Hi, and welcome to the St Barbara conference call. 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 one on your telephone keypad. I would now like to hand over to Mr. Chris Maitland. Please go ahead.
Thank you, Rachel. Good morning, everyone, and thank you for joining us today on the call. Please note the disclaimers on slide two. On today's call, our Managing Director and CEO, Craig Jetson, will discuss our plans to transform the Leonora Province. After which, we'll open the call to questions. Lucas Welsh, our CFO, and Andrew Strelein, our Chief Development Officer, are also on the call to help answer questions at the end. With that, I'll hand the call over to Craig.
That's great. Thank you, Chris, and welcome to all. Look, as always, I'd like to begin by recognizing the traditional owners and First Nation people in the lands in which St Barbara operates here in Australia, Canada, Papua New Guinea, and pay my respects to the elders past, present, and emerging. Today is an exciting day for St Barbara. The Leonora Province Plan that I outlined in December 2020 is being accelerated through the acquisition of Bardoc Gold. What we've done today is to enter into a scheme that will execute an all-scrip acquisition of Bardoc Gold. It has been recommended by the Bardoc board, and I want to congratulate them for this decision as I believe this is truly in the best interest of our collective shareholders. The Bardoc shareholders will receive 0.3604 new St.
Barbara shares for each Bardoc share that they hold, representing a strong premium. This values Bardoc at AUD 157 million, which is 29% premium on the closing price of Bardoc shares last Friday, a fair and reasonable premium. The scheme is, of course, subject to Bardoc shareholder and court approvals as well as customary conditions and deal protection mechanisms that we anticipate the implementation of the scheme will happen in April 2022. The great thing for St Barbara is this deal delivers opportunities which allow us to bring forward some of our Leonora Province Plan. By developing Bardoc's well-advanced Aphrodite and Zoroastrian underground deposits that lie adjacent to the Kalgoorlie and Leonora rail line, which runs next to the Leonora plant, we expect to be able to fill the mill well ahead of our previous plans. The acquisition also comes with substantial mineral resource and ore reserves.
In addition to a significant land package based around the highly prospective Bardoc Tectonic Zone, the total land package of approximately 447 sq km is an exciting proposition, especially considering the many tenements that are close to the railway line. Combined with our existing exploration package, tenement packages, this gives our exploration team plenty of scope for future and further discovery. This acquisition also allowed us to accelerate the delivery of our regional processing hub through an upgraded Leonora mill and capacity to process both free milling and refractory ore. A separate ongoing pre-feasibility study has identified an open pit mining of Tower Hill as a preferred development option for this deposit. This has allowed us to declare substantially increased mineral resource estimate.
An additional 600,000 ounces of resources, taking a total of 1.2 million ounces at 1.8 grams per ton, is being declared today. The combined mineral resource across Gwalia, Tower Hill, Harbour Lights, Zoroastrian, Aphrodite warrants an expansion of the existing Leonora processing plant from 1.4 million tons per annum to 2 million tons per annum or greater. We still have Trevor Bore to come. After completion of the transaction, St Barbara will have one of the largest ore reserve and mineral resource portfolios in the region, which will feed a multi-decade production profile. Finally, it highlights significant growth potential that strongly aligns with our aspirations for the region as we spoke about last year.
Bardoc's 3.1 million ounces of mineral resource and 1 million ounces of ore reserves, adding to our leading reserves and resource position in the region. In addition, over the last five years, the Bardoc team have strategically built an exciting tenement package that covers up to 40 km of strike length of the highly prospective Bardoc Tectonic Zone and the interaction with the Black Flag fault system. Value creation for our shareholders was our primary focus when we first looked at Bardoc. We saw an opportunity to access at least two well-advanced, large, high-grade ore bodies that would allow us to utilize the mill at Leonora to its full and extended and expanded capacity earlier than we previously planned. That is a great outcome. We plan to proceed quickly with the development of Zoroastrian underground deposit.
It's a high-grade free milling ore, which complements Gwalia as a near-term mill feed. We are initially likely to transport Zoroastrian via road to be treated at Leonora at rates of around 400,000-500,000 tons per annum. Ore production from much larger Aphrodite underground deposit is expected to follow within a few months. Coinciding with when we expect the Leonora plant to be ready to process refractory ore. I'll have more to say on that shortly. Only modest investment is required to facilitate rail transportation, so that will be carried out parallel with the refractory capability. Mining rates are anticipated at this mine of around 900,000 tons per annum. We are already well progressed with respect to enabling transportation between the two mines and the mill.
In November, St. Barbara submitted a mining proposal for the construction of a dedicated rail siding adjacent to the Leonora processing facility. We expect that these will be built in the next calendar year. St Barbara has been working with two rail haulage companies on simple rail solutions for the relatively short 180 km journey from the new mines. We are gearing up to commence the pre-feasibility studies and the construction of both the Zoroastrian and Aphrodite underground mines. The Bardoc team has done some great work in their feasibility study. St Barbara will need to tailor that work and include the portal access from the surface at Aphrodite underground, railing ore to Leonora processing plant, and the production of gold doré via Albion treatment processing plant instead of producing concentrate for export.
