St Barbara Limited

Ladies and gentlemen, thank you for standing by, and welcome to the SBM FY20 Q3 March quarterly report conference call. At this time, all participants are in a listen-only mode. After this speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded, and I'd like to hand the conference over to your speaker today, Mr. Craig Jetson, CEO. Thank you. Please go ahead.

Good morning everybody and thank you for joining us. It's from Barbara for the March 20 quarter report briefing, my first since commencing with the company just on 12 weeks ago. On the call with me today I have Garth Campbell-Cohen, our CFO, Mr Rowan Cole, our Company Secretary, Val Madsen, GM Human Resources and HSEC, Lucas Welsh, General Manager of Finance and Procurement, and Mr David Cottrell, Manager of Investor Relations. I'd like to open up by saying how pleased I am with the very successful measures we have taken to protect our people during the COVID-19 pandemic. I, along with other members of the executive team, are very focused on the health and wellbeing of our employees and contractors during this crisis. Unfortunately, there's still a long way to go, especially for our people and our folk in Papua New Guinea before we get back to some sort of normality. Our three mines have performed well over this quarter, given the difficult operating conditions that we've had. All three are produced in line with ounces and cost expectations. A great achievement would need to put some effort into changing our processes and daily habits to minimise the COVID-19 risks. We increased our cash performance by $41 million from our operating activities, as previously announced. Our conservatively drew down $200 million which we had available from our debt facilities. At Atlantic, we offered our condolences and support to families and friends, colleagues and the community so dreadfully impacted by the recent tragedy in Nova Scotia, in the area where we operate. Atlantic, the operation has had an outstanding quarter with record plant throughput, despite being in the middle of winter, a great effort by Lee and his team. Congratulations to Atlantic. The Glarlia extension project is in the final stages of the raised bore, remaining the only part of that project to be completed. Extremely difficult ground conditions recently damaged the raised bore head, but the site team have been very busy with components of the project that are completed, changed the mine ventilation configuration as we integrate the new surface infrastructure into that ventilation program. It seemed very production and costs for the corridor were well in line with guidance St Berry is the only site that I was able to manage before COVID-19 restrictions came into the force. Our new general manager, Jason Robertson, is doing a great job with his team in his first few months on site in extremely difficult circumstances, mainly driven by COVID-19, as you all would expect. So with that, on slide four are the details of an incredible job our team has done to protect our people, their families and their business to help prevent the spread of COVID-19. We followed very closely advice from government medical authorities and taken steps appropriate for quite different operating conditions as you would imagine. At our sites in Western Australia and Canada we brought in split shifts that are two different operating teams back to back so we have no physical interaction. Our fly-in fly-out teams in particular are checked at the airport and this happens daily for our driving teams in Atlantic in Canada. In addition, we have closed our offices and cancelled all non-essential activities, including all our travel. The company's IT connectivity has been highly developed and secure and robust, particularly with the increased usage we've experienced in the last month, including our first virtual board meeting held for many hours last week. Key highlights, and turning to slide five, is on slide five the highlights of the quarter, which some have already mentioned. I draw to your attention the payment of the half-year dividend during the quarter. The quarter also marked 15 years of St Barbara's purchase of Gualia, an occasion which I was looking forward to celebrating with the site team myself, which we'll do now sometime into the future. You will note our consolidated full-year production anticipated to be lower end of our guidance range, driven by Gualia and Somberia being at the bottom end of their guidance range, but margins still remain very healthy and significantly helped by our gold price. On slide six, you'll note the ongoing improvement in that safety, in particular at TRIFA. Safety is my number one priority for the company and I have been doing a lot of work in the safety under my leadership and will be doing a lot more in the future. Slide seven, and turning to slide seven now, the consolidated quality of production and all in sustaining costs, a robust result given the coronavirus-related disruptions that we've had to endure. Moving on through to slide eight, in particular this is Gwalior's quarterly result. Production has been impacted by the change of conventional ventilation configurations, which you may have heard about earlier this year. This separates the mine into ventilation districts with the aim to getting more effective use of our chilled air that we're already seeing a positive impact as that started slowly but surely comes online. Gwalior grade was approximately what we've seen over the last few quarters, so no change material change to be mentioned on that point. Moving to slide 9 you can see the total material removed in the final raised bore shaft which will allow the new ventilation infrastructure strategy to really start having impact has not yet been completed. This has been quite frustrating with difficult ground conditions and at times over several months now the ground conditions are described as pillow basalt in quite fractured ground so that large boulders are coming down loose and falling onto the reaming head causing significant damage. The post aggregate fill plant has been