Earnings Transcript for SBM.AX - Q4 Fiscal Year 2021

Operator: Thank you for standing by and 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 question-and-answer session. [Operator Instructions] I would now like to hand the conference over to Mr. Chris Maitland. Please go ahead.

Chris Maitland: 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. [Operator Instructions] With that, I'll hand the call over to Craig.

Craig Jetson: Thank you, Chris and good morning everybody. As always, I'd like to begin by recognizing the traditional owners, the First Nations' people of the land in which St. Barbara operate, here in Australia, Canada, and Paper Guinea, and pay my respects to the elders past, present, and emerging. Safety always is central to everything that we do at St. Barbara. At 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 beam 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 employee's family and counseling to support our Simberi team. Individual remained in our hearts. I'm also concerned with the TRIFR 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've also convinced 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 infield 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 Ltd is working to eliminate fatalities, and life changing injuries. This is our number one priority, and remained completely committed to a goal of zero harm. We've 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 AUD0.02 dividend. As we believe, it is important that -- shareholders make a return during periods of strong gold price. Our Building Brilliance program exceeded its target by delivering AUD41 million analyze cashed contributions. Before we delve into the details of the financial results and operational performance of each side, I just wanted to spend more time discussing this program, which will deliver the future shareholder returns. I am particularly pleased to dive that we've been able to announce an increase in both our group or 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, but here are St. Barbara, we're going against that trend and building a company with strong production profile for the future. The increasing reserves has been driven primarily by Gwalia the two following reasons. One, the resource extension infield drilling extended mineralization along with strike, and at depth, upgrading some inferred resources that indicated resources, and resource extension, however, have been lower grade than the existing reserves in combination with a lower cutoff grade, as a result of an overall reduction in reserve grade from 6.3 grams to 5.2 grams per ton of gold. Our higher gold price has also contributed to the increase in reserves. The mineral resources increased by approximately 13% since June 30, 2020 driven by the inclusion of the Gwalia open pit, Harbour Lights, an extension of growing in Gwalia Deeps. The team commenced a review of Gwalia mine in December 2020 as part of the land or a province plan remnant mineralization between 280 meters below service and 500 meters above surface. Identify potential source of open pit mill feed, completion of the -- active completion of the underground mining. Accordingly, historical resource model was updated in accordance with JORC 2012. This worker's resulted in 764,000 ounces open pit mineral resource. The area below the new open pit mineral resource approximately 400 meters below the surface to 1,100 meters below the surface, where Gwalia Deeps 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 ounces in open pit mineral resources. We will provide updates and quarterly reports as exploration drilling continues at Gwalia in the land or region over the quarters to come. Last year, we launched our Building Brilliance program, which is central driver to delivering our strategy of three operations with greater than 10 years life of mine. The program is 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 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 existing plant and equipment by improving productivity rates. And finally, we're deploying a technical expertise to improve our recoveries. The second side of the program, or Uplift 2 runs to the next three years. Uplift 2 focuses on execution of brownfield expansion projects to grow our ounces where we can be profitably mined. For Simberi, this is their sulphide project. At Atlantic, it's the first of our satellite deposits, known as Beaver Dam, and their flagship -- at our flagship operation Leonora, this is about selling a mill. The final phase of Building Brilliance Uplift 3, we're looking 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 327,652 ounces of gold, with the gold sales slightly higher of 332,786 ounces. The average gold price for the year was AUD2,215 per ounce. The lower production was attributed mainly to Leonora, following difficulties with the ore delivery in September quarter production from Simberi been suspended in the June quarter, following the tragic fatality. Consolidated all-in sustaining costs for the group was 1616 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 the higher sustained capital investment of both Leonora and Simberi operations. The net cash contribution from the operations were AUD208 million, 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 Garth, who will take you through the financial results. Over to you, Garth.

