St Barbara Limited

Good morning, everyone, and thank you for joining us in St Barbara's March 2021 quarterly briefing. On the call with me today is the executive team from St Barbara, along with Lucas Welsh, our Chief Transformation Officer, and David Cottrell, Manager, Investor Relations. At this point, I'd like to draw your attention to page two and encourage a reading by standard disclaimer. As always at this point on slide three, I would like to begin by recognising our traditional owners and people of the lands in which St Barbara operate in Australia, Canada, Papua New Guinea and pay my respects to elders of past, present and emerging. Now turning to slide five. Slide five outlines our five core commitments related to St Barbara operating safely and sustainably. Of note, St Barbara became the signatory of the United Nations Women's Empowerment Principles. We also realised and released our modern statement. With the ongoing global challenge of COVID-19, it was pleasing to learn that 93% of our employees believe that COVID-19 is being managed well by the company. On slide six, we have had five recordable injuries for this quarter, most of low severity. Importantly, we recorded zero injuries in March, which was a high production month for us in quarter. This demonstrates our goal of zero harm is possible. Priority areas of focus during the March quarter were whole of business focus on care, which stands for control, action, respect and engage. Safely transitioning to a new underground mining contractor at Gwalior has also been a key focus of ours. Although in comparison to our peers, we are certainly doing well, we still have a journey to travel and reach zero harm or zero life-changing injuries. In terms of COVID-19 on slide seven, the COVID-19 situation in PNG deteriorated in the quarter with a significant increase in community transmissions across the country. By the end of March, a number of Simberry employees and community members tested positive for COVID-19. The employees were isolated in an on-site quarantine camp and containment measures in place to protect other employees. While specialist medical care and support has ensured the recovery of the majority of cases, two of our employees sadly passed away in the medical complications while were positive for COVID-19. So BARBRA is extending due care and support for their families. Whilst the Simberry operations have been unaffected by COVID until recent escalation, it remains a dynamic situation with increasing pressure on resources and people. St. Barbara continues to work closely with the government and non-government agencies together with local community to manage the situation at centre. On slide eight, quarter three March key achievements in particular, I'm pleased to report the performance of the March was strong, delivering 50% of the total production for the quarter. This was a result of our company-wide transformation and implementation of Building Billings Initiative over the recent months. The cash contribution from the operations for the quarter was 41 million Australian dollars. Of note, we have a couple of growth options to unlock inherent value in our business. This is uplift two of our strategy, which is to grow the production from the Leonora province and deliver brownfield projects at Sinbury and Atlantic. First, we have reviewed a number of our aspects of the Leonora Province Plan relating to geological models, resource models and pit optimisations. We are planning to release the details of this work plus the Leonora mill options during the June quarter. Secondly, we yesterday released the Sinbury sulphide results which demonstrate we have a very robust and financially viable project. The board has approved 13 million US in pre-investment work. This includes metallurgical test work, engineering work on the wharf and infrastructure design. Deposits are placed upon long lead items in complete purchases. We have submitted the SEIS to SEPA for the project and expect a modification approval to the process to take somewhere between nine and 12 months. Third, we have submitted the environmental impact statement for 15-mile stream. And in February, we expect to submit... Sorry, in February. And we expect to submit the EIS for Beta Dam in May. All of these are significant milestones for the Atlantic and Australian PNG operations. Most importantly, we continue to operate safely despite the COVID-19 headwinds, particularly in Canada and PNG. Now moving to slide nine. We first published slide nine in the December investor briefing. It shows two near-term uplifts I'm looking to achieve over the next two to three years across our operations which are progressing as planned. As I outlined during the December quarter briefing and the half year briefings, executing to plan with building British initiatives, underpinning the performance in March in particular. Delivery of the sulphide feasibility study and in the coming weeks we will provide an update on the Leonora Province plan. On slide 10, slide 10 shows the contribution from each site and annualised cash contribution amounts we outlined in the December investor briefing. Our company-wide transformation is well underway and launched in December 2012 by those results. At the end of March we achieved 50% of the FY21 targets driven primarily by Atlantic and Gwilyer operations. I'm pleased with our progress and I look forward to continue to unlock value in our business through our program. Slide 11 is a deeper dive into some of