Earnings Call: Q1 2019

Apr 29, 2019

Good morning and good afternoon, ladies and gentlemen, and welcome to OceanaGold 2019 first quarter results webcast and conference call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on April 29th at 5:30 P.M., Eastern Time. I would now like to turn the conference over to Mick Wilkes. Please go ahead. Thank you. Good evening and good morning to everyone, and welcome to OceanaGold's first quarter 2019 results webcast and conference call. It's a pleasure to be here with you today and discuss our operational and finance performance during the first three months of this year. I'm joined today by Michael Holmes, the Chief Operating Officer, who will discuss the performance of our operations. Scott McQueen, Chief Financial Officer, who will discuss our financial results. On slide number two, just the cautionary statement before we proceed. Note that references in this presentation adhere to International Financial Reporting Standards, and all financial figures are denominated in U.S. dollars unless otherwise stated. Excuse me. Also note that the presentation contains forward-looking statements, which by their very nature are subject to some degree of uncertainty. There can be no assurances that our forward-looking statements will prove to be accurate as future results and events could differ materially. Please refer to the disclaimer on forward-looking statements in our presentation. Moving on to slide number three. On a consolidated basis, our operations produced 126,000 ounces of gold and 3,900 tons of copper in the first quarter, while all-in sustaining costs were $1,026 per ounce on sales of 121,000 ounces of gold. Didipio and Macraes delivered solid operating performance in the quarter. Didipio continues to deliver with ramp-up of the underground progressing well, while Macraes delivered another quarter where production was greater than 50,000 ounces. Waihi delivered to expectations, as we are mining lower grade zones of the underground. However, production and productivity at Haile were lower than expected, as we continue to recover from challenging ground conditions which have led to poor mine productivity early in the quarter and continued to delay access to higher grade areas of the ore body. As Michael will discuss with you shortly in greater detail, Haile did improve materially in March with access to higher grades commencing, plus the impact of various operational and productivity improvement strategies being implemented. Despite the challenges at Haile, we did deliver a good quarter where we had our other operations achieve strong results. Having multiple operations does provide us with diversification, but production and operational flexibility. Revenue in the first quarter was $180 million, while EBITDA was $64 million and a net profit of $12.4 million. After adjusting for unrealized losses on hedges and impairment charges, our adjusted net profit was $16 million, equating to an earnings per share of $0.03 fully diluted, which is in line with analyst consensus. Cash flow per share was $0.10 per share, before adjusting for working capital movements, which compares to the analyst consensus of $0.11 per share for the quarter. At Haile, we are well advanced on both the Tao Mill and IsaMill projects, with tie-in and final commissioning nearing completion. These projects have also progressed in line with our capital planning. Work to advance the Martha underground project continues to progress well with mine and management plans, and we expect to start development in the second quarter. As a reminder, we are looking at the rapid development to get the underground into operation as soon and as safely as we can. We also continue to drill at both the Martha project and at WKP, and are advancing the pre-feasibility study, which we expect will be completed in early 2020. On slide four, just before I turn the webcast over to Michael, I want to take this opportunity to highlight major achievements at our Didipio mine in the Philippines and Macraes in New Zealand. At the annual Global CSR Awards in Malaysia, which recognizes multinational ESG performance across multiple sectors, Didipio received four awards, including top honors for environmental excellence and women empowerment. While at the Future of Mining Awards in Sydney last month, our Macraes operation was recognized for environmental excellence related to our waste rock stack design at Coronation North. Congratulations to the women and men of Didipio and Macraes. We're very proud of their achievements. More broadly, we are proud of our ESG performance as a business. I'll now turn over to Michael to go through the operational performance. Thanks, Michael. Thank you, Mick, good morning and good afternoon. I'll now spend the next few minutes going through our operational performance for the first quarter in 2019. On slide number six, you can see our TRIFR performance. As a company, we improved on our TRIFR performance over the course of the first quarter with Didipio and Macraes leading the charge. The Macraes operations has experienced improved performance over the past 12 months, with much of this result being attributed to the focus on improving their safety culture. Strong, visible, and persistent leadership has been instrumental in driving this culture at the