commissioned. The crushing is operating well and the pumping circuit has been operating quite well, although during this quarter relatively slow due to the mining sequence and only a small amount of stoke filling occurring at this time. The final raised bore shaft is expected to be completed within the financial year. We're expecting guilefully a full year production but the lower end of the guidance as a result of these delays. Sint-Berry quarter three March results. Sint-Berry has improved its quarter with mining able to focus on ore rather than waste to a greater extent. Our strip ratios dropped from 1.3 from approximately 1.4 where it has been in the previous two quarters in particular. The Bottle Loop pit in the south of the mining area is really quite a small pit but in common with other pits in St. Barry. Deeper parts of that deposit have been superior in terms of ore tons and grade than the grade control model would have suggested. Processing performance has been good through this quarter and improved mill tons and recovery with the relining of both mills have been contributed to the improvement. Harder rock from the deeper zones of the pits, which are reaching the limits of the oxide pit shells, has increased the wear rate, not just in the mills, but also the conveyors, the breaker at the top of the hill, and also the rope con. My broad observations from my visit there was encouraging. Some of the significant investments of recent times, including 1,500 metres of a new conveyor spliced into the rope con belt, and the installation of a new pebble crusher and scrubber has all gone quite well. The Siberi PFS has had a third party independent review and validated by the panel of external experts. We are shortly submitting the proposal to the board for a decision. During the quarter we announced an update of Siberi's reserves and resources. We increased by 30% to 2.2 million ounces. on an accessible drilling campaign beneath Sarawak in particular. Moving on to Atlantic Gold, on slide 11, I guess a big thing you've heard in this term is that Atlantic Gold gets a great quarter. They were through with another record, made it 1.2 grand per tonne gold, closer to the reserve grade of 1.1, rather than the exceptional 1.5 grade in the last quarter. The Atlantic team took advantage of the winter where the conditions to complete the planned truck rebuilds leading to a 17% decrease in material moves mean that we relied on stock for greater extension. A similar gazement with our notice of pressure is on hold due to COVID-19 restrictions at the moment, with the relevant departments and the First Nations organisations in particular all in lockdown. Our own experts and teams have been able to have some limited interaction with the wildness area adjacent to the development of our project. That's also delayed COVID-19 issues in the country. Moving on to slide 12. Slide 12 shows balance, which has increased by $241 million during the quarter. This includes a $200 million drawdown from the syndicated debt facility I mentioned earlier. And this is after an $18 million dividend payment, $10 million in growth and capital, and $6 million in exploration expenditure. So moving, I guess, on to the next slide, slide 13, in terms of our... So in Australia, our exploration during this quarter focused on the Leonora region, Pingen, and the Dramatin JV we have with catalyst metals. On Simberry, we've completed the diamond drill program designed to gather additional geotechnical, metallurgical, and assay data for the sulfite project, as you would imagine. In Nova Scotia, we were able to conduct some suspension of work. The north Brookfield area in the southwest of the province returns some particularly encouraging results that I'm sure that we'll all look forward to. As previously announced, we suspended exploration field work due to COVID-19 restrictions. However, we are currently evaluating that position resumption of exploration activities within a reasonable timeline and using relevant guidelines to be able to start the exploration programs up once again in the very near future. Slide 14 and 15 outline our strategy and growth pipeline. The company's strategy remains relatively unchanged in that we are focused on building out our existing growth options as well as considering external growth. Within the current portfolio, we have consultants assisting with the review of Gualia as we look to reset our production profile. We also have consultants reviewing our optimal sequencing of our length of goal projects. As I mentioned earlier, some very solid projects have been prepared for a submission to the board as we speak. Overall, I'm still very excited about the growth opportunity and potential we have in our portfolio. In conclusion, and moving on to slide 16, we've had a solid quarter at all three operations despite the restrictions imposed by COVID-19. Importantly, our safety performance is trending in the right direction. Consolidated full-year production is anticipated to be on the lower end of our guidance range. Cash at the end of the quarter increased $41 million after $18 million dividend payment, plus $200 million from the drawdown of that debt. This puts the company in a very strong position with $320 million and enables the organisation to withstand interruption in production across all our operations, if need be. In the near term, we're expecting to take the proposal to the board for the Symbere Sulfide decision. Lastly, we have reviews underway again at Gwalior and Atlantic to maximise performance, reaching full potential and growth of those operations. I'm planning to provide an update in quarter four on the progress of those reviews. In summary, and with that, I will now hand over and take questions.

Thank you. Thank you, ladies and gentlemen. We now begin the question and answer session. If you wish to ask a telephone 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 the pound and hash key. Thank you very much. We have multiple questions in queue. Our first question is from Alex Barkley from Morgan Stanley. Please ask your question, Alex.