Thank you for standing by. Welcome to the St Barbara briefing on FY 2021 full year results. All participants are in a listen-only mode. There will be a presentation followed by a question -and -answer session. If you wish to ask a question, you will need to press the star key followed by one on your telephone keypad. I would now like to hand the conference over to Mr. Chris Maitland. 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-Cowan, and Deputy Chief Financial Officer, Lucas Welsh. On today's call, Craig and Garth will discuss our FY 2021 results, after which we will open the call to questions. Just a reminder that you will need to press star one, and the operator will line your question up. With that, I'll hand the call over to Craig.
Thank you, Chris. Good morning, everybody. As always, I'd like to begin by recognizing the traditional owners and First Nations people of the lands in which St Barbara operate. Here in Australia, Canada, and Papua New Guinea, pay my respects to the elders, past, present, and emerging. Safety always is central to everything that we do at St Barbara. At our fourth quarter results, I discussed the fatality we had at our Simberi 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 employee's family and counseling to support our Simberi team. The individual remains in our hearts.
I'm also concerned with the TRIFR safety performance. 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 on 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 zero 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 AUD 0.02 dividend, as we believe it is important that our shareholders make a return during periods of strong gold price. Our Building Brilliance program exceeded its target by delivering AUD 41 million in annualized cash contributions.
Before we delve into the details of our financial results and operation performance of each site, I just wanted 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 ore 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 three provinces of where we operate. As many of you would know, each year the gold reserves for the industries decline. 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 Gwalia for the two following reasons.
One, the resource extension infill drilling has extended mineralization along with strike and at depth, upgrading some inferred resources to indicated resources. Resource extension, however, have been lower grade than the existing reserves in combination with a lower cut-off grade has resulted in overall reduction in reserve grade from 6.3 g to 5.2 g per tonne 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 Gwalia open pit, Harbour Lights, and extension going in Gwalia Deeps. The team commenced a review of Gwalia Mine in December 2020 as part of the Leonora Province Plan. Remnant mineralization between 280 m below surface and 500 m below surface identified potential source of open pit mill feed at the completion of the underground mining.
Accordingly, the historical resource model was updated in accordance with JORC 2012. This work has resulted in 764,000 oz of open pit mineral resources. The area below the new open pit mineral resource, approximately 400 m below the surface to 1,100 m below the surface where Gwalia Deep's actually commenced, has the potential for additional mineral resources to be defined. Similar review work for geological model for Harbour Lights resulted in a further 602,000 oz in open pit mineral resources. We will provide updates in quarterly reports as the exploration drilling continues at Gwalia in the Leonora region over the quarters to come. Last year, we launched our Building Brilliance program, which is a central driver to delivering our strategy of three operations with greater than 10 years life of mine. The program has encouraged everybody to review processes, apply owner's mindset, and ask how things can be done better.
During Uplift One, which is the first 18 months of the program, we are focused on stabilizing our current operations. This involves generating executing ideas and initiatives in three 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. Finally, we are deploying our technical expertise to improve our recoveries. The second phase of the program, or Uplift Two, runs for the next three years. Uplift Two focuses on execution of brownfield expansion projects to grow our ounces where we can be profitably mined. For Simberi, this is our sulfide project. At Atlantic, it's the first of our satellite deposits known as Beaver Dam. At our flagship operation, Leonora, this is about filling the mill.
The final phase of Building Brilliance, Uplift Three, 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 oz of gold, with the gold sales slightly higher at 332,786 oz. The average gold price for the year was AUD 2,215 per ounce. The lower production was attributed mainly to Leonora following difficulties with the ore delivery in the September quarter, production from Simberi being suspended in the June quarter following a tragic fatality. Consolidated all-in sustaining costs for the group were AUD 1,616 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 Simberi, combined with a higher sustained capital investment at both Leonora and the Simberi operations.
The net cash contribution from the operations was AUD 208 million, which was lower than the prior year due to lower production and higher sustaining capital. With that, I'll now turn the presentation over to Garth, who will take you through the financial results. Over to you, Garth.
Thanks, Craig, 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 three operations, due mainly to the lower production year -on -year, as Craig referred to. Underlying EBITDA was AUD 300 million, which was 12% down on last year. Operational EBITDA was down 17%, with Simberi 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 AUD 81 million, with the lower result compared to last year driven again by the lower production.
Statutory net profit after tax was a loss of AUD 177 million, impacted by the AUD 248 million impairment write-down at Atlantic, which I'll talk to shortly. The 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 three 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 AUD 227 million, which was down 19% on FY 2020. The key difference compared to last year is, again, lower gold revenue.