operation. Although we've experienced an improvement in the safety performance at Haile, we are focusing on the recently launched Core Behaviour program, which is similar to the safety cultural programs launched at our other business units. That enables the workforce in taking accountability for their safety and the safety of their work colleagues. This program is guided and supported by management. Moving on to slide seven and the operational performance at Haile. The operation produced 25,717 ounces of gold in the first quarter, with half of this production in March. It was another challenging quarter for us at Haile, as we continued to deal with the poor ground conditions as the mine remains saturated following the heavy rainfall experienced in the fourth quarter and into early 2019. These conditions slow down equipment and impact productivity, mainly due to the opening up of new areas of the mine, which requires the stripping of the clay material. This impacted the mine sequence in Snake Pit and delayed access to the higher-grade material, which we've uncovered in March and will continue to mine for the next two quarters. The previously reported negative reconciliation in the upper benches of Snake Pit continued to impact early this quarter, but this has corrected as we have mined deeper and is reflected in March's improvement. This was a similar experience that we saw in Mill Zone. All these challenges at the same time culminated to the poorer than expected performance. In the month of March, however, we saw a marked improvement on all fronts, with many of the mitigating initiatives yielding positive results. As we continue to mine and open up new areas over the different weather conditions, we are continually developing better processes and methods to manage these conditions. As at the end of the quarter, we had installed 11 depressurization holes and have another 15 planned for the remainder of the year. We are constructing additional retention ponds and water storage for water storage, we are continuing to improve our road conditions. As we ramp up our mined material, we have commissioned a new Komatsu PC3000 excavator and a Komatsu 730E haul truck in April, as well as three 785 Caterpillar trucks that we've hired in quarter one. This will assist in moving more material and drive our unit costs down as we transfer over to the new Komatsu fleet. As noted, the reconciliation is aligning with our resource model as we mine deeper in the Snake Pit. In preparation for mining similar areas in future pits, we have commenced drill programs in these areas, to date have completed 33 diamond core drill holes at the top portion of the Red Hill Pit. Pleasingly, these results to date have demonstrated good alignment with the Red Hill resource model. Recruitment efforts have progressed well with the hiring of workers at all levels and strong skill sets from the hard rock mining states such as Nevada. We also continue to focus on improving both the skill and leadership capability of our workforce. We're in the process of replacing some of the leadership level positions at our operations and are currently recruiting a general manager and other managerial and supervisory-led level roles. Moving on to slide eight, and the specific details on how the operation performed each month of the first quarter. As you can see, the mitigating strategies supported and improved the operational performance in March. For the quarter, the operation mined 3.8 million tons, including 0.6 million tons of ore. Total material mined in March increased 53% from February, and the total material mill feed for the quarter was 749,000 tons, including 273,000 tons milled in the month of March, representing a 15% improvement on the previous months. all-in sustaining costs were high and driven by the reduced feed grade and the mine productivity challenges that I've just described. This led to lower production and sales and a higher operating cost. Sustaining costs was also materially higher quarter-on-quarter as expected, primarily due to the timing of pre-stripping. Moving on to slide nine. As Mick mentioned, the plant expansion at Haile is progressing well, and in early April, we had a 110-hour planned shut of the plant to tie in the IsaMill, in addition to completing several maintenance activities. We have some further fine-tuning, but the IsaMill and the Tower Mill are now up and running as we achieve our desired grind size and deliver the gold recoveries benefits that we expect. For the remainder of the year, we'll upgrade the cyanide destruct units and the pre-aeration thickener as the main infrastructure that really remains for us to achieve the higher throughput rates. With the higher throughput rates and the development of the large open pits and the Horseshoe Underground once permitted, we expect production to increase to over 200,000 ounces as depicted by the graph. Moving to slide 10 and Didipio in the Philippines. The operation delivered a strong operational performance in the first quarter, with production nearly 50% better quarter-on-quarter, with increased mill feed. The all-in sustaining costs at Didipio decreased quarter-on-quarter on the higher sales. It also included $96 per ounce related to production taxes, which we are now including in the all-in sustaining costs, and approximately $130 