We have done the scoping study work which indicates the capital cost for the Zoroastrian underground mine to come in at approximately AUD 15 million, with a development target to commence in Q4 FY 2023. Our initial thinking is that we will open up the open stoping operation with portal access via the existing pit. The same scoping work indicates that Aphrodite underground mine will commence a little later with construction planned for quarter one FY 2024, with an estimated cost of approximately AUD 30 million to construct. We have been working hard on the pre-feasibility study on Tower Hill, Harbour Lights with the potential expansion of the Leonora processing plant.
The study has identified cost-effective opportunities to expand the capacity from 1.4-2.1 million tonnes per annum, with capital estimates in the order of about AUD 30 million to install the required ball mill and other associated debottlenecking equipment. We had always planned to install the equipment capable of treating refractory ore process to process at Harbour Lights material. The Aphrodite deposit complements this approach by giving us access to additional 6.7 million tonnes of refractory ore. To treat these ores, we have selected a Glencore Albion Process technology, an estimate that will cost between AUD 110 million and AUD 120 million to install. The ability to process refractory ore will be unique to the Leonora processing plant within a 200-km radius.
We think that this will provide many new opportunities for acquisition and discovery, opportunities which are of limited interest and value to other companies. The Zoroastrian deposit is free milling and capable of being treated through the existing Leonora processing plant even before the expansion is completed. I'd like to spend a short amount of time talking about the Albion technologies as it may be unfamiliar to some of our investors. Both free milling and refractory ores will be processed through our standard crushing and grinding circuit. After which, the gold from the free milling ore will be recovered through the CIL plant, followed by production of gold doré bars. This is how we operate today. Once the upgrade is complete, refractory ore will be able to be diverted to, after the milling process, to the new flotation circuit to recover gold in the sulfide concentrate.
This concentrate will then be sent to the Albion circuit before being returned to the CIL and followed by gold doré production. Glencore has developed the Albion Process. It's an established technology for processing refractory ores such as Harbour Lights and Aphrodite. Around the world, this process has consistently been delivering successfully and with high recoveries. We conducted test work on Aphrodite material showed it was compatible to the process. As part of the pre-feasibility study, we will conduct the testing, continue conducting of Harbour Lights. In comparison to the traditional process, Albion Process operates under atmospheric pressure, making it substantially lower in capital and operating costs, and more importantly to me, safer as there is significantly less pressure and temperature. Oxidation occurs in the interconnected Albion Leach Reactors, where oxygen is injected in finely ground flotation concentrate.
It does not require internal heating or cooling systems, unlike traditional pressure oxidation processes, which makes it significantly safer and cheaper to operate. The final step is the oxide slurry is fed back into the CIL circuit to undergo traditional leaching and carbon adsorption. Where we are planning to run a campaign milling process at the plant over approximately a 4-week period. This will be seamlessly interchanged between treating refractory and free milling ores. In parallel with today's acquisition, we are excited to announce a resource increase at Tower Hill. By changing our planned approach to mining from underground to open pit, we have increased the Tower Hill mineral resource by 600,000 ounces. The red line in plan view on this image indicates the full extent of the resource shell.
The table highlights the variance between underground and the open pit resource. What does this all mean? In a short period of time, we could go from having excess capacity at a 1.4 million ton per annum Leonora processing plant to being mill constrained, process plant constrained. As we bring on Tower Hill, Harbour Lights, couple that with today's acquisition of 1.4 million tons will not be sufficient to grow. For me, this slide only highlights the quality of ore that could feed Leonora, but also a number of ore sources which can be fed, adding flexibility and redundancy into our production plan. Ultimately, it shows a bright long future for Leonora processing with ore inventory at its disposal, large enough to be selective in what we process.
As I said earlier, we are basing a pre-feasibility study work on the excellent work done by the Bardoc team. This significantly speeds up our study process for ourselves. When combined with the fact that Zoroastrian has already had its mining proposal and closure plan approved, we think we'll be able to get this mine up and running in the second half of FY 2024. Aphrodite is only marginally behind Zoroastrian, as the mining proposal and the closure plan has already been submitted. Aphrodite development will be timed to deliver all processing to the plant when refractory treatment capability has been installed. For the expansion of the 2.1 million ton per annum, we are aiming to complete the PFS work by the end of June FY 2022, with the full feasibility study completed six months thereafter.
We are in a great position that all three of our operations have organic growth projects in the pipeline. We are committed to funding all of these through a mix of low-cost debt, free cash flow from our operations. We have just over AUD 0.5 billion in syndicated debt facilities. We intend to subscribe to the $150 million facility when we construct the Simberi sulfide project. The Canadian facility will be partly funded by the construction of Beaver Dam in Canada. As I said at the start of this presentation, today is an exciting day for St Barbara. The acquisition of Bardoc accelerates the Leonora Province Plan that I outlined to you in December 2020. Aphrodite and Zoroastrian are well-advanced underground deposits that lie adjacent to the rail line and a major highway.
The rail and highway leading directly to the Leonora Province Plant and the Bardoc project assets within economic reach of the Leonora Province Plan. The rail line is an elegant option, exclusively available to St Barbara for transportation of ore into its processing plant. We are now in a position to expand up to 2.1 million tons, a significant leap from our current situation. The acquisition also comes with significant land package around the highly prospective Bardoc tectonic zone. Combining Bardoc's tenements with our existing exploration tenement package significantly increases our exploration footprint. This acquisition will also allow us to accelerate the delivery of our regional processing hub through an upgraded Leonora mill. We are creating a mill unique to the region that has the capacity and capability to process both free milling and refractory ore.
