Thank you for standing by, and welcome to the St. Barbara Briefing on FY 'twenty one Full Year Results. All participants are in a listen only mode. There will be a presentation followed by a question and answer I would now like to hand the conference over to Mr. Christopher Nathan.
Please go ahead.
I'm Chris Maitland, Head of Investor Relations for St. Barbara. On the call with me today are Managing Director and CEO, Craig Jetson Chief Financial Officer, Garth Campbell Cohen and Deputy Chief Financial Officer, Lucas Welch. On today's call, Craig and Garth will discuss our FY 'twenty one results, after which we will open the call to questions. With that, I'll hand the call over to Craig.
Thank you, Chris, and good morning, everybody. As always, I'd like to begin by recognizing the traditional owners of First Nations people of the lands in which Zimbabwe operate here in Australia, Canada and Papua New Guinea and pay my respects to the elders, past, present and emerging. Safety always is essential to everything that we do at St. Barbara. At our Q4 results, I discussed the fatality we had at our St.
Barry operations in May. This year, when one of our truck drivers was fatally injured when the truck they were driving traveled over a safety berm and eventually rolled over into the open pit. All of St. Barbara was deeply saddened by this tragic incident. We have been providing assistance to the employees' family and counseling to support our Simberry team.
The individual remains in our hearts. I'm also concerned with the TRIFA safety performance and in the coming year, we are launching our next phase of our care safety leadership program. This program is visible safety leadership, which our leaders will have more skills in the field of safety leadership by having active care based conversations with our employees. We have also commenced a review of our critical control standards to ensure that these are all encompassing and reflect the up to date thinking. This will include regular in field verification and understanding of required critical controls that keep our people safe.
Another area we can do a lot more in improving is our contractor management and aligning our safety behaviors, there is much we can learn from the contractors and vice versa. Every day, everyone at St. Barbara is working to eliminate fatalities and life changing injuries. This is our number one priority, and we remain completely committed to our goal of 0 harm. We have introduced a new sustainability framework.
This framework supports St. Barbara's purpose, vision, business strategy, which collectively focus on value creation with all our stakeholders. This framework supports our vision, our business strategy and unites the elements that drive good environmental and social governance performance. The last financial year has been a year of consolidation preparing the company for the next stage of growth, including optimizing our organic opportunities. We have declared a $0.02 dividend as we believe it is important that our shareholders make a return during periods of strong gold price.
Our Building British program exceeded its target by delivering $41,000,000 in annualized cash contributions. Before we delve into the details of our financial results and operational performance of each site, I just want to spend more time discussing this program, which will deliver the future shareholder returns. I am particularly pleased today that we've been able to announce an increase in both our group oil reserves and mineral resources. This is a central plank to our strategy of having our operations with lives greater than 10 years in each of our 3 provinces of where we operate. As many of you would know, each year the gold reserves for the industry to decline, but here at St.
Barbara, we're going against that trend and building a company with strong production profile for the future. The increase in reserves has been driven primarily by Gualia for the two following reasons. 1, the resource extension in field drilling has extended mineralization along the strike and at depth, upgrading some inferred resources, indicated resources and resource extension, however, have been lower grade than the existing reserves in combination with a lower cutoff grade has resulted in an overall reduction in reserve grade from 6.3 to 5.2 grams per ton of gold. A higher gold price has also contributed to the increase in reserves. The mineral resource has increased by approximately 13% since June 30, 2020, driven by the inclusion of the Gualia open pit, harbor lights and extension growing in Gualia deeps.
The team commenced a review of Gualia mine in December 2020 as part of the Leonora province plan. Remnant mineralization between 2 80 meters below surface and 500 meters below surface identify potential source of open pit mill feed, completion of the after completion of the underground mining. Accordingly, the historical resource model was updated in accordance with Jolt 2012. This work has resulted in 764,000 ounces of open pit mineral resources. The area below the new open pit mineral resource approximately 400 meters below the surface to 1100 meters below the surface where Gwalior Deeps actually commenced has the potential for additional mineral resources to be defined.
Similar review work for geological model for harbor lights resulted in a further 602,000 ounces in open pit mineral resources. We will provide updates in quarterly reports as the exploration drilling continues at Guaya in the Leonora region over the quarters to come. Last year, we launched our Building Brilliance program, which is central driver to delivering our strategy of 3 operations with greater than 10 years life of mine. The program has encouraged everybody to review processes, apply owners' mindset and ask how things can be done better. During one uplift in the last during uplift 1, which is the 1st 18 months of the program, we are focused on stabilizing our current operations.