per ounce related to the expensing of the open pit ore stockpiles previously mined and progressively being processed. Ramp-up of the underground mine continues to advance well with the higher mining rates and the improved unit cost. As the year progresses, we expect the mining rates and the grade to further increase to the run rate of 1.6 million tonnes by the end of the year. Development of Panel Two is also advancing well, and we continue to drill the ore body at depth in Didipio. Looking ahead, production at Didipio is expected to be lower next quarter as a result of decreased grades before returning to the stronger production in the second half of the year with better grades from the underground. This is just purely a function of the mining sequence as we mine through the higher breccia stopes, and the medium grade monzonite stopes. As we mine and then fill those stopes, so it becomes a function of the mining schedule. Moving on to slide 11, to Waihi. Production at Waihi decreased quarter-on-quarter, which was expected given that we are now mining the lower grade zones of the underground. We also mined less material in the first quarter due to ventilation restrictions. Before the quarter end, we broke through to the open pit from the 920 underground drill drive, which provided us with the ventilation that was required. As Mick mentioned earlier, we continue to advance the Martha underground project and are in the process of decoupling the project from the operation. We will continue to work on the mine and the management plans while continuing our extensive drilling program from underground and the surface. The development of the Martha underground is expected to commence this quarter, while the pre-feasibility study incorporating Martha project and WKP is expected to be completed in early 2020. Production at Waihi for the remainder of the year is expected to be steady. Turning over to slide 12 of Macraes. The Macraes operation picked up from where it left off in the fourth quarter with another strong quarter of operational performance. As has been noted, Macraes produced over 50,000 ounces again and delivered an all-in sustaining cost less than $900 an ounce, with a quarter-on-quarter increase related to the lower grade mills. We continue to progress the Golden Point underground study while drilling multiple areas as part of our objective to increase the mine life of the operation at the current gold prices. I will now turn the presentation over to Scott McQueen, who will discuss our financial performance. Thanks, Scott. Thank you, Michael, and hello, everyone. Next few slides include an overview of our first quarter financial performance. Turning to slide 14. Here we see a snapshot of our balance sheet, specifically cash, liquidity, and debt levels as they were at the end of the first quarter. Our cash position, while still strong at $87 million, did decrease across the quarter. The reduction reflected our 2019 capital profile, which included in Q1 material pre-strip at Haile and Macraes, progress on our organic growth projects, and continued exploration. Q1 also included a New Zealand tax payment of nearly $14 million US, along with the higher-than-planned operating cost to Haile. Just to confirm, we do not expect to make any further New Zealand cash tax payments this year. Total debt also increased somewhat. It is related to the adoption of IFRS 16, which dealt with the change in the classification of leases. There was no change in the underlying core debt, which remains at $150 million drawn. Our next scheduled debt repayment is not until the 31st of December 2020. As you can see, net debt at the end of the quarter sat at a relatively low $99 million. In terms of our total debt, it is worth keeping in mind that we expect to see that increase over the next 12 to 18 months as we progressively bring on new mining fleet in support of the Haile expansion. Moving to slide 15, which provides a summary of the Q1 financials. As you can see, top-line revenue for the first quarter was $180 million. It was marginally lower than the previous quarter. This reflected a higher average gold price received this quarter, which largely offset lower quarter-on-quarter sales volumes. EBITDA for the quarter decreased $10 million from the previous period. This reduction reflected the marginally lower net revenue, combined with the higher operating cost at Haile. Michael mentioned, we've got several improvement actions underway at Haile, which we expect to improve productivity. We see those higher costs as short-term, and combined with anticipated grade improvements, which will also improve the top line, I expect costs, and certainly unit costs, will decrease as the year progresses. Adjusted net profit for the quarter was $16 million, which was similar to the prior quarter, with the lower EBITDA offset by reduced depreciation and a lower income tax expense. The main adjustments, other than the customary unrealized FX on hedges, was a $4.6 million write-off of deferred exploration costs this quarter. These related to an accumulated contributions made to several exploration joint venture earning arrangements that we had in Argentina, which we've decided to exit. Operating cash flow in the first quarter reflected the lower EBITDA, also was impacted by the timing of working capital