At June 30, 2021, the cash position was AUD 163 million, with debt of AUD 109 million, comprising AUD 84 million of the syndicated debt facility, AUD 15 million for leases relating to purchase of mining equipment at Gwalia, and AUD 10 million for other right-of-use asset leases. As Craig mentioned, the board declared a final dividend of AUD 0.02 per share, fully franked, and this is in addition to the AUD 0.04 fully franked interim dividend that was paid at the half year. The company's dividend reinvestment plan has always been well supported by our shareholders, and we retained the 1% discount for shares issued in relation to this final dividend. Just turning to slide 13. The company has consistently maintained returns to shareholders via dividends since we commenced dividend payments in FY 2017.
Including today's final AUD 0.02 per share, the company has paid nine consecutive dividends totaling AUD 0.40 per share or AUD 240 million. The FY 2021 total dividend equates to AUD 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 AUD 248 million after tax. A further AUD 5 million after tax was written off capitalized exploration, which related to tenements in the southwest region of Nova Scotia. The majority of impairment has been caused by the delay to the timing of permitting the Beaver Dam, Fifteen 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 AUD 248 million aligns with the current market consensus estimates for the value of the Atlantic Operations and gives a carrying value in our books of AUD 623 million. Slide 14 gives a breakdown of how capital has changed at Beaver Dam based on the estimates that have been used through this exercise. If you look at that slide, overall capital costs are currently estimated to increase by circa AUD 79 million. This is made up of revised capital estimates of AUD 30 million for improved environmental controls and to meet community expectations.
A revised route for the haul 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 one to the financial statements, there is 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 AUD 220 million in the year.
We purchased MRRI for AUD 62 million to consolidate 100% ownership of Touquoy, and we paid AUD 45 million in dividends. The group also invested a total of AUD 139 million in sustaining growth capital in the year. The cash contribution from the operations after all this CapEx was AUD 208 million for the year, which was well down on the AUD 273 million that we generated last year. We also spent AUD 34 million on the global exploration program. Last area I'll turn to is the balance sheet, where we finished the year with cash of AUD 133 million, giving a net cash position of AUD 34 million, excluding the right of use asset leases. Total interest-bearing liabilities amounted to AUD 109 million, which included the AUD 84 million outstanding on the Canadian tranche of the syndicated facility.
Now at June 30th, we reclassified this facility amount from non-current to current liabilities, despite the fact that this facility does not mature until the July 23rd, 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 June 30th, 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 three-year term.
With that, I'll now hand back to Craig.
Thank you, Garth. For me, let's start at Leonora, where our strategy clearly has been focusing on filling the mill. To start with, our Leonora operations generated over AUD 62 million in cash after sustaining and capital growth. This was lower than previous years, we already explained around the higher sustaining capital and the lower gold production. In the first quarter 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 m section. The lower gold production, as we've stated and Garth has gone through, has given the site an all-in sustaining cost per ounce higher at AUD 1,663 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. Macmahon, our underground mining contractor, are developing and certainly delivering improved productivity, despite the impact of border closures driven by COVID-19, primarily from the East Coast. Pleasing, Macmahon's productivity results are increasing, and in many areas, beginning to exceed our base KPIs. One of the most successful recent outcomes at Gwalia 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 paste fill curing time for the mine stope by reducing the number of pours required. This has resulted in shorter stope cycle time.
Another initiative has been focusing on reducing a number of hole cleans and re-drills by using a just in time philosophy. The Wi-Fi has also further improved safety conditions by broadening the use of remote control capabilities. Instrumental in the turnaround at Gwalia 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 2021 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, increasing the speed of which we establish our ground support by replacing static cable bolts with self-drilling anchors, which reduce 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 faces. 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 Gwalia Deep is at 1,700 m below the surface.