This involves generating executing ideas and initiatives in 3 main areas. The first is to reduce absolute operating costs. The second is to get more out of the existing plant and equipment by improving productivity rates. And finally, we are deploying our technical expertise to improve our recoveries. The second phase of the program or Uplift 2 runs for the next 3 years.
Uplift 2 focuses on execution of brownfield expansion projects to grow ounces where we can be profitably mined. For Simberry, this is our sulfide project. At Atlantic, it's the first of our satellite deposits known as Beaver Dam. And our flagship operation, Leonora, this is about filling the mill. The final phase of Building Brilliance Uplift 3 will look at exploration opportunities acquiring assets which are scalable, where we can leverage our existing infrastructure and leverage portfolio synergies.
The production for the group for 2021 financial year was 327,662 ounces of gold with the gold sales slightly higher at 332,786 ounces. The average gold price for the year was $2,215 per ounce. The lower production was attributed mainly to Leonora following difficulties with the oil delivery in the September quarter production from St. Barry being suspended in the June quarter following the tragic fatality. Consolidated all in sustaining cost for the group was 16.16 per ounce in 2021, which is higher than the same period last year, reflecting the impact of materially lower production from Leonora and the shutdown suspension of the operations at Simberry combined with a higher sustained capital investment at both Leonora and the Simberry operations.
The net cash contribution from the operations was $208,000,000 which was lower than the prior year due to lower production and higher sustaining capital. So with that, I will now turn the presentation over to Gar, who will take you through the financial results. Over to you, Gar.
Thanks, Craig, and good morning to everybody. I'll start by looking at the key financial measures for the FY 2021 year. FY 2021 was a challenging year, which is reflected in the key financial metrics when compared to the previous year. Profitability and cash generation was down across the 3 operations due mainly to the lower production year on year as Craig referred to. Underlying EBITDA was $300,000,000 which was 12% down on last year and operational EBITDA was down 17% with Sambury reporting the largest decline given the suspension of operations in the last quarter of the financial year.
EBITDA margin for the group was healthy at 40%, only marginally lower than last year. We reported an underlying net profit after tax of $81,000,000 with the lower result compared to last year driven again by the lower production. Net profit after tax was a loss of $177,000,000 impacted by the $248,000,000 impairment write down Atlantic, which I'll talk to shortly. Difference between the statutory and the underlying net profit after tax is significant items relating to the impairment at Atlantic, the Building Brilliance transformation costs incurred during the year, capitalized exploration that was written off at Atlantic and partially offset by unrealized fair value movements on Gold Call options. Note 3 to the financial statements provides a detailed breakdown of the significant items and an explanation of each of them.
Cash flow from operating activities was $227,000,000 which was down 19% on FY 2020. Key difference compared to last year is again lower gold revenue. At 30 June 2021, the cash position was $133,000,000 with debt of 109,000,000 dollars comprising $84,000,000 of the syndicated debt facility, dollars 15,000,000 for leases relating to purchase of mining equipment at Guylia and $10,000,000 for other right of use asset leases. As Craig mentioned, the Board declared a final dividend of $0.02 per share fully franked, and this is in addition to the $0.04 fully franked interim dividend that was paid at the half year. The DUC of the company's dividend reinvestment plan has always been well supported by our shareholders and we've retained the 1% discount for shares issued in relation to this final dividend.
Now just turning to Slide 13. The company has consistently maintained returns to shareholders via dividends since we commenced dividend payments in FY 2017. And including today's final $0.02 per share, the company has paid 9 consecutive dividends totaling $0.40 per share or $240,000,000 The FY 2021 total dividend equates to $129 per ounce produced and it equates to an attractive dividend yield of around 3.8%. Now turning to the impairment. The company has reported an impairment following the annual review of the carrying value of its assets.
This resulted in a non cash write down of the Atlantic operations by an amount of $248,000,000 after tax. A further $5,000,000 after tax was written off capitalized exploration, which related to tenements in the Southwest region of Nova Scotia. The majority of the impairment has been caused by the delay to the timing of permitting the Beaver Dam 15 Mile Stream and Cochrane Hill projects from what was assumed at the time of the Atlantic acquisition. The carrying value test has been based on the latest information to determine the fair value of the Atlantic operations. The overall reduction in carrying value of $248,000,000 aligns with the current market consensus estimates for the value of the Atlantic operations and gives a carrying value in our books of 623,000,000 dollars Slide 14 gives a breakdown of how capital has changed at Beaver Dam based on the estimates that have been used through this exercise.