movements, including material increases in inventory and, of course, the payment of that $14 million in income tax in New Zealand. Moving to slide 16, which summarizes our capital expenditure for the quarter. Total CapEx is broadly in line with the previous quarter. Q1 saw reduced total growth capital, which was largely offset by higher general operating capital and capitalized pre-strip, both of which, as previously mentioned, were contributors to the higher quarter-on-quarter all-in sustaining costs result. Overall, though, we're tracking consistent with guidance. You can see in the table at the bottom, the bulk of the gross capital, being the top line, related to the Haile expansion, which, as Michael mentioned, continues to advance as planned, with the tower and IsaMills installed and being commissioned. In Q1, we also continued development of panel 2 of the underground at Didipio, of course, also advanced the Martha underground project at Waihi. General operating capital was also higher, of particular note in Q1 was the purchase of a new excavator at Macraes. Moving down, you can see, as previously mentioned, the Q1 pre-strip was material that was consistent with expectations and was mainly centered around Haile and Macraes. Terms of exploration, while we continue to explore at and around Macraes and Haile, as you can see, the major spend was unsurprisingly focused at the Martha and WKP, both of which are shown under the Waihi column. The corporate column includes group capital projects, which are generally IT related, rehab costs at Reefton, plus greenfield exploration not attributable to an existing operating region. This is also where we would disclose JV contributions, which in the first quarter, were primarily in Nevada. Onto slide 17. Here, you can see a graph of our EBITDA margins, which have decreased from the previous quarter. This reflected lower average grades processed and higher operating costs incurred at Haile. We expect an improvement across the year, which is consistent with our budgets, irrespective of the increases associated with the short-term challenges at Haile. Return on invested capital remains a key metric for our business. You can see on the right, we have delivered positive returns every year dating back to at least 2011. We've seen a decrease in the rate of return in Q1, which reflects the lower underlying profitability, as previously noted, that is not a trend we expect to continue as the year progresses. I'll now hand back over to Mick to wrap up the presentation. Thanks, Scott. I'll now close off the webcast to discuss our business going forward. Slide number 19. I wanted to talk to you a bit about strategy. I've highlighted some of the key strategic components that we're focused on going forward. We're often asked by investors what's next, and we explain that our strategy is the same one that we've been focused on for the past several years, with some exceptions. Our operations are delivering good results, and we have some work to do at Haile to get it fully back on track and delivering the strong margins we've always expected from this operation. We're confident that we will get there, and we have seen improvements from the changes we've made thus far. We have four operations, which provides operational flexibility. We will leverage our collective experience to deliver sustained productivity from all of our operations. We are investing in technology and have made some significant enhancements at the Didipio underground. We will continue this focus with the objective of rolling out these enhancements to the next underground operations we've planned on building over the next several years, particularly in New Zealand and at Haile. Organic growth is a major component of how we expect to create significant value for investors. From the initiatives we have underway, we have an objective to increase production by 50% from current levels and to do so within the next five years. Finally, to achieve these ambitions and to set up the business for further growth, we continue to seek out opportunities to enhance our business and how we conduct the many facets of it, including operating across multiple time zones. With a robust business comprising four high-quality operations and a deep pool of talent and experience, we are confident in achieving our objectives and being the best gold mining company in the industry. That concludes the formal presentation, ladies and gentlemen, of this webcast. We'll now take some questions over the phone. I will turn the webcast over to the moderator to facilitate the Q&A session. Thank you. Ladies and gentlemen, should you have a question, please press star followed by one on your touch tone phone. If you're using a speakerphone, please lift your handset before pressing any keys. One moment, please, for your first question. Your first question is from Michael Siperco from Credit Suisse. Michael, please go ahead. Yes, thanks very much. I've got, I think, three or four quick ones. First of all, the Didipio underground ramp up. If you annualize the first quarter, you're at 1.36. You're talking about an exit rate of 1.6, but an expectation for the full year of being 1.2-1.3. The implied softening over the next couple of quarters, what drives that? Are you expecting to do better than the 1.2-1.3? Michael, I'll