A separate ongoing pre-feasibility study has identified open pit Tower Hill preferred development option. This substantially increased our mineral resources as I spoke about previously. The combination of St Barbara and Bardoc is a complementary asset package together. St Barbara has a huge resource base of free milling refractory ores and a processing plant that is capable of cost-effective expansion to 2.1 million tons per annum or greater. Bardoc has also significant free milling and refractory ores immediately adjacent to rail and a major highway directly leading to the Leonora Processing Plant. Upon completion, we'll be creating one of the largest ore reserve and mineral reserve portfolios in the region with a multi-decade production profile. Finally, it highlights our significant growth potential that is strongly aligns with our aspirations in the region that we spoke about in December 2020.
With that now, I shall open up the line for any questions. Thank you.
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 speakerphone, please pick up the handset to ask your question. Your first question comes from David Radclyffe from Global Mining Research. Please go ahead.
Good morning, Craig and team. I've got a couple of questions, if that's all right. Maybe first off, if I look at Bardoc's recent presentations, they sort of talk to a profile of around 136,000 ounces a year with all-in sustaining costs under AUD 1,200 an ounce. Could you maybe just expand on how that might change under your sort of new Province Plan? Specifically, I guess, on the cost side, given we've got to now think about the cost of railing material up to Gwalia.
David, good question. Let me start in reverse. Let me talk about the rail. Obviously, you know, there are trains that head past the deposits that basically stop just outside our processing plant, not far away from our processing plant. Rail for me is a very cost effective neat solution to be able to transfer it or transport ore. Although we do have, obviously, a fallback position, we certainly have a start-up position of trucking as we develop the rail as a need. Now, the train in particular that goes past these assets goes past empty. It's really a backfill.
We'll be looking for significant discount at some stage to what that could mean, and a very cost-effective way of transporting the ore, and a very efficient way of transporting the ore. In the scheme of rail transport, it's 180 km, which is very, very short. It should be cost-effective. The all-in sustaining costs that Bardoc has certainly put out there. There are listing rules that prevent me talking about such an opportunity at this point until we do our work for ourselves to not only support what Bardoc have done, but validate that from our own perspective.
I really can't go into the detail of for what we think at this point, and I guess A, until we do the work, and certainly B, we'll talk about that when the time is right and we're allowed to do so. I think there's plenty of cost-effective truck options available. If I look at some of the other operations around the area, around the region, and obviously with Linden Gold, you know, that travels 140 km to our processing plant now. That's over gravel roads, combination of gravel and bitumen, so it's not easy going. That's done cost effectively and done reasonably well.
There are other mines in the Kalgoorlie region that transport by road and truck a lot further distances than what we're talking about here. I believe the location of these assets, the Bardoc assets, to ours, gives a significant advantage. The rail is certainly something that we're treating very seriously. The Shire of Leonora has already published their wish to have a multimodal system, which is only going to enhance what we're trying to do here with the rail.
Okay. Thanks. I guess as a follow-on then, I mean, you seem to be focusing here on the underground opportunity, but I just note that the majority of their reserve is actually open pit material. Is the indication that that open pit material would actually go to Gwalia, be it via rail or road?
That would be my view, yeah. I guess, Andrew or, Lucas, if you want to chime in to help answer some of these questions with a bit more detail, feel free to do. That would be my understanding, yeah. Andrew?
Yeah. Yeah, if I can help there. I mean, the focus is definitely on the undergrounds. And you know, if you look partly to your first question, if you look at our plans, Aphrodite can be mined at rates around 900,000 tons as per the feasibility study that Bardoc had done. So even at a 2.1 million ton per annum plant, we're focusing on, you know, the combination of Zoroastrian and Aphrodite as the obvious priority targets, and at mining rates in the vicinity of 900,000 tons in the peak year. So that's where that's at. The other deposits, Excelsior, and some of the smaller open pits, even Aphrodite and Zoroastrian, they all are attractive as well, but they would probably follow in sequence, given the 2.1 million ton per annum capacity that we're looking at for the expanded mill.
Thanks, Andrew.
Awesome.
Okay, thanks. Think maybe if I could just sneak one more in, just on Tower Hill, just changing gears a little bit. You're obviously talking to a potential rate of 1-3 million tons a year from now. It looks like you've decided to go ahead with the open pit. Could you maybe provide a little bit more color on how you actually see that redevelopment coming through, the timing? And then what is the solution there and the potential capital for actually moving that infrastructure that before has been an impediment to redeveloping it?
Would you like me to take that one, Craig, as well?
Yeah. Yeah, for sure.
On the first part of the question, on the scale of mining, you know, we can from the work we've done so far, the Harbour Lights and Tower Hill can and would be processed through the 2.1 million ton per annum expansion that we've described. Obviously, that gives us an extraordinarily long processing life. We'll, you know, continue to look at the options there. In terms of the infrastructure, the main infrastructure that you'd be talking about is the rail line. We're working with the parties. There is some limited commercial operation on that rail.
Our plan is that we will assist the operators to relocate their operating facilities to more convenient locations, more outside of town rather than in the town. We're working through that, and you know, we're confident that we have got the solutions for those rail operators. The line doesn't actually run 20 km north of Leonora. It just stops in the Leonora town. The intermodal facility that's been talked about on the outside of Leonora is gonna be an encouraging step for St Barbara.