Garth Campbell-Cowan: Thanks, Craig and good morning, 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 AUD300 million, which was 12% down on last year, and operational EBITDA down 17% with Simberi reporting the largest decline, given the suspension of operations in the last quarter of the financial year. The EBITDA margin for the group was healthy at 40%, only marginally lower than the last year. We reported an underlying net profit after tax of 81 million. The lower result compared to last year, driven again by the lower production. The net profit after-tax was a loss of 177 million impacted by the 248 million impairment write-down Atlantic, which I'll talk to you 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 annualized 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 AUD227 million, which down 19% on a FY 2020, key difference compared to last year is again lower gold revenue. At 30 June, 2021 the cash position was AUD133 million with debt of AUD109 million, comprising AUD84 million of the syndicated debt facility, AUD15 million for leases relating to purchase of mining equipments at Gwalia and AUD10 million for other right of use asset leases, As Craig mentioned, the board declared a final dividend of AUD0.02 per share fully franked and this is an addition to the AUD0.04 fully franked interim dividend that was paid at the half year. The debt 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 by dividends since we commenced dividend payments and their FY 2017 and including today's final AUD0.02 per share. The company's paid nine consecutive dividends totaling AUD0.40 per share, or AUD240 million. In FY 2021 Total dividend equates to AUD129 per ounce produced. And it equates to an attractive dividend yield of around 3.8%. Now turning for the impairment, the company's reported impairment following the annual review of the carrying value of its assets. This resulted in a non-cash write down on the Atlantic operations for an amount of AUD248 million after tax. A further AUD5 million after taxes written-off clause expiration which related to tenements in the southwest region of Nova Scotia. The majority of the payment has been caused by the delayed the timing of permitting the Beaver Dam 50 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 AUD248 million aligns with the current market consensus estimates for the value of the Atlantic operations and gives a carrying value enables of AUD623 million. Slide 14 gives a breakdown of how capital has changed at Beaver Dam, based on the estimates that 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. If you look at that slide, overall capital costs have currently estimated to increase by circa AUD79 million. This is made up of a revised capital estimates of AUD30 million 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 reallocated from operating capital which is also shown in their chart. In terms of movement and 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, is a detailed breakdown of the profit before tax for each operation. This was -- this result was partly offset by lower finance costs in foreign exchange movements. The cash waterfall chart highlights where cash was deployed in the year of notice that we repay debt of AUD220 million in the year, we purchased MRRI for AUD62 million to consolidate 100% ownership of Touquoy and we paid AUD45 million in dividends. The group also invested a total of AUD139 million in sustaining growth capital in the year. The cash contributions from the operations after all this CapEx was AUD208 million for the year, which was well down on the AUD73 million that we generated last year. We also spent AUD34 million on the global exploration program. Last area I'll turn to is the balance sheet, where we finished the year with cash of AUD133 million, giving a net cash position of AUD34 million, excluding the right of use asset leases. Total interest bearing liabilities amounted to AUD109 million included the AUD84 million outstanding on the Canadian tranche of the syndicated facility. That said 30 June January reclassified this facility amount from non-current to current liabilities, despite the fact that this facility does not mature until the 23rd of July 2022. Due to the large impairment write off, that was determined as part of the year-end process in August, this affects the 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, and following year in. We have explained this in the subsequent events 19 in the accounts, if you wanted to get a bit more detail. Discussions I've already commenced with the syndicate lead to extend the maturity of this facility. The current term of the facilities is a three year term. And with that I'll now hand back to Craig.