let you answer that. Thanks. Yeah. Thanks, Mick. Thanks, Michael. It was a good quarter, and it's a function of, I suppose, the staking sequence that we're doing and the development sequence that we're doing. We're still sort of looking at getting the guidance. We haven't changed that at this point in time, but certainly, we have to get up to a run rate of 1.6, and that will just be a function of the stope sequence that we're currently running. At some times there, we'll be filling more stopes than we're actually mining. That's just a bit better at that sort of at the first quarter, there was some more stopes that were being produced. Okay. Thank you. Secondly, with respect to the sort of early conclusions from the Tower Mill and the IsaMill, has there been enough material through that to see the recovery enhancement? Have you got anything to date to conclude that it's been as successful as you hope? Michael? Yes. There are positive signs, I suppose just a little bit too early to tell. We've just sort of got the Tower Mill, sorry, the IsaMill sort of running. I suppose we're seeing some positive grind sizes into what we've expected. We've seen some improvements in recovery. To say that that's sort of locked in at the moment, Michael, it's probably a little bit too early to tell, but certainly positive signs. Okay. Thank you. Thirdly, with respect to your ability to manage the guidance, Didipio pulling out a terrific quarter by depleting that stockpiled high-grade breccia ore and operating at the four million ton per annum rate. Is there anything else in a bag that you can pull out if necessary, that you've delivered the quarter by clearly pushing Didipio harder than what's sustainable? Have you run out of capacity to sort of patch over any other risk of weakness? Michael, I think that what we've got is a multi-operational business with the capacity to pull levers where required. There's plenty of potential at Haile. Don't think that that's going to continue to have bad performance. We feel like we've turned a corner at Haile, but there's still work to do to ramp it up to reach its full production rate of 50,000 ounces a quarter. Waihi continues to perform well and surprise on the upside. Macraes continues to perform well and often surprises. I think just that we do have that capacity to run a stable business, that's the whole reason we have a multi-operational business is to mitigate against issues when they happen. We've always had that strategy. I'm very pleased with the performance of the business. It's disappointing that we had the issues we have had at Haile. We are overcoming them and it'll only make us better. Yeah. With respect to Didipio, that license limit, is there any movement there yet? I know you've been pretty positive about the opportunity to have that limit removed. Is there any progress there? Oh, yeah. It's very modest. We are continued to be in discussions with the regulators on that and, we're hopeful that we'll get it in the not too distant future, but not promising anything. Then finally, with respect to Haile, it seems like every problem that you possibly could encounter, you have encountered in every aspect of that operation. Clearly you've identified what those issues are, address them progressively. What have you learned from that? What sort of went wrong in the acquisition case? What didn't you see? What are the lessons from it that perhaps you wouldn't repeat in a future acquisition, given that you want to increase by 50% over the next five years? The timing, if I look back a couple of years, and it's probably not really that helpful to do so, it was a unique transaction in the sense that we bought a mine that had just started construction. All the designs and everything were already in place, and in particular, the permits were already in place. We had to work with what we had. We've made quite a few changes since then, mainly around the process plant, and we're now seeing throughputs well above the nameplate. On particular days, so far, we're operating at 3.5 million tons per annum annualized. That's a function of the potential that we saw with the process plant, with the improvements that we've put in place. I guess we did underestimate the impact of the water table and the hurricanes that come through there. We've had our fair share of those in the last three years. We probably underestimated the impact of that, particularly as we ramp up or start off the open pit mine. Remember, this is quite a long pit. The ultimate pit is some three kilometers long, and the ore body is covered by overburden with soft saprolite material. The combination of opening up new areas of that open pit and the coinciding with these hurricane events really did cause us some problems. We'll get through that. Mining has its ups and downs, we're very resilient and, that's why we've got a multi-operational business. We're very confident that Haile will reach its full potential over the next couple of years. If we can just sort of sneak another very quick one with respect to Haile. I've only been there the once, my recollection is it's a pretty tight little site. To what extent does that lack of available land constrain what you otherwise might do? I'm just trying to understand. As you increase material movements, as you need to drop more waste, increase your