We're now assessing potential upper portion of the mine between 400 m below the surface and 1,100 m, some of which had been mined previously when the gold price was considerably less than where it is now. We are particularly focused on the upper portions of the West Lode and the South Gwalia Series. The purple section on this side is the Gwalia intermediates. The intermediates have already been incorporated into the Gwalia 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, Harbour Lights are known deposits within 5 km of Gwalia Mill. On the image here, Tower Hill is in the foreground, Harbour Lights is in the background. A combined pre-feasibility study for Tower Hill and Harbour 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 Harbour Lights as this is a refractory ore body. All of these studies are scheduled for completion in the fourth quarter of this financial year. To fill the Gwalia Mill, we are exploring all options to source additional ore. Our focus is what will deliver value to our shareholders, that be tolling or purchase, joint ventures, or acquisitions. This financial year, Linden Alliance arrangement will deliver a minimum of 180,000 tonnes of ore and 90,000 tonnes in FY 2023, 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 1.2 million ounces in resource and deposits within 45 km 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 Gwalia, Tower Hill, and Harbour Lights. There is also resource definition drilling planned for Tower Hill and Harbour Lights deposits, with special focus testing potential high-grade extensions to known targets, particularly at depth. We're already progressing targets in Jasper Hill area as we speak, located 20 km north of the Leonora processing plant. We believe that this area has further exploration potential on the upside. Last year, the mill processed 749,000 tonnes.
Due to mill improvements, Uplift One of the Building Brilliance program, we expect to process 1.3 million tonnes this year through a combination of increased milling output from Gwalia and from tolling or ore purchase. In FY 2023, this will increase to 1.4 million tonnes, with less reliance on tolling and ore purchase. Our aspirational target for FY 2025 is 1.7 million tonnes. This will require upgrade work on the existing process plant, obviously. We will now turn to Atlantic operations in Nova Scotia and the project work we are advancing there as we move towards developing a 10-year operating life in the province. The Touquoy mine has been integrated well into St Barbara portfolio and has performed strongly since the acquisition of Atlantic Gold Operations in July 2019. The Building Brilliance program at Atlantic Gold Operations has delivered material productivity benefits, particularly in the mill, with throughput up 13% on the prior year.
Gold production for the year was 101,000 oz, which is only 6,000 oz 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 lower benches of the pit, in particular. Increase in sustaining capital saw an all-in sustaining rise of AUD 100 per ounce to AUD 1,027 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 Brilliance program in Atlantic 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 aperture, in particular, to better enable separation of material and substantial debottlenecking of the gravity circuit.
One of our frontline employees, through the program, picked up the angle of a spray bar in the trommel mill could be adjusted to better screen fine material, and has had a significant impact on throughput. We've also increased mill power draw to enable increase of feed tonnes 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 enable to achieve record throughputs in quarter four. As mentioned earlier, Building Brilliance program is about getting more out of existing assets. At Touquoy, we've been able to improve processing plant by 14%. 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 installing downcomers in the CIL tanks, for example, we're able to increase the residence 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 first satellite deposit we intend to develop. As the crow flies, it's 37 km away from the Touquoy processing plant. Our plan is to truck ore along the preexisting and yet to be constructed haul roads. 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 Touquoy, and potential liquid nitrogen water treatment systems rather than traditional and more energy expensive methods.
Our plan and our original plan, when Touquoy open pit finishes, we intend to convert it to a tailings storage facility. We expect this pathway to be in place in the third quarter of this financial year. For Beaver Dam, we have submitted a revised EIS, or environmental impact study, to the federal government. We expect this to be approved at the end of the current financial year. In parallel, we're progressing a mining license approval for Beaver Dam, which we anticipate also being completed by the end of the third quarter of this financial year. After the environmental impact statement is approved, 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 first ore from Beaver Dam in the first half of FY 2024 financial year.
We're also working a number of permitting matters at Fifteen Mile Stream, located approximately 57 km from Touquoy processing plant. A number of permitting matters for Fifteen Mile Stream are already underway, with the environmental impact statement due to be submitted in the 1st quarter of next financial year. Fifteen Mile Stream will see a new processing plant constructed. The site will produce a gold concentrate, which will be trucked to Touquoy for further processing into doré. First gold production is currently on track for FY 2025. Our exploration team remains committed to exploring new opportunities beyond Beaver Dam and Fifteen 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, which we will follow up this year at either the first or second round of drilling programs. With that, I will now take you through the Simberi operations in PNG. Production for the year was severely impacted by the shutdown of the mining operations on the May 21st, 2021 due to the fatal accident at the mine. Production was suspended due to damage incurred to the DSTP, or the deep sea tailings placement line. A recovery plan is well underway at Simberi. Corrective actions from the fatality and the replacement of the DSTP are well underway. The processing facility is expected to restart towards the end of this year or in quarter two. Simberi generated a positive net cash flow of AUD 46 million after sustaining and capital expenditure.