Andrew, I think it's also fair to say that, if we took a deconstrained view, so if the railway line wasn't there, for example, and we continue with the Bardoc transaction, given the life of all the assets or the life of mine, we wanna do whatever we possibly can in the next round of studies to make sure that 2.1 is enough. Maybe we wanna look at something a little bit greater than that, but we have to do the work first to realize that.
Okay. Thanks. I mean, I guess I was just trying to think of where there is a potential additional capital which could be meaningful to actually allow Tower Hill to come into the mine plan.
It's not expected to be significant. It's obviously a matter of the rail operators have to be comfortable with the intermodal facility. If that's the case, then it's just it would then be the relocation of the rail and the facilities. It's not actual construction, but rather, removal activities.
Perfect. Thank you. I'll pass it on.
Thanks.
Thank you. The next question is from Alex Barclay from RBC. Please go ahead.
Thanks. Morning, Craig and team. Is it just a sort of an overview question, is it possible to give an idea of the NPV you're seeing for this deal after the integration of all assets, plus to give a sense of what that valuation increase would be versus your existing Province Plan, not including all of this extra ore?
Yeah, look, I think the answer to that will be there's a lot more work to do. Obviously, we've got an internal view, an internal look at what that would look like. We have got some indicative, I guess, production numbers and capital numbers in there. I think, you know, I'll hand over to Lucas or to Andrew to, I guess, answer that in a bit more detail.
Yeah. I mean, frustratingly, as you'll imagine, we can't, we're limited in terms of what we can say under the listing rules based on the. Yeah, we're looking at acquiring advanced projects that will then be processed through a different mechanism than the Bardoc processing facility. But if I can give you some color on it, we're obviously this is a processing plant upgrade and conversion to refractory that we already wish to do for our existing organic assets. For us to be able to process initially these two significant resources and process them through our facility is attractive financially and actually brings it, you know, allows us to bring forward our plans ahead of when Harbour Lights and Tower Hill would have been available.
We're more than happy with the economics of the transaction based just on the two undergrounds and then the open pit opportunities that were mentioned before create additional potential value add. Unfortunately, we're a little constrained in what we can talk about ranging from AISC through to NPV considerations.
Okay, sure. You touched upon it a little bit there, but to reach that 2.1 million tons per annum capacity, it seems like you have sort of plenty of regional ore sources which you own, obviously not quite as high grade as the underground that would be coming on board. I mean, how should we think about that you already had this capacity coming in? You know, what are the opportunity costs that's being lost in not processing your own ore? You know, obviously you thought this was beneficial, hence the deal. Is it possible to talk through that a little?
Look, I think the upside that we're looking here is the Harbour Lights certainly and where Tower Hill and all the current open pit mines actually fit into the scheme of things. Clearly, the change in processing plant from an Albion to you know is opening up a whole bunch of other opportunities around Harbour Lights in particular and the type of ore source that's coming and what comes with Bardoc. Joining those two together really does lift the throughput through the plant. Having a unique position of being able to mill and process different ore sites gives us a real good advantage in the region as well. We've got to do a lot more work as the studies unfold to determine the real answer for some of those.
Okay.
Yeah. If you're looking at the modeling, I'd just suggest, like, it does to some extent displace in terms of how you're probably modeling it. 900,000, you know, in at full production of 900,000 tons per annum at, you know, the 3.3-3.6 grams per ton mark, that's obviously attractive early stage. I think you highlight the problem. It does give us a significant number of years of production now at 2.1 million tons per annum. As Craig mentioned, we obviously need to look at that. It's not in the announcement today. I guess it does give us the opportunity to look at further enhancement of scale, which is not part of the announcement today, but that's, that'll be future work program.
Okay, thanks everyone. That was quite helpful.
Thank you. The next question comes from Kate McCutcheon from Citi. Please go ahead.
Hi, Craig and team. You've shied away from giving an indicative pro forma outlook. Look, I know you haven't done the PFS and, you know, you're limited to what you can say. You've said Zoroastrian, if I've pronounced it incorrectly, in FY 2024. Can you talk to the timing and sequence of the four deposits? It seems like you're talking about mining the Bardoc deposits at one stage concurrently, and when might Tower Hill perhaps break ground?
Andrew?
Sure. Yes, we intend to bring Zoroastrian on first. I think we're all gonna have trouble, so we'll do our best on finding a different name for that. Zoroastrian obviously is the most available. It's free milling, and it's got a production rate that could be fed through current scale. That one would be brought on, obviously as fast as we can get it on board. Aphrodite is also very well advanced. We just time that to coincide with the availability of the refractory treatment. We have included a timetable of that from that in the announcement, as best we can determine. Like, we have had a large amount of access and opportunity to work with the Bardoc team on this, and those are our confident timeline estimates at this stage. Our hesitation is not so much because of the work.
It's because of the listing rules being a pre-production asset, although there is a feasibility study, that feasibility study is by Bardoc. We propose to treat those deposits through a different processing plant. Unfortunately, listing rules then prevent us from being able to quote the numbers, our production numbers from the Bardoc feasibility study. That's just an unfortunate aspect of the listing rules. I hope I'm answering your question in terms of that's the sequence because of the natural properties of those ore bodies. In terms of the Tower Hill and Harbour Lights deposits, we can say what, you know, when they'll be available from. We're hoping that on the current plans that they can be brought on from sort of FY 2025 onwards.