ponds for unforeseen water events, have you got the land available, or is it always going to be somewhat challenging? Yes, we do have the land available. We've been purchasing land since we bought the mine. We've added about, I think, 20% or 25% the land area there to accommodate the expanded mine. It is relatively tight. We have different types of waste rock that we have to deal with the PAG material and the non-PAG material. That requires proper scheduling, of course, if it's a fully contained site where there's no contact water discharge from the site. That just makes the scheduling more complex than it would otherwise be on a, say, a mine in Western Australia. That complexity means that we've got to be extra good at the schedule and the planning over the longer term. Yeah. Great. Thanks, Wilson. Thanks, Hamzy. Thanks, Trevor. Thank you. Your next question is from Reg Spencer from Canaccord. Reg, please go ahead. Good morning, management team. Just a question from me on the Didipio. You've lodged the application for the FTAA renewal. I was just wondering, does the suspension order that still sits on top of the Didipio impact that renewal application, or is that two separate issues or two separate government departments that you're dealing with there? No, it doesn't impact it, and they are two separate government departments. All of the discussions we've had with the Department of Environment and Natural Resources and the MGB have been constructive and have not considered the suspension order issue. That's with the Office of the President, and DNR is progressing with the renewal as per normal business. Okay, great. Just back to Haile. I know you're looking at a number of ways to address your unit mining rates there, but how should we think about the steady state unit mining costs at Haile going forward? We haven't really got anywhere near the original feasibility study estimates. Obviously, you're going through a difficult patch at the moment with the wet weather and the clay and the saprolites. Will you guys be looking at updating the market as to how we should think about that in due course? Will you get to anywhere near that $2 a ton mark as previously suggested, or should we be thinking something a little bit higher than that? Look, I'll let Michael answer that, Reg. I'll give you my initial comments. The mining costs have been higher than we expected so far, mainly to do with, well, the weather, obviously, in the last six months. Prior to that, due to skill levels and the equipment and the maintenance support that we were getting from Caterpillar in South Carolina. That was disappointing. We took the decision at the end of last year to change equipment providers and go for best-in-class machines, the Komatsu 730Es. There's 200-ton trucks. That's been most appropriate for our site, and in particular, the support that Komatsu is providing in North America at the moment. Based on that upgraded fleet and expected levels of support and the continued drive to increase the skills base of our operators by recruiting out of the western states, particularly Nevada, we do expect that the unit rates will come back down towards that $2 a ton. Now, will it happen this year? Maybe not. But it certainly will, I think, we'll get there once we have the mine up to its full mining rate. Michael, do you want to add anything more to that? Well, no, I think you've covered it pretty well, Mick. We've got the first PC 3000 on site now with some of the bigger 200-ton trucks. We've got the next excavator, the PC 4000, that'll be on site in sort of July, in the dirt in early August, then one in November. As we ramp up, we've got much bigger equipment coming on site. We've got the new trucks arriving in August as well. We've basically got two or three trucks per month for the next 12 months. Yeah, exactly what you're saying. You probably won't see it this year, but we'll be targeting it to when we get up to the 46 million tons, 45 million to 48 million tons run rate, we should be expecting those unit costs to come down to the levels that we sort of- No, just a- Put in the 43-101. Great. Thanks, Michael. A quick follow-up question on that. Have you been able to quantify which area has had the largest negative impact on those unit mining rates? Is it the maintenance? Is it the equipment? Is it the skills, labor, staff turnover? Where has been the biggest problem area for you on that mining cost front? It's a bit of everything, Reg, part of that is the actual mining of the clay material as well. That's with the contract that we've had in there with the smaller tons. Smaller trucks, just due to the pressures and the wet material, you had to run the 60-ton trucks instead of the 100 or the 150-ton trucks. Understood. That's all from me. Thank you, guys. Thank you. Your next question is from Chris Thompson from PI Financial. Chris, please go ahead. Hi, guys. Just two quick questions, starting off with Haile. Just digging in, trying to understand the snake reconciliation in the upper benches there. Is that a factor of tons, grade, or both? Chris, it was actually a factor of drilling. There were 6 holes in the original model which were RC holes drilled pre-Romarco, so they go back more than 10 years. When we started mining and saw the negative reconciliation there, we realized that those six