The feasibility study for Beaver Dam is expected to be completed by the end of the current quarter. And if you look at that slide, overall capital costs are currently estimated to increase by circa $79,000,000 This is made up of a revised capital estimates of $30,000,000 for improved environmental controls and to meet community expectations, a revised route for the whole road has been developed together with upgrading that road to handle larger trucks. Current draft of the feasibility study also assumes certain costs are reallocated from operating to capital, which is also shown in that chart. In terms of movement in underlying net profit after tax, the waterfall chart shows the underlying result. As I mentioned earlier, with production down at all three operations, each operation had lower profit than last year.
If you look
at note 1 to the financial statements, there's a detailed breakdown of the profit before tax for each operation. This was always partly offset by lower finance costs and foreign exchange movements. The cash waterfall chart highlights where cash was deployed in the year. Of note is that we repaid debt of $220,000,000 in the year. We purchased MRRI for $62,000,000 to consolidate 100 percent ownership of TUKOI and we paid $45,000,000 in dividends.
The group also invested a total of $139,000,000 in sustaining growth capital in the year. The cash contribution from the operations after all this CapEx was $208,000,000 for the year, which was well down on the $273,000,000 that we generated last year. And we also spent $34,000,000 on the global exploration program. Last area, I'll turn to the balance sheet, where we finished the year with cash of $133,000,000 giving a net cash position of $34,000,000 excluding the right of use asset leases. Total interest bearing liabilities amounted to $109,000,000 which included the $84,000,000 outstanding on the Canadian tranche of the syndicated facility.
Now at 30th June, we reclassified this facility amount from non current to current liabilities, despite the fact that this facility does not mature until the 23rd July, 2022. Due to the large impairment write off that was determined as part of the year end process in August, this affects EBITDA and EBIT for the year, which is used to calculate certain debt covenants. Because we could not satisfy these covenant calculations at 30th June, we are compelled to report the debt as current, even though the syndicate banks have granted a waiver from complying with these ratios following year end. We have explained this in the subsequent events note in the accounts if you wanted to get a bit more detail. Discussions have already commenced with the syndicate lead to extend the maturity of this facility.
The current term of the facility is a 3 year term. And with that, I'll now hand back to Craig.
Thank you, Garth. So for me, let's start at Leonora where our strategy clearly has been focusing on filling the mill. So to start with, our Leonora operations generated over $62,000,000 in cash, outstanding and capital growth. This was lower than previous years as we already explained around the higher sustaining capital and the lower gold production. In the Q1 of the financial year, we had a seismic event that resulted in a fall of ground, which forced the closure of the decline where we had to rehabilitate more than 30 meter section.
The lower gold production, as we've stated and GAF has gone through, has given us the site an all in sustaining cost per ounce higher at $16.63 per ounce. Our Building Brilliance program has been working hard to improve performance at the site and reverse these cost trend increases. The program has encouraged everyone to look at the work areas and use the owner's mindset as we assess opportunities. McManor underground mining contractor are developing and certainly delivering improved productivity despite the impact of border closures driven by COVID-nineteen primarily from the East Coast. Also pleasing, Manheim's productivity results are increasing and in many areas beginning to exceed our base KPIs.
One of the most successful recent outcomes at Gladia has been the commissioning of extensive underground Wi Fi. We've seen the Wi Fi enable various productivity improvements in this deep mine. One example is the tele remote drilling through shift changes, which has dramatically increased equipment utilization. Another initiative looked at ways to reduce the total pace fuel curing time for the mine stope by reducing the number of cores required. This has resulted in shorter stope cycle time.
Another initiative has been focusing on reducing a number of hole cleans and redrills by using adjusting time philosophy. The Wi Fi has also further improved safety conditions by broadening the use of remote control capabilities. Instrumental in the turnaround of Guayli will be the number of development fronts we have been operating at any one time. As you can see here, there has been considerable change in the start of FY 'twenty one to where the year ended. This is encouraging signs for the coming year and the years to come.