Craig Jetson: Thank you, Garth. So for me, let's start at Leonora, where our strategy clearly has been focusing on filling the mill. So at the start with our Leonore operations generated over AUD62 million in cash after sustaining and capital growth. This was lower than the previous years have we already explained around the higher sustaining capital and the lower gold production. In the first quarter of the following 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 meters section. Lower gold production as we've stated and Garth has gone through has given us the side and all in sustaining costs per ounce higher than AUD16.62, per ounce. Our Building Brilliance program has been working hard to improve performance at the site and reverse these costs training increases, the program has encouraged everyone to look at the work areas, and use the owners mindset as we assess opportunities. With minor underground mining contractor are developing and certainly delivering improved productivity, despite the impact of border closures have driven by COVID-19, primarily from the East Coast. Also I’m pleased, in March productivity results are increasing, and in many areas beginning to exceed advice KPIs. My successful recent outcomes at Gwalia, has been a commissioning of extensive underground Wi Fi. We've seen the Wi Fi enable various productivity improvements in the state mine. One example is a tele remote drilling through shift changes which has dramatically increased equipment utilization. Another initiative looked at ways to reduce the total pace curing time for the mine state by reducing the number of ports required. This has resulted in shorter step cycle time. Another initiative has been focusing on reducing a number of Hawk lanes and reduced by using adjusting time philosophy. The Wildfires also further improve safety conditions, by broadening the use of remote control capabilities, is to mantle in the turnaround a quality 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 funds open up on the ground, the team that 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 is enable implementation of better short-term control interval control by obtaining real time data and equipment utilization than in the coordinate equipment underground. In simple terms, at train leaders now no real time weather equipment is and what where it's not being fully utilized, which allows them to make real time decisions to ensure equipment does not remain on for long. We've also looked at ways safely, increasing the speed of which we established our ground support by replacing steady cable bolts we're 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 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 Gwalia dates at 1700 meters below the surface. We're now assessing potential upper portion of the mine between 400 meters below the surface and 1,100 meters, some of which had been mined previously when the gold price was consistent continue to be less, and where it is now. We are particularly focused on the upper portion, the West low and the South Gwalia series. The purple section on this side is a Gwalia intermediates. The intermediates have already been incorporated into the Gwalia mine plan and has been included in the reserves update released today. The developmental work to access these intermediates will commence later this financial year. Tower Hill, Harbour Light, and nine deposits within five kilometers of Gwalia mill. On the image here Tower Hills is in the foreground Harbour Lights is in the background. The combined pre-feasibility study for Tower Hill and Harbour Light 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 Light 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 mill -- to fill the Gwalia mill, we are exploring all options to source additional law. 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 or ore and 90,000 tonnes in FY 2023 with a potential achieve higher tonnages over a long period yet to be realized. In early July, we acquired a strategic 19.8% equity in Kin Mining, which has 1.2 million 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 will we 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 a resource definition during plant -- Harbor Life deposits with special focus testing potential ore grade extensions to nine 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, we'll put the mill process at 749,000 tonnes. During the mill improvements, uplift one of the Building Brilliance Program, we expect process this year one point -- expect to process 1.3 million tonnes this year through a combination of increased milling output from Gwalia and from Tower Hill ore purchase. In FY 2023, this will increase to 1.4 million with less reliance on tolling and ore purchase. Our operational target for FY 2025 is 1.7 billion tonnes. This will require upgrade work on the existing process plant obviously. We’ll now turn to our 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 two coal miners is integrated -- 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, 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 mine becomes steeper and the lower benches of the pit in particular. Increase in sustaining capital saw an owner sustaining rise of AUD100 per ounce to 1,027 per ounce. The increase in sustaining capital is mainly related to tailings management facility and preparation for future use, and the refresh of some of the mining fleet. The Building Brilliance program non-active operations has already delivered record breaking neutral 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 particularly better enable separation of material and substantial de-bottlenecking of the gravity circuit. One of our frontline employees through their program picked up the angle of spray bar in the Trommel, we could be adjusted to better screen time material, and has a significant impact on throughput. We've also increased wheel player, draw to enable increased the field time, playtime through the ball mill without negatively impacting, the mill in anyway and particularly on vibration. This initiative likely 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 2Q we've been able to improve processing plant by 14%. Similarly, Mike and his team have critically reviewed their maintenance programs 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, to benefit also increasing the mill of availability. There's also been a focus by the team on recovery, with the recovery target 90% based on our models for recovery, by stalling down commercial is going to see CIO tax for example, we are able to increase the residuals time and improve cyanide, dissolved oxygen control, which has seen improved recovery from the base 92% from our geological models to 94% within lower feed grade. Beaver Dam is the first satellite deposit pool we intend to develop. As the Kalgoorlie is 37 kilometers away from the Touquoy processing plant. Our plant is to truck ore along the preexisting, and yet to be constructed haul roads. We are particularly interested in the minimal carbon footprint designed for the Beaver Dam site. He we are considering using life cycle plastic for foundations, inflatable buildings, using renewable power from Touquoy, and potentially liquid nitrogen water treatment systems rather than traditional and more energy expensive methods. Our plan -- our original plan when Touquoy open pit finishes, we intend to convert it to a tiling storage facility. We expect this pathway to be in place in the third quarter of this financial year. For Beaver Dam, we have submitted AISC are 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 progress in 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 statements is improved or then apply for the requisite provincial industrial approval, which will allow us to commence construction of our mine, and we started mining. At this state we're on target in the first ore from Beaver Dam in the first half of, FY 2024 financial year. We're also working a number of permitting matters a 15 hour stream located approximately 57 kilometers from Touquoy processing plant. A number of permitting at Fifteen Mile Stream are already underway with the Environmental Impact Statement due to be submitted in the first 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 Doray. First ore 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 drilling and testing several targets immediately adjacent to longer strike that are nine deposits. In the region of northwest area, we are drilling the highest strength target in this financial year. Multiple targets have been generated in the southwest region, and which we'll follow-up this year either the first or second round of drilling programs. So with that, I'll 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 21st of May, 2021, during 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 Simberi. Corrective actions from the fatality and replacement of 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 AUD46 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 upside targets of Simberi with the aim is a finding additional resources capable of extending the life of the oxide operations. Initial drilling will be target areas such as [indiscernible]. As we progress to -- the depth and the ore bodies Simberi mineralization transitions from free milling oxide material to refractory sulphide ores, assessing the change in the pricing pathway forward to produce go. The production of Gulf Gold Doray onsite under oxide pricing flow sheet will give way to production of gold concentrate under the sulphide processing regime. The sulfide has a high grade of gold and oxide and we'll see a shift from oxide average of 1.2 grams per tonne to sulfide adding about 2 grams per tonne. The change in the process flow sheet we will produce an attractive gold sulphide concentrate which is readily saleable and easily saleable with strong yields in the market. Initial capital expenditures for the sulphide project is circa AUD170 million including expansion capital with a payback of approximately three years. What makes the sulphide projects expansion particularly attractive from mining perspective is that we can utilize much of the existing infrastructure and maintain existing mining methods. Every slice of gold mine production for the sulphide project will increase from approximately 160,000 ounces per annum, at an average of all in sustaining costs of 896 per ounce for 11 years. This delivers an IRR of 40% with the first dollar been delivered in about -- 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 large islands called Big Tabar and Tatatu. Exploration on the southern two islands remains ongoing through the course of the year. Our strategy is to develop three operations with a productive mine lives of greater than 10 years. In an industry where average life of mine 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 by having three mines with large grade in 10 years. St. Barbara land -- the recent Leonora province plan work has added a further 2 million ounces to reserves to the inventory placing Leonora Operations on a projector with greater than 10 years, more life of mine. We have identified satellite deposit at landing and will keep our operations running there for greater than 10 years. We have also very removing from a higher grade software mineralization for 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 plants of our three operations over a quarterly and a half years to come. With that, I will now hand back to the operator and take any questions that our listeners might have. Thank you.