holes, or maybe the quality of the data wasn't as good as it could have been. We removed those holes from the resource model, and it reconciled much better. Pleasingly, as we saw with the Mill Zone, the reconciliation has flipped to the positive as we get deeper into the ore body. The net overall effect is not significant. It's more of a smearing effect that you often see in these RC holes, particularly the old ones. Great. Thanks for that, Mick. Just the final question here, just moving on to Macraes. You mentioned that you're going to be working on, I guess, underground feasibility for Golden Point. Have you got the timing for that, and will this include Round Hill? No. Golden Point underground is actually the down-dip extension of Round Hill, so it doesn't sterilize the future open pit and redevelopment of the process plant project. What it does, it allows us to develop an underground to basically replace the ever deeper reserves at Frasers underground. We're looking at around 2022 for that underground to continue, but at Golden Point instead of Frasers underground. What that does is it complements, of course, ongoing open-pit operations, which allows the mine life to keep being extended. We're looking at mine life going out to at least 2024 right now, subject to what happens to the gold price in the future. It's quite a positive development. In terms of the feasibility study, look, we've got a team working on it. It's not that complicated, I don't think. We'll have something out by the end of the year, thereabout. Perfect, Mick. Thanks for that. Thank you. Your next question is from Matthew Freedman from Goldman Sachs. Matthew, please go ahead. Sure. Thanks. Hi, Mick and team. Just following on from Reg's question on how mining costs, and I'll just dig down into two specifics. Firstly, on the saprolitic clay material, can you remind us of how that zone varies across the remaining pits or the remaining stripping that you need to do and how much of this, I suppose, will be ongoing as you widen out the footprint of the pit? You did touch on the long geometry of the pit. Then I suppose, do you have any options to mitigate the timing of this stripping seasonally in your mine plans? Then secondly, I guess on a similar vein, on the depressurization holes, you did also previously mention the impact of the water table. Is it safe to assume that these depress holes will also become an ongoing process through the life of the open pit? Is that having any notable impact on your costs given that you're using specialized equipment to drill those wells? Yeah, good question, Matthew. Thanks for that. I'll start off and then let Michael talk to some more of the detail around it. I think that there's around 20 million tons of clay material sitting on top of the ore body as per the expanded pit. I'm not quite sure how much we've moved to date. A lot of that clay material will be moved over the next 18 months, but there still will be some from time to time that have to be removed. It's critical to the mine plan right now because obviously, as we're starting up new pits, we need to remove that to get down into the ore body. As the mine expands, as the open pit expands, then the timing of removing that saprolite material becomes less critical to ongoing access to ore. The significance of that is that this stuff is very easy to dig in the dry season, but very tough to dig in the wet season when it's particularly wet. We can schedule it to remove the soft clay material in dry periods, i.e., in the summer months. Basically from March through to, I don't know, August, September, is a good time to be mining the soft clay material. Then after that, forget about it unless you've got the right equipment. That, I think, is a big lesson for us operating in this part of the world. As far as the dewatering holes, we'll probably have to continue to do that more broadly, but again, once we open the open pit up more, we expect that will generally draw the water table down anyway. Michael, can you add any more detail to that, please? Yes. The program that we've got at the moment sort of covers us off for this year and the phase 1 of Ledbetter. As we increase the different phases and the bigger pits, we will be continuing to put some additional depressurization wells in there, but probably not to the extent of what we're doing this year, as sort of this year's a bit of a catch-up year with the amount that we've planned to try and get that high level around us, as well as getting rid of some of the surface water that we've had that's been in the area. I don't know whether people would remember, but the Ledbetter Reservoir, we've drained that. We're constructing an upstream diversion dam to get the water away from that area as well. That will all help. That diversion dam grabs the water from upstream and just puts it around the pits and discharges it back into the rivers and creeks. That's the other part with the dewatering as well. That should assist us going forward. Sure. Thanks. Appreciate the detail, gents. If I think about your unit mining cost, even just for the quarter at Haile at $5.40 a tonne, would it be safe to assume that your rate for the contractor to move that clay material is potentially a multiple of that? Maybe double that on a dollar per tonne basis? That's part of the reason driving