As more fronts open up underground, the team are better able to manage equipment utilization and are able to work in multiple areas. This has been a key restriction for years in the past. The underground Wi Fi has enabled implementation of better short term interval control by obtaining real time data and equipment utilization better to coordinate equipment underground. In simple terms, our team leaders now know real time where their equipment is and where it's not been fully utilized, which allows them to make real time decisions to ensure equipment does not remain idle for long. We've also looked at ways safely by increasing the speed of which we established our ground support while replacing static cable box with self drilling anchors, which reduced the development cycle time significantly.
The team have also improved the cut length by implementing alternative detonators, which better utilize our explosive and increase the blasting depth at each of the phases. Incremental gains like these saw the increase of the number of development fronts from 11 at the start of the last financial year to 24 in June with the aim of achieving 30 within the next 12 months. The current mining Gualia deeps at 1700 meters below the surface. We're now assessing potential upper portion of the mine between 400 meters below the surface and 1100 meters, some of which have been mined previously when the gold price was consistently less than where it is now. We are particularly focused on the upper portions of the West Lobe and the South Gualia series.
The purple section on this side is the Gualia intermediates. The intermediates have already been incorporated into the Gualia mine plan and have been included in the reserves update released today. The development work to access these intermediates will commence later this financial year. Tower Hill Harbor Lights are known deposits within 5 kilometers of Guayuan Mill. On the image here, Tower Hills is in the foreground, Harbor Lights is in the background.
A combined pre feasibility study for Tower Hill and Harbor Lights is underway and will include options for potential mill expansions. In addition, as part of the study, refractory treatment options are being considered for Harbor Lights as this is a refractory ore body. All of these studies are scheduled for completion in the Q4 of this financial year. To fill the mill to fill the Igalia Mill, we are exploring all options to source additional ore. Our focus is what we will deliver value to our shareholders that be tolling, ore purchase, joint ventures or acquisitions.
This financial year Linden and Alliance arrangement will deliver a minimum of 180,000 tons of ore and 90,000 tons in FY 'twenty three with the potential to achieve higher tonnages over a long period yet to be realized. In early July, we acquired a strategic 19.8 position equity in Kin Mining, which has 1,200,000 ounces in resource and deposits within 45 kilometers of our Leonora operations. We believe there is further exploration upside potential within the package, and we look forward to supporting Kin Team to continue to build on the great exploration work they've been doing there. Transacting on smart opportunities like these and combining these deposits we already control with our existing infrastructure is how we'll ensure that the mill is full for the next decade and beyond. Exploration drilling is planned along the corridor between Gloria, Tower Hill and Harbor Lights.
There is also a resource definition drilling plant for Tower Hill and Harbor Lights deposits with special focus testing potential high grade extensions to 9 targets particularly at depth. We're already progressing targets in Jasper Hill area as we speak, located 20 kilometers north of the Leonora pricing plant. We believe that this area has further exploration potential on the upside. Last year, the mill processed 749,000 tons. Due to mill improvements uplift 1 of the Building Brilliance program, we expect process this year 1 point expect to process 1,300,000 tons this year through a combination of increased milling output from Gallia and from tolling oil purchase.
In FY 'twenty three, this will increase to 1,400,000 with less reliance on tolling and oil purchase. Our aspirational target for FY 'twenty five is 1,700,000 tons. This will require upgrade work on the existing process plant, obviously. We'll now turn to Atlantic operations in Nova Scotia and the project work we're advancing there as we move towards developing a 10 year operating life in the province. The Teco Mine is integrated has been integrated well in Sabarva portfolio and has performed strongly since the acquisition of Atlantic Gold Operations in July 2019.
The Building Bridges program Atlantic Gold Operations had delivered material productivity benefits, particularly in the mill with throughput up 13% on the prior year. Gold production for the year was 101,000 ounces, which is only 6,000 ounces lower than last year, primarily driven by lower process grade. Mining in the second half of the year was impacted by congestion due to smaller work areas as the mines becomes deeper and the lower benches of the pit in particular. Increase in sustaining capital saw an all in sustaining rise of $100 per ounce to 10 $27 per ounce. The increase in sustaining capital is mainly related to tailings management facility and preparation for future years and the refresh of some of the mining fleet.