For the next two years, Simberi will be mining and processing remaining oxide material in various oxide ore bodies. We are continuing to drill six oxide targets of Simberi with the aim of finding additional resources capable of extending the life of the oxide operations. Initial drilling will target areas such as Cell Tower, Pigibo East, and Bekou South. As we progress through the depth of the ore bodies, Simberi mineralization transitions from free milling oxide material to refractory sulfide ores, necessitating a change in the processing pathway forward to produce gold. The production of gold doré on-site under oxide processing flow sheet will give way to production of gold concentrate under the sulfide processing regime. The sulfide has a higher grade of gold than oxide, we'll see a shift from oxide averaging 1.2 g per tonne to sulfide averaging about 2 g per tonne.
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 AUD 170 million, including expansion capital, with a payback of approximately three years. What makes the sulfide project expansion particularly attractive from a mining perspective is that we can utilize much of the existing infrastructure and maintain existing mining methods. Average life of gold mine production for the sulfide project will increase from approximately 160,000 oz per annum at an average of all-in sustaining cost of AUD 896 per ounce for 11 years. This delivers an IRR of 40%, with the first ore being delivered in approximately two years from now.
In addition, the mining lease on the eastern side of Simberi, St Barbara holds the regional exploration license covering the eastern side of Simberi and the two larger islands called Big Tabar and Tatau. Exploration on the southern two islands remains ongoing through the course of the year. Our strategy is to develop three operations with productive mine lives of greater than 10 years. In an industry where an average life of operating gold mines is now less than seven years, the time to develop new mines is greater than 15 years, particularly in Canada. We believe that this is a distinctive advantage is by having three mines with lives greater than 10 years. The recent Leonora Province Plan work has added a further 2 million 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 Atlantic, and we'll keep our operations running there for greater than 10 years. While Simberi, we're moving from a higher-grade sulfide mineralization. We're planning for conversion to deliver a further 10 years in that operation. These are exciting times for us at St Barbara, and we certainly look forward to providing regular updates on the journey and ongoing progress of all our plans of our three operations over our quarterly and half yearly to come. With that, I will now hand back to the operator and take any questions that our listeners may have. 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 with Global Mining Research. Please go ahead.
Hi, good morning, Craig and team. 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. For the last few years, the interim final dividends have been equal, so would it be reasonable to assume that sort of the AUD 0.02 per half is the new current level?
David, really good question, I'll pass back to Garth or to Lucas to answer that. No, I wouldn't draw a linear line of AUD 0.02 and that will be ongoing forward. Garth, comment?
I think, David, the board considers it at each reporting date, given the performance of the business, what the other uses might be for the cash. I think, given that it was a tough year, Simberi is not in production at the moment, 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 the previous years.
Okay. Maybe just to follow up, Garth, on the syndicate loan. 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 waiver now in this financial year? Maybe could you just give us a bit of an idea of what the principal repayments are, if any, in this year? When you look to the future commitments of each of the three projects, they each need capital. 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?
The reclassification of the debt really was a technical accounting issue because there was a chicken and an egg. We didn't have the impairment finalized until August, that's when we went to the banks to get the waiver because of the change to the EBITDA and EBIT number. The way the accounting rule is, you needed to have that waiver before June 30th. That was a bit difficult. It really is just a reclassification. The banks were quite happy with giving that waiver. There is no scheduled repayment until maturity of the facility on the July 23rd. We can repay as we need to over 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 AUD 200 million undrawn at the moment, that is part of the syndicated facility that matures in July 2022. The plans are certainly to look to extend that maturity. 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.
Yeah. Okay.
For now, we'll maintain the current syndicate facility with an extended maturity profile.
Okay, thanks. That's helpful. Maybe just a couple, if I can, on the reserve resource statement. On the Simberi, 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? If it's going through the current plant, how should we think about recoveries?
Yeah, David, the transitional material will have 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 the recoveries when we start up. I think we have been given permission to start mining on day shifts, we're doing some selective mining and starting to stockpile some oxide ore. When we start up later in the quarter, we're on good startup ore and can stabilize the plant. The mine plan yet has to be finalized for the second half. At this transition period, the recoveries could drop anything up to 10, 15%-20%, depending on where we are. We're doing that modeling. We're doing the best we can to recover.
It will be significantly different than the 80% that we normally get on oxides until we do the full conversion in 18 months to two 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.
Sure. Thanks. Morning, Craig and team. I guess following on from David's question, a couple on the reserve and resource updates, particularly at Gwalia, where you've called out the lower reserve grade from 6.3 g down to 5.2 g. 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? Should we think about a lower grade tail towards the end of the life of the mine? 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 grade. 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 cart it and certainly the gap to fill the mill. 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 g, as we stated before, from the Deeps. The combined business outcome is significantly better than what the position is at the moment.