Obviously, this will become a competition for feed, though, between the deposits at 2.1 million tons per annum. You know, we have between Gwalia and the 900,000-ton planned mining rate from Zoroastrian Aphrodite, we can fill that mill for the near term. We'll obviously be putting ourselves in a position to be able to expand if that's appropriate. For now we've got that would be the sequence. Get through Zoroastrian free milling, bring on Aphrodite as soon as the refractory treatment capability is, and then Harbour Lights and Tower Hill are able to come on from that point onwards.
Yeah. Just on that latter point, so if I look at the mining rates you're looking at once we start talking about Harbour Lights and Tower Hill, those upper bounds are above that 2.1 that you're talking about. Can you talk about how you're thinking about that right now?
Sure, if you're happy, Craig. We've been looking in the feasibility, the pre-feasibility study that we've had running since the middle of the calendar year. We've been, you know, these are mining rates that those pits are comfortably capable of operating at. In our pre-feasibility study for the mines, we're examining the, you know, the economics and the appropriateness of rates across that full range, across all those deposits. We are certainly not discounting the potential for expanded mill. We've been looking at the possibility of having this mill plus an additional free milling mill. That's the range of processing rates we know these operations can mine at.
Okay, sorry. If you were to go above 2.1, that would be another train? Is that what you?
A dedicated free milling circuit would be the option there.
Okay. Yeah, okay. Mining the two underground is, you know, different to what Bardoc had envisioned with Zoroastrian North and Bulletin South, I think with their focus for the DFS. Can you just talk to the change of rationale there?
It's Andrew here again. The Bardoc feasibility study had a range of pits coming on, but the Zoroastrian, the probably only difference is that they were starting with the Aphrodite open pit early as well. The plan for Bardoc was to mine the open pit and then, after stage one, access the Aphrodite underground. We're proposing to probably go for the underground more directly, developing a portal from surface. But in the revised Bardoc feasibility study, Aphrodite was certainly brought on as fast as they could. That was the major economic contributor to the feasibility study. Zoroastrian underground as well was sort of coincided with their open pit development sequence. It's more that, you know, we've got, they were needing to fill a 2.1, I think, a 2.2-ish million ton per annum plant themselves, so they had a mix of.
A mix of deposits starting. I suppose we've got the luxury that we can work it through a targeted 1 million ton per annum gap between what we can produce from Gwalia and what the new plant would be capable of. It's probably just more a matter of, you know, we can be a little bit more selective. We don't have to develop the open pits at the same time.
Yeah. Okay. Thanks, Andrew.
Thank you. The next question comes from Matthew Frydman from Goldman Sachs. Please go ahead.
Sure. Thanks. Morning, Craig and team. A few questions from me, if I can, and I guess firstly, starting on the Province Plan and I guess the kind of big picture assessment of the district. Just wondering if you can give us a sense of, I guess, how you're thinking about the back of the envelope concept for Leonora going forward. I mean, I know obviously there's a lot of moving parts and there's still a PFS to come. I mean, based on the resources you've presented, how do you think about what Leonora should be able to produce and for how long, and you know, at what margins?
I mean, I guess, you know, back of the envelope for me, you could think about maybe a 250,000-ounce per annum operation for, you know, for more than 20 years. You know, you've described that, you know, you've got expansion options beyond 2.1 million tons. Yeah, I guess, how do you think about what the sweet spot is for Leonora going forward in terms of those factors, production life, and even margin?
Yeah, Matthew, that's a really good call because that's certainly part of our uplift three and the Province Plan I spoke about in December last year. I think, not ignoring the Bardoc transaction for a moment, this certainly is going to lift us in the order of the answers that you're talking about. My view would be now, in particular around the refractory material that's available in the province, would also open up different avenues and more avenues and other interested parties that have some refractory ore that have nowhere to process it within a, you know, 200-300 km radius of us. It all starts to come into play now.
I think Leonora will maximize and will be cash-on-cash return when we do the feasibility work and all the study work we have to do to optimize what we've got now. Clearly, if you add you know, Harbour Lights, Tower Hill, Zoroastrian and the Bardoc assets, you put them all together. You know, 2.1 million tons in a couple of years may not be enough. We need to do that work. Certainly, if you back calculate, say, the 2.1 million at 3 grams, whatever that gives you know, you're up into that sort of number. We haven't optimized yet to actually know that, but 250 or above is absolutely doable in that region for many years. So I'm quite excited to have this join the portfolio.
The two refractory ore types from Harbour Lights and from, I guess, Bardoc. Join those two together. It's much more efficient, cost-effective way of processing that ore. The Albion plant bolted on. The unique way that we are talking about engineering to be able to cross over from one process stream to another seamlessly without very much delay will give us unique processing capability that will continue to lower costs. We'll be looking at, you know, the sort of production numbers that you just put out in terms of ounces or even higher, I would have thought.
Great. Thanks, Craig. That's helpful. You spoke there in terms of cash returns, and that really leads into my next question. I mean, clearly, you know, already having a big resource base and then acquiring new resources, you know, be it Bardoc or even other refractory sources as you alluded to, you know, obviously that gives you a lot of choices in terms of being able to invest in potential mill expansions and extend mine life. I mean, whatever way we cut it's pretty clear that Leonora is gonna move to a higher tonnage, lower grade configuration. I guess the question for me is, you know, what is your overall goal with these investments? Or how do you optimize or assess for returns, you know, for margin, in terms of minimum hurdle rate?