The building buildings program in the landing operations has already delivered record breaking mill throughput rates, seeing a 22% improvement since the start of FY 2020. This was achieved through a series of initiatives. The implementation of larger gravity screens, Aperturi, in particular, to better enable separation of material and substantial debottlenecking of the gravity circuit. 1 of our frontline employees through the program picked up the angle of a spray bar in the trommel, where it could be adjusted to better screen fine material and has had a significant impact on throughput. We've also increased wheel power draw to enable increase the field ton feed tons through the ball mill without negatively impacting the mill in any way and particularly on vibration.
It's initiatives like these that bring minor modifications to the plant, which enabled to achieve record throughputs in quarter 4. As mentioned earlier, Building Brim's program is about getting more out of existing assets. At Tukoy, we've been able to improve processing plant by 14%. Similarly, maintenance team have critically reviewed their maintenance programs to determine how best they could maintain the plant while minimizing shutdowns. This has resulted in a move from condition based shutdowns instead of time based.
The benefit also increasing the mill availability. There's also been a focus by the team on recovery. With the recovery target 92% based on our models for recovery, by starting downcomers in the CIL tags, for example, we're able to increase the residents' time and improve cyanide dissolved oxygen control, which has seen improved recovery from the base 92% from our geological models to 94% with even lower feed grade. Beaver Dam is the 1st satellite deposit we intend to develop. As the crow flies, it's 37 kilometers away from the Tucoid processing plant.
Our plan is to truck ore along the pre existing and yet to be constructed haul rates. We are particularly interested in the minimal carbon footprint design for the Beaver Dam site. Here we're considering using life cycled plastic for foundations, inflatable buildings, using renewable power from Tuukui and potential liquid nitrogen water treatment systems rather than traditional and more energy expensive methods. Our plan and our original plan when Tuukui open pit finishes, we intend to convert it to a tailings storage facility. We expect this pathway to be in place in the Q3 of this financial year.
For Beaver Dam, we have submitted a revised EIS or environmental impact study to the federal government, and we expect this to be approved at the end of the current financial year. In parallel, we are progressing our mining license approval for Beevade Dam, which we anticipate also being completed by the end of the Q3 of this financial year. After the environmental impact statement is improved, we will then apply for the requisite provincial industrial approval, which will allow us to commence construction of our mine and start of mining. At this stage, we're on target to deliver the 1st ore from Beaver Dam in the first half of FY 'twenty four financial year. We're also working a number of permitting matters of 15 mile stream located approximately 57 kilometers from Tukoy pricing plant.
A number of permitting matters for 15 Mile Stream are already underway with the environmental impact statement due to be submitted in the Q1 of next financial year. 15 Mile Stream will see a new processing plant constructed. The site will produce a gold concentrate, which will be trucked to Tukoy for further processing in the dore. First gold production is currently on track for FY 'twenty five. Our exploration team remains committed to exploring new opportunities beyond Beaver Dam and 15 Mile Stream in the Moose River corridor.
We are drilling and testing several targets immediately adjacent along the strike of the known deposits. In the regional Northwest area, we are drilling the highest rank target in this financial year. Multiple targets have been generated in the Southwest region and which we will follow-up this year either the first or second round of drilling programs. So with that, I will now take you through the Simberry operations in PNG. Production for the year was severely impacted by the shutdown of the mining operations on the 21st May 2021 due to the fatal accident at the mine.
Production was then suspended due to damage incurred to the DSTP or the deep sea tailings placement line. Our recovery plan is well underway at Gymboree. Corrective actions from the fatality and the replacement of the DSTP are well underway. The process of facility is expected to restart towards the end of this year or in quarter 2. Simberry generated a positive net cash flow of $46,000,000 after sustaining and capital expenditure.
For the next 2 years, Simberry will be mining and processing remaining oxide material in various oxide ore bodies. We are continuing to drill 6 oxide targets of Simberry with the aim of finding additional resources capable of extending the life of the oxide operations. Initial drilling will be target areas such as cell tower, piggybell East and the cow south. As we progress through the depth in the ore body, Simberry mineralization transitions from 3 milling oxide material to refractory sulfide ores, assessing the change in the processing pathway forward to produce gold. The production of gold dore on-site under oxide pricing flow sheet will give way to production of gold concentrate under the sulfide processing regime.
The sulfide has a higher grade of gold and oxide and will see a shift from oxide averaging 1.2 grams per ton to sulfide averaging about 2 grams per ton. By changing the processing flow sheet, we will produce an attractive gold sulfide concentrate, which is readily salable and easily salable with strong yields in the market. Initial capital expenditures for the sulfide project is circa $170,000,000 including expansion capital with a payback of approximately 3 years. What makes the sulfide project's expansion particularly attractive from mining perspective is that we can utilize much of the existing infrastructure and maintain existing mining methods. Average life of gold mine production for sulfide project will increase from approximately 160,000 ounces per annum at an average of all in sustaining cost of 8.96 per ounce for 11 years.