your costs higher during the quarter? Michael? It is at a higher cost. It's not as much as double it, there are other costs that come into that with regards to the total movement, which is the dewatering wells. It's the other site costs that we've got that go into the overall mining costs. It's just the function of the mining of the clays, as opposed to our mining rate, is around that factor. That's right. Sure. Appreciate it. Thanks for the detail, guys. Thank you. Ladies and gentlemen, as a reminder, should you have a question, please press star followed by one. Your next question is from Wayne Lam from RBC. Wayne, please go ahead. Yeah, thanks guys. Just a quick question on the ongoing turnover at Haile. Looks like we'd kind of turned the corner on the turnover issues with the net personnel additions from October to February. Just wondering if something changed in March or April, and if you can talk to the ongoing turnover in personnel and the changes that were made in the leadership team. Michael? Thanks. Yeah, sure. We're actually ramping up the personnel, the turnover as a percentage is coming down. We're still working through that, and it's still a fairly buoyant market for labor. We've done a couple of roadshows. We've got our name out there. We've got numerous platforms for that recruitment, having a look at both the experience at the West as well as experience coming from the armed forces. Then just some of the management changes is just sort of having a look at the operational readiness for the ramp up over the next couple of years. Looking at that as a role, and then sourcing. We've moved the general manager into another project area. Looking for a general manager to sort of take us through to the next step as we continue sort of increasing and ramping up the mine to get up to our run rate. Just a few other ones is just right-sizing the other management team. Having a look at the amount of activities that we've got on The focus that we've got on safety, as well as the permitting process. We had one manager looking after health, safety, the environment, and community. We've basically divided that role so that one manager's looking after health, safety, and training, and security, and the other one will be looking after the environment, community, and permitting. Changes like that to better align us with the activities that are currently going on at the moment. Okay. All right, thanks. Yeah, this is for me. Thank you. Your next question is from John Tumazos from John Tumazos Very Independent. John, please go ahead. Thank you. How do you recruit and relocate people east of the Rocky Mountains as you pioneer gold mining in South Carolina? Do you pay relocation allowances from Nevada? Are you recruiting the open pit mines for coal in Southern Illinois and Indiana or Wyoming and Montana? It's a big cultural change from out west to the East Coast. Yeah. Thanks, John. Look, what we've been doing, particularly over the last 12 months, is really pushing to get our name out there to be a serious option for the hard rock miners on the western side of the country, or the Rockies, as you say, to come over to South Carolina. That's been pretty successful. It is now got a reputation as a good place to work. It's a good mine. It's not in the desert, and it's not in the Arctic, so it does have its advantages there. It's an easy place for families to relocate to in terms of schooling and access to services and facilities. There are quite a number of people who are looking at it as a lifestyle change compared to driving an hour or two to work out of Reno or Elko or somewhere. Yes, it is a cultural change. There's no doubt about that. We encourage diversity, and we encourage people to come and be part of the community in South Carolina. It has been successful, particularly in the last 6 months, as we get our brand, our name out there. We're attracting people from Barrick and Newmont and the other players in Nevada. We're building a strong workforce for the long term. One of the things we didn't anticipate a couple of years ago was recruiting locally is great, and training the local people up is the right thing to do. When the labor market tightened, as it did strongly last year, a lot of those people that we trained up went off and did other jobs, working at the quarry or working at the paper mill or working in a manufacturing plant, which may be offering better money or a better roster. They're not necessarily wedded to hard rock gold mining. The people we're recruiting from the western states coming over with more experience, they are hard rock miners, and that's what they know and that's what they love doing. They're with us for the long term. Thank you, good luck. Thank you, John. Thank you. There are no further questions at this time. Please proceed. Okay. Well, thanks for your time, everyone. That concludes the webcast and the conference call. A replay will be available on our webcast website later today. On behalf of the team, Michael, Scott, and everyone here at OceanaGold, thank you for joining us. Should you have any follow-up questions, please don't hesitate to contact our excellent investor relations team. Thank you. Ladies and gentlemen, this concludes your conference call today. We thank you for participating and ask that you please disconnect your lines.