I guess what's your expectation for how these investments are gonna deliver actual cash return?
Yeah. Well, obviously, hurdle rates and return on capital deployed is, you know, is very important to us, the same as is everybody else. I think the opportunity in the Leonora Province is nobody knows yet how good that can be. Every bolt-on opportunity that is there, we'll certainly take and look at, and we'll take the best. Andrew, who's been leading the Bardoc challenge and charge for us, I should say, is certainly in the detail and the opportunities that we're uncovering there in our view, combined with our assets. It will come back to, you know, cash-on-cash return on each time and return on investment.
There is so much available in the province for us now in our endowment, in particular, that future expansions and good cash-on-cash return, depending on the gold price, of course, and a few other things, but is absolutely doable. We need to keep an eye on that in the future growth that leans on what that could look like. Because, you know, going off into other jurisdictions around the world, that's got its upside. But, you know, when I look at the organic growth that's in the province and the region for us, the investment in the Leonora or the Western Australian area in particular is probably better for us at this point in time. Look, it's still been baked in terms of what that Province Plan could look like.
We're nowhere near our third uplift stage or uplift three, as we called it last year at this point. We're well advanced. The Bardoc acquisition, for example, that wasn't in our minds 12 months ago. To be able to escalate our uplift two and partially uplift three at this early stage is very exciting. I think the investments will be, given the infrastructure that we have already, will be minimal compared to some of the opposition.
Okay. That's good to hear. Thanks, Craig. A couple of, I guess, maybe quicker ones, or project-specific ones if I can. Firstly on, metallurgy and recovery, just wondering the extent of the met work that's already been done to Aphrodite. Also, I guess, by extension, Harbour Lights in terms of the refractory deposits. What sort of recoveries can you expect from the Albion Process and how much more drilling or met testing is required for you to be comfortable with that?
Yeah, there's some good testing work already being completed at Bardoc. I'll pass over to Andrew to talk about that in a moment. We need to do some of our own testing at Harbour Lights. We're still, in my view, underdone there, and we need to understand a bit more. The Albion system has been implemented globally, and it's operating quite well in the mid-90s in terms of recovery. That's quite an efficient low-cost option for what we have, for example. In terms of the met testing, we have put some data out today on what's been done already.
The ore types that we will be escalating out of the Bardoc operation, for example, once they're running, is certainly compatible with Gwalia. We can mix the two ore types and be extremely productive and not lose recoveries. Andrew, any other further comment?
Bardoc selected in their feasibility study design to just produce a concentrate and then export it or rail it out for export for processing overseas. That's a trade-off between selling costs and capital costs there. We had already been looking at the Albion Process for Harbour Lights. I think that's a preferable outcome for us. Bardoc did look at a range of processing options, including Albion, and the test work was positive. It's just that compared to floating a con and then exporting it was a natural sort of lower cost, lower capital cost option for a junior. We're not concerned by the ability.
We'll do more test work for, you know, to zero in on the design parameters. In terms of actual being able to treat it, that doesn't cause us any concern. As I said, for Harbour Lights, back when it was in operation previously in the nineties, they used a BIOX treatment process, so very similar, you know, oxidation step in terms of achieving the same outcome. We're again confident on Harbour Lights. Again, we've got more test work planned to zero in on the specifications, sizings, et cetera. The processes are pretty well proven for these types of refractory ore bodies.
Got it. Thanks for the detail. One last one quickly, if I can. Just the capital cost in Bardoc's studies on the two undergrounds there. I mean, AUD 15 million, AUD 30 million. I know there's limits around obviously what you guys can say in terms of cost assumptions, but you know, those numbers seem pretty low to me. Do you expect that those are reasonable estimates or have you assumed something a little bit higher in terms of your assessment of the projects? Just, I guess, in terms of your due diligence and the, I guess, arriving at a fair price for the company.
Craig, what would you like me to take that one?
Yep. Yeah, sure.
If anything, probably the capital cost that Bardoc had were a bit lower in the feasibility study. They did have the benefit that they were planning to put in additional infrastructure at the location for the road, you know, for a processing plant and more mining locations. We have added some capital recognizing that, you know, we have to add that into the underground cost as the base of operations. No, we're actually quite comfortable. It's establishing a new underground mine from an existing pit at Zoroastrian.
We have added the cost that we've allowed for developing from surface at Aphrodite rather than developing off the pit, as Bardoc had planned to do in theirs. I think keeping in mind that it's relatively close to Kalgoorlie, we see no reason to depart from what Bardoc had planned with a Kalgoorlie accommodated workforce rather than an on-site camp. You know, modest power facilities, et cetera. We're quite comfortable that those numbers are based off our own work with the benefit of the Bardoc feasibility study.
Got it. That's great. Maybe, sorry, one last one, just quickly. I noticed that in your presentation of the revised resource base at Leonora, you haven't included the Gwalia open pit cut back in there, if I'm not mistaken. Just wondering where the plans for that are and the reasons for the omission there.
Again, I can take that one for you if you like, Craig. It's based on.
Yeah, sure.