This delivers an IRR of 40% with the first ore being delivered in approximately 2 years from now. In addition, the mining lease on the eastern side of St. Barry, St. Barbara holds the regional exploration license covering the eastern side of St. Barry and the 2 large islands called Big Tobar and Tatau.
Exploration on the southern two islands remains ongoing through the course of the year. Our strategy is to develop 3 operations with a productive mine lives of greater than 10 years. In an industry where our average life of mine operating gold mines is now less than 7 years, The time to develop new mines is greater than 15 years, particularly in Canada. We believe that this is a distinctive advantage by having 3 mines with large greater than 10 years. The Sandbar the recent Leonora province plant work has added a further 2,000,000 ounces to reserves to the inventory, placing our Leonora operations on a trajectory of greater than 10 years more life of mine.
We have identified satellite deposit at landing and we'll keep our operations running there for greater than 10 years. Whilst in Berry, we're moving from a higher grade sulfur mineralization, we're planning for conversion to deliver a further 10 years in that operation. These are exciting times for us in Sababa, and we certainly look forward to providing regular updates on the journey and ongoing progress of all our plans of our 3 operations over our quarterly and half year list to come. With that, I will now hand back to the operator and take any questions that our listeners may have. Thank you.
Thank Your first question comes from David Radcliffe with Global Mining Research. Please go ahead.
Hi. Good morning, Craig and T. My first question is on the dividend. You obviously have quite a loose policy. So maybe could you talk to the decision to cut the final dividend to the lowest level you've paid?
The financials are lower, but not proportionate to the cut. And then for the last few years, the interim final dividends have been equal. So would it be reasonable to assume that sort of the $0.02 per half is the new current level?
David, really good question. And I'll pass back to Garth or to Lucas to answer that. So no, I wouldn't draw a linear line of $0.02 and that will be a norm going forward. So Garth, comment? Yes.
I think, David, the Board considers that at each reporting date, given the performance of the business, what the use other uses might be for the cash. So I think given that it was a tough year, some berry is not in production at night will come into production during the half. I think it was just taken as a prudent measure to pay a dividend, but not at the same level as in previous years.
Okay. Okay. So then maybe just a follow-up Garfin on the syndicate loan. So can I confirm that you I think what you said was you don't have to make the full repayment given you've got the covenant waived now in this financial year? So maybe could you just give us a bit of an idea what the principal repayments are, if any, in this year?
And then when you look to the future commitments of each of the 3 projects, they each need capital. So what is the current level of debt that you're looking at? And maybe what are you happy to hold as you go through this sort of restructuring of the debt?
Yes. So the reclassification of the debt really was a technical accounting issue because there was a chicken and egg. We didn't have the impairment finalized until August. And therefore, that's when we went to the banks to get the waiver because of the change to the EBITDA and EBIT number. But the accounting rules is you needed to have that waiver before 30th June.
So that was a bit bigger. So it really is just a reclassification of banks. We're quite happy with giving that waiver. There is no scheduled repayment until maturity of the facility on the 23rd July. So we can repay as we need to in this next year or it all has to be paid by that maturity date.
The plans are already in place to extend the maturity on the existing facility. We have the $200,000,000 undrawn at the moment, but that is part of the syndicated facility that matures in July 2022. So the plans are certainly to look to extend that maturity. And I think in terms of the projects in Canada, I think that will require a whole capital management plan around those projects once the studies are complete and the CapEx is confirmed together with the timing of the spend. Yes.
But for now, we'll maintain the current syndicate facility with an extended maturity profile.
Okay. Thanks. That's helpful. Maybe just a couple on the if I can on the reserve resource statement. On the Zimbiri, where you're breaking out now the transitional ore, how should we think this fits into the mine plan?
Do you process that transitional material through the current plant or wait for the sulfide plant? And if it's going through the current plant, how should we think about recoveries?
Yes, David. So the transitional materials had a significant drop in recovery. We're also, I guess, with the current downtime, doing a lot of plant preparation and certainly a lot of, I guess, improvement work so we can maximize recoveries when we start up. I think we have been given permission to start mining at on day shift. So we're doing some selective mining and starting to stockpile some upside.