Before we start, we've still got some mine planning to do and some optimization to do, but I guess it fits the JORC 2012 the way that it is now. It puts us in a very good cash position at the end of that story. We'll see how it unfolds.
Sure. Thanks, Craig. 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?
As you can see, Matthew, by the amount of development in 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 deep. Adding this into the mix, it's certainly really unlocking the potential of that operation in year two. For me, it's really becoming a very healthy, stable operation. Now, as stable as mining can be.
With the headings 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 or mining fronts that are available to us at the Deeps, including this into the mine plan is certainly optimistic.
Sure. Thanks.
Sorry.
Sorry, go on, Craig.
No, sorry, Matthew. To add to your point, with the efficiencies that mines have been able to achieve and the rates they're achieving, the transition into that contractor, the lowering of the cost, plus what we're doing with Building Brilliance is setting up Gwalia for a very strong future with a lot of work still to do.
Sure, thanks. I might have missed it, but can you update us on the timing of converting those Leonora province resources into reserves? Clearly, you've seen an uplift in the Gwalia open pit, Harbour Lights, et cetera. I'm just wondering what the timeline is to bring that into reserves and into the mine plan.
Yeah. I think the story of our exploration program, 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. 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. 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. Moving over to Beaver Dam. You outlined it 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. Clearly, there's also a pretty big component there of underlying cost increases versus that 2019 PFS. Just wondering if there's any thoughts on how that underlying capital increase extends to Fifteen Mile Stream and to Cochrane Hill. Has any of that future potential capital cost increase in those future phases been included in the write-down? When can you expect to update the market on those studies and those phases? Thanks.
Yeah, good question. I think the answer to your question, there will be a change in CapEx because of what we're learning, particularly at Beaver Dam. 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. 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. There's a whole bunch of things that are headwinds and delays in getting permits. I think the CapEx, in particular, is really based on things like the PFS 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 Scotia government, is actually how to handle so many permits and strains. The permits are not just local, they're also federal. There's two bodies that we're working with and have to work with to get these things permitted. 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. There are some issues the government need to deal with there, and we're working with them to try and resolve those.
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 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 Fifteen Mile Stream and Cochrane Hill thinking for the future, it will bring that timeline back somewhat. Materially, we’ll wait and see, because as I’ve already alluded, things change so fast in Nova Scotia, you really don’t know. Things that we can control, like the engineering, the quality of our submissions, the 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. There's quite a bit of work to be done on that. I'd certainly see that the costs for Fifteen Mile Stream, Cochrane Hill and beyond will be impacted materially, yet to be seen. There will be some flow through.
Sure. I guess, just to clarify, maybe one for Garth, but does the current write-down include any allowance for capital increases at FMS or Cochrane Hill? Those phases had clearly much more significant capital outlined in the 2019 PFS compared to Beaver Dam, which was a relatively small capital requirement. Wondering if there's a bigger quantum there to come.
Well, certainly, and I will flick over to Garth, but certainly the project timeline extension is a significant driver to the change in the write-down. Garth, any comment?
Yeah, I think with Beaver Dam, there was very little capital in original estimates, and some of that was in OpEx. I think with the Fifteen Mile Stream and Cochrane Hill, there's a much more defined sort of level of capital around equipment, et cetera, that's going to be required for those projects. I wouldn't expect the same sort of change in those capital estimates that we've seen at Beaver Dam. Obviously they've still got to go through their final feasibilities. I think also, the team's 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. Beaver Dam's a much more straightforward operation and had very little capital built into it at the start.
Yeah, sure. Maybe some things missed in the capital write-down for Beaver Dam that weren't necessarily missed in those future phases. That makes sense. Thanks, Garth.
Yeah.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. 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 Simberi 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 continual growth.
I'd also like to thank the team for their support today, and especially Garth, who this is his final year-end summary for St Barbara, and like to thank him for his 15-year contribution and first-class executive contribution and professional contribution to our business through many different headwinds and certainly many different environments the company's gone through in that 15-year period. Also his tutoring and he's prepared Lucas to be able to fill that seat when Garth exits in a month's time. I'd just like to wish Garth the best for the new Garth adventures and hope it works out well. 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. Thank you. Thanks, everybody, this morning.
That does conclude our conference for today. Thank you for participating. You may now disconnect.