My team's study work. Nothing in particular, obviously, probably impressive enough list with rattling off that list. The Gwalia open pit cutback potential is still being studied in the pre-feasibility study. That hasn't come off our list of prospects to look at. That obviously has the complication of working out how to mine that open pit when we're also accessing the underground from the pit. But it's definitely still in our list of potential future resource development sequences. Yeah. It probably would fall behind Tower Hill in the sequence.
Yep. Understood. That makes sense. Okay, thanks for all your detail on the question.
You're welcome.
Thank you. The next question is from Joshua Hain, from REST Super. Please go ahead.
Good day. Guys, thanks for the call. I guess you know, Craig, sort of you alluded to before around going into other jurisdictions and perhaps the preference at the moment to invest organically closer to home. I guess I was just interested how you feel about this acquisition or how we should think about this acquisition in the context of you know, your time and team's time and bandwidth, given some of the complexities in the approval processes and development plans you've got going, you know, Atlantic and Simberi. It sort of feels like you've got a pretty full dance card already, particularly in context of you know, global pandemics and ability to move people around, et cetera.
Yeah. That's a really good question because I think if I look at the Bardoc side of the equation last, because they're well advanced with permits and have their permits in place. That we're shovel ready on one of their mines, for example. We're ready to get going, but I'll come back to that shortly. We're working through with the new government and the local environmental people in Nova Scotia, for example. That's going reasonably well. As of recent, the new Government new Environmental Minister has met with us. I must admit, the last month has progressed significantly compared to where we've been stalled for the last, well, ever since I've been around now, 22 months, I think.
It's been stalled, but it's now going through, so hopefully we'll have some good news on that in the early new year. In terms of the sulfide project at Simberi, the EIS has been submitted. The CEPA, so the environmental regulatory body in PNG, are very favorable of project. They've just given us approval for startup of the DSTP work that we've had to replace and repair with the technology that we've put in there to be world-class. I expect now there's been some questions come back from CEPA that we will technically answer and resolve over Christmas and New Year for them.
I believe the Sulfide project EIS approval will be, if not, we're running out of time this year, but if not this year, very early next year. That's going according to plan. What I am finding, given that I haven't been able to get to Nova Scotia myself, and none of our team has ever since I joined St Barbara. Doing things remotely is very, very difficult. That changes in a few weeks when I head up there myself. Meryl, who most of you on this call is already up there, heading up the organization in North America for us and has been doing a great job in the couple of months he's been there. That's progressing okay.
It is so different than progressing operations at in Western Australia. Western Australia clearly get and understand mining. A very rigorous engineering standards and processes to go through. It's also the government agencies are well attuned to mining. It's second nature. They've got really good, strong processes. They certainly have got a great workflow of where you're not sitting and waiting for forever, not knowing where you're going, like some other jurisdictions. As I said, Bardoc have submitted their last, I guess, set of license plans. The other one's already approved. It's shovel ready. I just don't see the complexity in Western Australia to move forward and grow even further.
As I've alluded to, there's certainly refractory ore bodies that people haven't developed and own that may have a look now that we have and will have within the next two years, an Albion processing facility or a multi-processing facility, as I would call it, to be able to handle multiple ore sources. I think to be able to get that license permitted, engineered and built, the risk to me, the things that would keep me awake at night would be the Western Australian labor pool, the construction capability of some of the contractors. We have some time, not overnight, but we have some time to work through that. As Andrew and the team go through the next phase, we'll see what the timing looks like. Yeah, I don't feel uncomfortable in any jurisdiction.
Still a little bit in Canada.
Yeah. Thanks for that.
For sure.
Thank you. The next question is from Peter O'Connor, from Shaw and Partners. Please go ahead.
Good morning, Craig. Congratulations. You've caught me on leave, so I've missed the first part of the call. Just some background on the deal itself. Why a scheme, not on market? Is the first question.
Yeah, look, I think I probably should let Lucas answer that. Look, I think for me, the value of our paper, the value of our shares obviously. You just gotta look at all different options. I think there are multiple ways to be able to fund it. My preference would be, at this stage, and given the price of debt, to take on small amounts of debt. We will be cash, reasonably cash strong, certainly cash generative over the next 12-18 months that can afford to pay for this. For me now, this is the best financial outcome going forward. Lucas or Andrew, any other comments on that?
It's Andrew here. In terms of the scheme versus on market, obviously, I think probably the one of the key advantages, of course, is the certainty of the outcome. Given the Bardoc register, this was an agreeable approach on both sides. No particular magic to it, but certainly confidence of the outcome and working with the Bardoc team on a definite result seemed the appropriate way for us to choose on this one.
Sorry, cash versus paper. Your paper, I think we'd all agree on this call, is trading at a big discount to fair value. Why would you issue paper? You said you're cash generative, and you said the cost of debt is cheap.
Lucas?
I think there's a couple of things there. One, we already have some debt facilities that we've already negotiated with the syndicate banks. Largely we're looking at reserving those for the capital requirements we're gonna have not only for constructing the Bardoc assets and developing those and processing part of Leonora, but also looking at the work that needs to be done in Atlantic and also at Simberi if the sulfides are approved on board in a few months' time. But I think when you look at, yes, our strength of the paper is not great, but also, you know, the valuation of Bardoc is, we also believe, undervalued. You're kind of looking at this balance of two relatively undervalued companies sort of exchanging paper on that level.
The question is if Bardoc is cheaper than Simberi, that's fine, but if it's not, it's diluted. I take it.