Also when we start up later in the quarter, then we're on good start up ore and can stabilize the plant. The mine plan yet has to be finalized for the second half. But at this transition period, the recoveries could drop anything up to 10% to 15% to 20% depending on where we are. We're doing that modeling. We're doing the best we can to recover.
So it will be significantly different than the 80% that we normally get on oxides until we do the full conversion in 18 months to 2 years from now.
Okay. Brilliant. Thank you so much, guys. I'll pass it on. Thanks, David.
Thank you. Your next question comes from Matthew Frydman with Goldman Sachs. Please go ahead.
Joel, thanks. Good morning, Craig and team. I guess following on from Dave's question, a couple on the reserve and resource updates, particularly at Qualia, where you've called out the lower reserve grade from 6.3 grams down to 5.2. Just wondering if you can give us some detail on how we should think about that grade profile going forward? Do you expect the mine plan will track pretty closely to that reserve grade over the medium term as obviously you bring in some of those lower grade areas like the intermediates?
Or should we think about a lower grade tail towards the end of the life of the mine? Or is there anything you can say about the distribution there?
Look, I think we've always stated as we go deeper, we're certainly going to see a drop in grades. So that's always been transparent. I think the opportunity for the intermediates and the shallows, in particular, at the lower grade is certainly offset by the less distance that we have to card it and certainly the gap to fill the mill. So gold price, it's always sensitive to gold price as well. And I think when we look at where the gold is, what we can do, the optionality for the mine, how we can bring that into a longer term mine plan, the efficiency to fill the mill, it's certainly going to be at a lower grade than the 6.3, as we stated before, from the deeps.
But the combined business outcome is significantly better than what the position is at the moment. So before we start, we still got some mine planning to do and some optimization to do, but I guess it fits the jock, 2012 the way that it is now, and it's certainly in a very good cash position to be able puts us in a very good cash position at the end of that story. So we'll see how it unfolds.
Sure. Thanks, Craig. So I guess if I interpret that you should be tracking fairly close to the reserve grade over the medium term then given the blend of the various mining phases. You alluded to it there in terms of whether you can talk about the relative mining cost of that shallower material despite the lower grade. Is the overall margin for that material comparable in the intermediates despite the lower grade?
Look, it absolutely is. Because we've as you can see, Matthew, by the amount of development and capital works that we've put into the mine in the last 12 months in particular to set us up for the future and heading to 30 headings, that's really going to give us the optionality from the beat. But adding this to the into the mix, it's certainly really unlocking the potential of that operation in year 2. So for me, it's really becoming a very healthy, stable operation. Now if stable as mining can be, but with the headings that and the optionality this gives and the continuity to continue to top up the mill is such a huge benefit to the business that I'm looking forward to the next 12 months getting to the 30 headings that are mining fronts that are available to us at the deep, including this into the mine plan, we're certainly optimistic.
Sure. Thanks. Sorry. Go on, Craig.
No. Sorry, Matthew. But to add to your point, with the efficiencies McMahons have been able to achieve and the rates they're achieving, the transition from into that contractor, the lowering of the cost plus what we're doing with building brilliance is setting up Qualia for a very strong future with a lot
of work still to do.
Sure. Thanks. And just wondering if you I might have missed it, but can you update us on the timing of converting those Leonor province resources into reserves? Clearly, you've seen an uplift in the Guayana open pit, harbor life, etcetera. I'm just wondering what the timeline is to bring that into reserves and into the mine plan?
Yes. I think the story of our exploration program, and as you know, back in June last year, I announced a significant shift in thinking of exploration targets and development in the province called province plans. And I think the exploration story and the reserves and resource story will be restated almost at each of the quarters. It's unfolding so fast for us. So I think quarterly would be fair for us to have reasonable and accurate updates going forward.
Okay. That's great. We'll look out for those. And then moving over to Beaver Dam, you outlined and Garth outlined the capital uplift you've seen there and obviously the write down. About half of that uplift is more around the reallocation of capital versus operating costs as Garth talked to.
But clearly there's also a pretty big component there of underlying cost increases versus that $29.10 PFS. So just wondering if there's any thoughts on how that underlying capital increase extends to 15 Mile Stream and to Cochrane Hill. Has any of that future potential capital cost increase in those future phases been included in the write downs? And when can you expect to update the market on those studies and those phases? Thanks.