Operator: Thank you. [Operator Instructions] Your first question comes from David Radcliffe with Global Mining Research. Please go ahead.

David Radcliffe: 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 dividends, the lowest level you've paid. The financials are lower, but not proportionate to the cash. 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 AUD0.02 per half is the new current level?

Craig Jetson: David, really good question. And I'll pass back to Garth, or to Lucas to answer that. So, no, I wouldn't -- I wouldn't draw a linear line as of AUD0.02 and that will be an ongoing forward. So Garth, comment?

Garth Campbell-Cowan: Yes. I think David that, the Board considered 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, there was a tough year. It’s a very -- is not -- in production -- 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.

David Radcliffe: Okay. So then, maybe just the follow-up, Garth, on the syndicate loan, so can I confirm that you what -- 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. So maybe could you just give us a bit of an idea of what the principal repayments are if any in this year? And then when you look to the future commitments of each of the three projects they each need capital. So, what is the current level of debt you're looking at and maybe what are you happy to hold as you go through this sort of restructuring of the debt?

Garth Campbell-Cowan: Yes. So, the reclassification the debt really was a technical accounting issue, because -- there was a chicken and the egg, we didn't have the payment 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 way the accounting rules is you need to have that waiver before 30th of June. So that was a big deal. So, it really is just a reclassification and banks were quite happy with giving that waiver. There is no scheduled repayment until the maturity of the facility on the 23rd of July. We can repay. As we need to in this next over this next year 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 million undrawn at the moment that that is part of the syndicated facility that matures in July 2022. So the plans are certainly to extend that maturity. And I think in terms of the projects in Canada, I think that 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 spin. But for we will maintain the current good facility with an extended maturity profile.

David Radcliffe: Okay, thanks, that's helpful, maybe just a couple on that, if I can on the reserve resource statement. On the Zoom Barry where you're breaking out now the transitional or how should we think this fits into the to the mine plan, do you process that transitional material for the current plan, or wait for the sole five plan. And if it's going through the current plan, how should we think about recoveries?

Craig Jetson: 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 our recoveries when we start up. I think we have been given permission to start mining at dayshift, so we're doing some selective mining and starting to stockpile oxide also when we start up later in the quarter, then you know we're on, we're on good startup or I can stabilize a plan. The mine plan yet has to be finalized for the second half. But, as this transition period, the recoveries could drop anything up to 10%, 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 monoxides until we do the focus conversion in 18 months to two years from now.

David Radcliffe: Okay. Thank you so much guys, I'll pass it on.

Craig Jetson: Thanks, David.

Operator: Thank you. Your next question comes from Matthew Friedman with Goldman Sachs. Please go ahead.

Matthew Friedman: Thanks morning Craig and team. I guess, following on from Dave’s question, a couple of reserving results, updates particularly Gwalia where you've caught out the lower reserve grade, you know from 6.3 grams down to 5.2. Just wondering if you can give us some data on how we should think about that grade profile going forward? Do you expect the mind plan will track pretty closely tracked reserve credit over the medium term as obviously you bring in those lower grade areas like the intermediate, or should we think about a lower grade tail towards the end of the lot from the mine or is there anything you can say about the distribution there?