Correct.
Therefore, Bardoc, you're pitching at a cheaper price to NPV. Okay, that's good. Next point, when did the discussion start? Who started them? And what level of DD has been done?
Yeah, look, I think the.
Can I-
Oh, sorry, Andrew. Go ahead.
I was just gonna ask you if you want me to cover that.
Yeah. Yeah.
Bardoc announced the strategic review following the decision not to proceed with the financing. Our look at Bardoc had started back in August, I suppose, when we were looking at complementary assets in the region. We've been looking from the outside since August, where we looked at the complementary nature of the assets. They had good excellent refractory deposit. They had free milling ore. It was a target that we identified that had a you know a very sensible mix of assets that blended well with our own and particularly in terms of the timing of the development sequences. The due diligence was able to start late October.
I think it was when that strategic review was announced. We were allowed to look pretty much the week after that strategic review started. Due diligence has been underway right from that point until the last week. Obviously with the value proposition to us, the significant target for us was Aphrodite and Zoroastrian. As you can see, the other deposits are also attractive, but these ones were the ones that sort of were the most complementary and most immediately available. We've had the opportunity, working with our consultants to study those in depth, to revisit the resource model, remodel the mine designs, and model the processing stream.
We've had a good period of intense due diligence with the Bardoc team, who I must say were extremely responsive throughout the due diligence process. We're very grateful for that in terms of allowing the depth of due diligence that we're able to.
Has it been a competitive process or a bipartisan process?
I would defer to Bardoc, but there was certainly. It was a strategic process that they went through, where they invited multiple parties.
Got it. Okay. Look, shifting gears back to ops. Craig, you talked about the way you're gonna run the mills with campaigns and with the refractory in the free milling. You talked about that you wouldn't have an issue with that, I think you said. Are there precedents around the world, anywhere that you can talk to or point us to where there are mills running a similar campaign process or give us a sense that you can do this and it can work well?
Yeah, look, there are mills in the U.S. that I've seen that run these sorts of different ore feeds and different processes. I think with ours, if you look at it from a P&ID lens, for example, the Albion plant, although it's connected to our normal plant, it's actually separated to a point where you can actually bring it on stream, heat it up. The biggest issue is getting the pressure tanks in particular up to temperature. And that normally can take a couple of days to do that. The way we're designing it here and from a P&ID perspective as well, is we'll bring the whole plant up to temperature before the cut over, and then cut over and shut the other plant down. It's quite the same. It's quite a quick transition and very low risk from an engineering perspective.
Okay. Just back to regional processing or the sense of the scale and scope of the province relating to Matt's question. A 2.1 million ton mill running sort of recoveries you talked about on the call. I think you were talking about 3, maybe 3.3 grams a ton. That's not 250,000 ounces a year, that's more like 200. Do I take from that the grade is gonna be fed at a higher gram per ton, or are the recoveries higher? Is there one of those factors that I'm not getting right?
Yeah, look, the overall throughput is certainly gonna be. The feed grade is certainly gonna be there. We've still got you know we're processing at the same time Gwalia who still you know still reasonably high grade whatever it is. I think the overall throughput at 2.1 is the base case. You know there will be opportunities to grow as we do the work and I'll pass back to the guys that have been putting the Province Plan together and Andrew's team. The Province Plan work is still certainly unfolding. The opportunity to uplift that I believe if you asked me the blue sky would be greater than 2.5. Andrew?
Yeah. I think when you're talking about the math there, the 2.1 million includes the Gwalia would be, you know, under our assumptions, 1.1 of that, if you look at the next two years. When in the first full year of production from these deposits, you're looking at 900,000 tons coming from Aphrodite, for example. That's 3.3. You're talking about 3.3-3.6 grams a ton. We still got a little bit of capacity for whatever it may be, including Trevor Bore. You add, you know, your current projections for Gwalia underground production and then.
And that would be what levels?
tons of.
What should I think about for Gwalia underground?
1.1.
Sorry, 1.1. What grade?
Depending on your model, but, so 6, 5.5's the ones that we've.
Yeah.
That's not current. That's what's a bit higher in the current, but as you project forward.
Backsolving, you need about 4 grams per ton weighted average throughput or head grade to get 250,000 ounces at that mill scale at 95% recovery.
Yep. Those are the minutes. That's 3.3-3.6 from these deposits.
Yeah.
Our higher grade Gwalia feed. Yep.
Yep, got it. Okay, great. Thanks very much. Appreciate the feedback.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Craig Jetson for closing remarks.
Yeah. Look, thank you very much for that. Look, thanks everybody for dialing in and the amount of interest. Do apologize for those that are on holidays. We went through a range of discussions late last week when we knew where we were going with this transaction of when to actually release, but it was material enough to release this morning, as close to Christmas as it is. Really appreciate the questions, the level of detail, but also sharing with you some of the opportunity for uplifts in the Leonora Province. Andrew has clearly been leading through the business development this whole project. The Bardoc executives and management team have been just fantastic to work with to get to this point and look forward to continue that relationship going forward.
Thanks for everybody dialing in on Christmas week. If I don't hear from you, I know some are lined up already to talk to Chris and I and Andrew over the next couple of days, but if not, please have a safe Christmas and a Happy New Year. Thanks again from the St Barbara team for everybody's interest today. Thank you.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.