Yes. Good question. I think to answer your question, there will be a change in capital because of what we're learning, particularly at Beaver Dam. And that's primarily driven by regulatory changes, environmental changes and licensing and a whole range of different things that are justifiable from a regulatory perspective that we will comply and we will deal with. And these things are certainly changing, not monthly, but they change quite often.
The political landscape in Nova Scotia changes and has changed just recently as well. So there's a whole bunch of things that are headwinds and delays in getting permits. So I think the capital, in particular, is really based on on things like the pre fees would have missed out on building extra roads and extra bridges and culverts, what that means. Certainly, the delay in permits has also impacted severely as well. What we're learning around and in partnership with the Nova Scotian Government is actually how to handle so many permits and strains.
Now the permits are not just local, they're also federal. So there's 2 bodies that you we're working with and have to work with to get these things permitted. But in Nova Scotia itself, the major delays have been the ability to be able to turn permits back out of the government washing machine for different questions or different challenges or whatever that may be and get them put back in. And there are some issues to the government need to deal with there and we're working with them to try and resolve those. And then the people like the Department of Fisheries and the environmental challenges there and rightly so and we support that and we've got the best engineering solutions we know of to satisfy those questions and those certainly the First Nations questions about that and we're working through all of them.
If you take that learning and the pre work that we're doing in the 15 Mile stream and Cochrane Hill thinking for the future, it will bring that time line back somewhat materially. We'll wait and see because as I've already alluded, things changed so fast in Nova Scotia. You really don't know. And things that we can control like the engineering, the quality of our submissions, answering the questions and the relationships, we're doing and I think we're doing really well. The headwind is making sure that the regulators have got the same importance on turning those submissions around as what we do.
So there's quite a bit of work to be done on that. But I'd certainly see that the costs for 15 Milestone, Cochrane Hill and beyond will be impacted materially yet to be seen, but there will be some flow through the year.
Sure. So I guess just to clarify, maybe one forgot, but does the current write down include any allowance for capital increases at FMS or Cochrane Hill? I mean those phases had clearly much more significant capital outlined in the 2019 PFS compared to Beaver Dam, which was a relatively small capital requirement. So wondering if there's a bigger quantum there to come?
Well, certainly, and I will flick over to Garth. But certainly, the project time line extension is a significant driver to the change in the write down. So Garth, any comment?
Yes. I think with Beaver Dam, there was very little capital in the regional estimates and some of that was in OpEx. But I think with the 50 Mile Stream in Cochrane Hill, there's a much more defined sort of level of capital around equipment, etcetera, that's going to be required for those projects. So I wouldn't expect the same sort of change in those capital estimates that we've seen at Beaver Dam. But obviously, they still got to go through their final feasibilities.
And I think also, there's probably the team is probably testing some of the assumptions in that in terms of how those projects will be developed, which may well reduce capital in some areas. But EBITDA is a much more straightforward operation and we've really had very little capital built into it at the start.
Yes, sure. So maybe some things missed in the capital light option for Beaver Dam that weren't necessarily missed in those future phases. That makes sense. Thanks, Scott.
Yes. Thank you. There are no further questions at this time. I'll now hand back to Mr. Jetson for closing remarks.
Thank you very much for that, and thanks for everybody that dialed in and the questions that we got. Certainly, your interest in us is appreciated. I'd just like to summarize, it has been a very challenging year, very difficult year. The team has navigated a lot of headwinds. We're certainly in better shape at Leonora than we have been for a number of years.
Certainly look forward to starting up Simberry in the very near future and having our permitted approvals completed for Beaver Dam in particular so we can march on with our province aspirations in Canada and continue growth. I'd also like to thank the team for their support today and especially Garth. This is his final year end summary for St. Barbara and I'd like to thank him for his 15 year contribution and 1st class executive contribution and professional contribution to our business through many different headwinds and certainly many different environments the company has gone through in that 15 year period. But also he's tutoring and he's preparing at Lucas to be able to fill that seat when Garth exits in a month's time.
And I'd just like to wish Garth the best for the new Garth adventures, and I hope it works out well. And on behalf of our shareholders and all of St. Barbara, thank you very much, Garth, for your professional contribution over many years and developing great people like Lucas to take over from you. So thank you. And thanks everybody this morning.
That does conclude our conference for today. Thank you for participating. You may now disconnect.