Craig Jetson: Well, I think it was always stated as we go deeper. We're certainly going to see a drop in grade. So that's always been transparent. I think the opportunity for the intermediate and the shallows in particular that the lower grade is certainly offset by the less distance that we have to card it and certainly the gap to fill the middle. So, gold price, it's almost 50 of the 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 efficiency to fulfill the mill? It's certainly going to be at a lower grade and the 6.3, as we stated before from the date, 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, some optimization to do, but I guess it fits the job 2012. The way that it is now, and it's certainly very good cash position to be able to puts in a very good cash position at the end of that story, so we'll see how it unfolds.

Matthew Friedman: Yes. 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 faces. You alluded to it there, in terms of whether you can talk about the relative mining costs of that shallow material despite the lower grade is the overall margin flat material comparable in the intermediate despite the lower grade?

Garth Campbell-Cowan: Look, it absolutely is, because with, as you can see, Matthew by the amount of development and capital work that we put into the mine in the last 12 months in particular set us up for the future and heading to 30 headings that's really going to give us the option -- optionality from the build, but adding this into the mix, it certainly really unlocking the potential of that operation in year two. So, for me, it's really becoming a very healthy stable operation. Now, it's stable as mining can be, but with the headings that and the optionality of 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 date, including this into the mine plan. We're certainly optimistic.

Matthew Friedman: Sure. Thanks. And--

Garth Campbell-Cowan: Sorry.

Matthew Friedman: Sorry. Go on Garth.

Garth Campbell-Cowan: No. Sorry, Matthew, but to add to your point, with the efficiencies of mines have been able to achieve and the rights are achieving, the transition from into that contractor, the lowering of the cost plus what we're doing with building is setting up quality for a very strong future with a lot of work still to do.

Matthew Friedman: Sure. Thanks. And just wondering if you might have missed a bit. Can you update us on the timing of converting those Leonora province resources into reserves, clearly 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?

Craig Jetson: Yes, I think the story of exploration program and as you know, back in June last year I'm asked 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 of 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.

Matthew Friedman: 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're seeing 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 2019 PFS. So just wondering if there's any thoughts on how that underlying capital increase extends to Fifteen Mile Stream and to Cochran Hill, has any of that future potential capital cost increase in those future phases that included in the write-down, and when can you expect to update the market on those studies and those phases? Thanks.

Craig Jetson: Yes. Good question. I think the answer to your equation 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 mightily, but they change quite often. The political landscape in Nova Scotia changes and has changed just recently as well. So the whole bunch of things that headwinds and delays and getting permits, so I think the capital, in particular, is really based on things like the pre phase 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 it's strange that the permits are not just local, they're also federal. So there's two bodies that 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 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's some issues to the government need to deal with them, 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 now have 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 in the pre work that we're doing in Fifteen Mile Stream and Cochran 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 and things that we can control like the engineering, the quality of 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. So, there's quite a bit of work to be done on that. But I'd certainly say that the costs for Fifteen Mile Stream and Cochran Hill and beyond will be impacted materially, yet to be seen, but there will be some flow-through there.

Matthew Friedman: Sure. So, I guess, just to clarify maybe one for Garth, but does the current write-down include any allowance for capital increases at FMS or Cochran 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, wondering if there's a bigger quantum there to come?

Craig Jetson: 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, so Garth, any comment.

Garth Campbell-Cowan: The I think with Beaver Dam there was very little capital in the regional estimates and some of that was in OpEx, but I think was the Fifteen Mile Stream and Cochrane Hill, it is much more defined sort of level of capital around equipment et cetera that is 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 are still going to go through the final feasibilities and I think also there's probably -- the team is probably testing some of the assumptions in terms of how those projects will be developed, which may well reduce capital in some areas, but Beaver Dams are much more straightforward, operation and was really -- had very little capital building just at the start.

Matthew Friedman: Yes. Sure. So, maybe some things missed in the in the capital-light option for Beaver Dam that weren't necessarily missed in those future phases. That makes sense. Thanks Garth.

Garth Campbell-Cowan: Yes.

Operator: Thank you. [Operator Instructions] There are no further questions at this time. I'll now hand back to Mr. Jetson for closing remarks.

Craig Jetson: Thank you very much and thanks for everybody that that dialed in and the questions that we got. Certainly, your interest in us is appreciated. I 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, this is the 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 business through many different headwinds and certainly many different operating environments the company's gone through that 15-year period, but also his tutoring and he's prepared Lucas to be able to fill that seat when Garth exists in a month of those time and I just like to wish Garth the best for the new Garth adventures and 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 for everybody this morning.

Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.