given my limited knowledge and what I've seen on my last trip here, I've been here twice in the last 4 weeks, specifically because I can now, but specifically to look at oxide extensions and what we can do differently. Knowing that, there's still some headwinds with permitting and probably cost escalation and FID and a few bits and pieces. I still believe we've got two years of oxide material in front of us with selected mining before we go into transitional material.
Now, the transitional material is available to us now, if we wanted it. Sulfide material is available to me now if I wanted to put it through the mill, but it destroys the value so much because of the recovery issues. We elect not to do that. I'd rather wind production back slowly and get the best out of the resources that we've got now and keep stockpiling the sulfides for a run start. I think there's a mine plan, mine balance to be had, and we work through the best case scenarios on that.
I'd have to say, driving the mine this week with the mine technical services team, the site technical team here and the mining group, I'm very optimistic about extending the life of the oxide program a little bit more than we currently know today, which will buy us some time into the sulfides. The thing that concerns me with the sulfides is not the mine plan, not face positions, not whether we've got sulfides or not, 'cause, you know, you can see that drooping out of the walls. It's the cost escalations and what that does and working with the government here to get the permits as soon as we possibly can, which is what I'm working on.
Great. Thanks very much, Craig. I'll pass it on.
Thank you.
Again, if you'd like to ask a question, please press star then one at this time. Our next question comes from Matt Greene with Credit Suisse. Please go ahead.
Hi. Good morning, Craig. Hope you're well. Look, my question is I've just got a few on Gwalia, if I may. Just on development rates, you mentioned that you're not, you know, development rates are not where you want them to be. I notice you don't disclose how many headings you have anymore at Gwalia, but if I think back, I think you're around sort of 23, 24, ideally wanting to get up to close to 30 to sustain just over 1 million tons. Now you're putting more jumbos in place. You know, you've mentioned that getting, you know, your sustained CapEx is low just on the inability to get jumbo operators there.
Can you just give me some color as to how the developments are going, how many headings you have currently, and do you still expect to get up to 30 by year-end?
Matt, I think 30 is certainly a stretch target at this point. We've got in the order of around 20, is my understanding of today, but I'll reconfirm that as we ramp up towards that 30. I want that 30. That 30 is more than what we will need to deliver the 1 to 1.1 million tons of ore to the surface. It gives me mine flexibility to continue that 1.1 million run rate with flexibility. So I don't actually need all those headings for that 1.1 million. It just gives me the health of the mine and ability of the mine to consistently deliver at those rates and mining optionality. You've seen a taste of that occur last year into this quarter, in fact.
That flexibility going from one mining front to about four headings up to about 15, 16 headings that we had towards the end of last year allowed us when the fall of ground occurred. That would normally stop us in our tracks because of one heading. You know the story, because of one mining front, et cetera. We were able to change the mine and be flexible enough to go off mining somewhere else. Although albeit, we took a bit of a punch this quarter because we're away from our high-grade areas, known high-grade areas, and extended our mining in the lower grade portions of the deeps. It gave us that mining flexibility to continue at a rate which is acceptable and not fantastic, but acceptable.
With that vision of more headings, though, continues on. That will be supplemented, not only will the extra headings that the extra jumbos will deliver over the next quarter, but the quarters to come into next year. When we open up the shallows between 600-1,000 meters below the surface, that gives us further opportunity and flexibility. If something happens in the deeps, whatever, we've got the shallows to haul from and vice versa. I think the 1.1 million tons is almost touchable, right? Where it was a vision and a strategy, I can actually touch it and see it now. It's easy for me to say, the team at the site might be a little bit more uncomfortable with that comment.
We're really debottlenecking this mine now to put it back on where it should be, which is reliable delivery to the mill at the rates that we guide on for many months, not one month or three weeks at a time, if that makes sense.
Yeah, that does, Craig, and thanks for the context there. Just sticking on guide, if I may. The purchased ore, now the underperformance on the grade there, was this expected or was this more a reconciliation issue by the third party?
Yeah, look, I think when we went into the agreements to be fair to the operators, I mean, they had their grade control. They assumed they were going to give us X amount of tons at the grade, and they've hit their mining headwinds. Their reconciliation hasn't quite matched up with where they thought it would be. When we get it to the mill, and when it's transferred, transported to the mill, we batch process it, and then we reconcile against what the expectation their mine plan is and their grade control. There's been a significant difference in the two. That difference has been validated on independent tests and whatever. Unfortunately, they have underperformed of what they predicted.
We assumed in our plans going forward that they would deliver what they said, and it hasn't occurred. Now, I certainly understand the position they're in. It happens to us every damn quarter it feels. They are doing quite a good job again with narrow mining and doing what they're doing. They just haven't delivered the tons that we expected or the grade that we expected, which comes through. Because we purchase it comes through on the bottom line impact to our production profile. It doesn't mean for a moment it's out of cash or out of the money. It's not a great situation to be in when we're guiding on including those ounces. We've come up a bit short.
That's helpful. Has this, I mean, we're a few weeks into this quarter, have things improved on that front?
Well, we're currently batching now, to be honest. So I can't answer that until I can see the reconciliation numbers. Once we process the current batch, I'll know more, but I don't know. I suspect not. It's been consistently underperforming now for two quarters. First quarter, you know, six months ago, it was flagged as a big issue. That continued into this quarter. Our team, along with those teams, have been working through those headwinds to see if we can resolve it somehow.
That's great. Okay. Look, just one final one, if I may. The comments you made, and sorry if I misheard this, but you said you're looking at 400,000-500,000 tons a year, by road from Zoroastrian. Is that the sort of... I presume you're somewhat mine constrained currently, but are you looking at increasing from that 300,000 tons a year, 30,000 ounces, to try to see if you can squeeze out 400-500? Is that something you're looking at at the moment?
Well, yeah, the answer to that was absolutely yes. I think I made a comment during my presentation today about, you know, as soon as we get underground, we'll start looking at further development drilling in different areas, looking for opportunity. We believe there's some upside to be had. What that is? Don't know. We'll do the work to find that out. The team have done a great job in pre-engineering and getting us ready for an earlier than predicted startup. We've been using Bardoc public information up until now. Now we can get in and do the work ourselves, and I have no reason to doubt that the team, once the decline is in and we do some further drilling, that we have upside and further opportunity.
I don't think I'd like to continue carting 500,000-600,000 tons by road. We're really working hard with the key stakeholders to bring the rail into that transport plan as soon as we possibly can. Then the sky's the limit, particularly when we get Aphrodite online in a couple of years' time.
That's helpful. That's all for me. Thanks, Craig.
Thank you very much.
Our next question is a follow-up from Peter O'Connor with Shaw and Partners. Please go ahead.
Craig, thinking back to your comments about cost inflation and CapEx inflation and the projects you have in front of you, and given your history in the industry, are we back where we were 10 years ago when we're gonna have to make decisions about where the project should go given CapEx cost inflation? How much wiggle room do you have with the likes of St Barbara Sulphide in terms of those CapEx and OpEx pressures?
Yeah. Look, I think the wiggle room. Let me start at the very end, Peter. The wiggle room is really concerning me on the Sulphide project. Not that the cost that I've got in draft, and it's really a high-level draft, worry me in the overall project scheme of things because the payback on the project is still very robust. It's got a great NPV and IRR. Though what I guess hurts the project is we say a number three years ago, when you start PFS and then go into FS, and these numbers always climb, and they certainly climbed during the year for a lot of reasons. Now we're seeing all these cost pressures on top of that really do concern me.
I don't think we've gone back 10 years ago. I think 10 years ago was more about a resource constraint issue than than material issue and and what we're seeing today. The standalone Sulphide project itself is robust and it's a good project. I think is it palatable to see the escalation cost? No, it's absolutely not. As I said, we'll use this white space between the delay in the FID from myself to the board, going to the board and the team is to what further can we do to reduce those cost pressures or spread the cost pressures out.
The other thing I think from a strategy and strategic position from St Barbara is to what's the absolute critical timing, given the capital spread that St Barbara may need over the next five years, of what can we do creatively in the business to level that peak of spend over the next couple of years into a five-year plan? We'll do that work as well. I think the Sulphide project, great project stand alone. If it was a brand-new mine, and that's really what it is, you know. It's X amount of dollars investment for a 12-year life of mine at around 150,000-180,000 ounces a year. You're not gonna buy a mine with that sort of capacity for the numbers that I'm seeing come through anyway, although they're somewhat escalated at this point.
The small increment changes that we need in the processing plant at Leonora to get the mill to 2.1 million tons is still in the order of AUD 30 million. That to take the mill reliably from 1.2 to 1.4 to 2.1 for AUD 30 million is very low risk and very low capital. That's a great project. I think what we and what the team are doing is looking at the timing in the Leonora Province Plan of where the refractory ore material from Aphrodite fits with our own refractory ore material in at Leonora already, is what is the timing of that project and what can we do there in terms of a project flattening, if you like. Can we defer some?
Do we need to bring some forward, and how does that sit? I think that from a strategy perspective, we're doing a lot of soul searching on what we can do differently and what could be done differently, to spread that capital load requirement out on the business over many years and not just the next five.
Thanks, Craig. Appreciate the detail.
There are no further questions at this time. I'll now hand back to Mr. Jetson for closing remarks.
Yeah. Look, Peter and Matt, thank you to everybody that's dialed in and the questions that I received this morning, the interest they're showing in St Barbara. You know, the demonstration today in particular is around we're on the cusp of really delivering some good results, solid results. Certainly with our Province Plan coming to life at Leonora, what that does to our business is certainly all upside and potential upside even further. Watch that space. I'll talk a lot more in detail in St Barbara once I have some more information and meet some of the ministers tonight and tomorrow.
I'm heading to Atlantic again in a few weeks' time, heading to the federal government this time around permitting and also engaging further with the local stakeholders in Nova Scotia. Things are finally opening up and moving within St Barbara. Thank you very much for your interest for everybody this morning. Thank you.
That does conclude our conference for today. Thank you for participating. You may now disconnect.