the initiatives driving performance at Atlantic and Gwalior in particular. The mill throughput and availability of recovery rates at Atlantic continue to edge upwards with 8% increase in mill availability. At Leonora, the team has balanced development and production with a 14% uplift in development metres and a 24% increase in total material removed compared to FY20. These are key performance indicators and value unlocked as outlined in the December investor briefing at each of our operations. Moving on to slide 12, highlights of quarter three. Consolidated production for the quarter was 82,000 ounces on the sustaining cost of 1640 Australian per ounce. March was an excellent month, clearly demonstrating performance potential across all operations, which I'll talk about in more detail in the operational sections. As I mentioned earlier, operational cash flow in the quarter was AU$41 million. It's however worth noting that we sold less ounces than we produced, which will come through on the balance sheet in the next quarter. Cash at the end of March was AU$100 million and with debt of AU$102 million. The key items impacting cash flow were $23 million of dividend payments, $9 million of income tax payments, $7 million of growth capex, and $6 million of exploration expenditure. Slide 13 shows the consolidated quality of production and all the sustained costs. The March quarter result was driven by lower production in January and February and significantly stronger performance in March, particularly from Glalio. Performance in March is expected to continue into and through quarter four. On slide 14, my NTQ3 results. Production was $20,600 in sustaining costs of $11.28 per ounce. The operations were impacted by weather events and winter operating conditions, with production lower than the previous quarter. The lower grade results is attributable to the use of stockpiles of supplementary mill feed as winter affected the mining rates. Despite this, meal performance in March was a new record. Its throughput was up 5% on FY20, with availability at 98%, and the average recovery for the month was 94.5%. As we move into the final quarter of the financial year, we've adjusted FY21 guidance to production between 100 and 110,000 ounces, all in sustaining costs between 958 and 1,050 Australian pounds. At Leonora, Gwalior's production was 42,716 ounces and all in sustaining costs of $15.55 per ounce. While the numbers for Gwalior look almost identical to the December quarter, in reality, January and February were development-focused months, with 50% of the production for the quarter achieved in March. Mill throughput increased at Gwalior to nameplate capacity of 1.2 million for the second half of the month. The development rate substantially improved with both February and March achieving advance of over 400 metres. These themselves are records. McMahon commences as an underground mining contractor in early May. This change of underground operator is expected to reduce the mining costs from around 8% to 10% and support our productivity improvements. FY21 guidance is adjusted to the lower end of the previous range, 175 and 190,000 ounces. This could include 5,000 to 7,000 ounces of production from ore purchased from Second Fortune, which would replace lower-grade Leonora province ore, if required. All in sustaining costs between $15.90 and $16.30, all in sustaining per ounce. On to the slide 16, the St Berry results. Simberi recorded a week a quarter with production of 18,981 ounces, an almost sustained cost of $2.426 Australian per ounce. The reporting period was impacted by lower oxide grades in particular and with a transitional law resulting in lower recoveries. Production in March improved with higher oxide grades in the summit pit in particular. This result in production in March is equating also to about 50% of the total quarter production. The remainder of the original Rotcom belt as replaced during the quarter resulted in higher mill throughput, which will continue into quarter four. FY21 guides to adjust to the lower end of the previous range of 95 to 105,000 ounces and all in sustaining costs between 17 and 20 and 18.10 per ounce. Onto slide 17. At Gwalior, new areas of our mining lease and current footprint have been identified for inclusion in overall mineral resources. As part of the de-bottom making, Gwalior production rate in a number of areas of current Gwalior deeps mining front have been identified and incorporated into the mine plan, including intermediates and the shallows. Slide 17 presents a long section of the upper part of the mine showing the Gwalior Shallows target. During the quarter, the additional phase of underground diamond drilling consisting of 11 holes was completed. Four hangwall loads have been identified and the team is commencing a resource estimation work in weeks. The team has also conducted a review of the upper part of the mine. This has identified a number of attractive targets for infill drilling, including old South Gwalior, Old West Lode and targets in the south end of the mine above the 585 metres below the surface. We will drill these areas out over the next six to 12 months. Onto the Leonora Province in slide 18. Slide 18 shows the deposits in the areas close to Gwalior and further to the north. Work has progressed in the Leonora Province plan that's involved reviewing of the geological models, existing resource models and building new resource models, completing a pit optimisation and considering mill expansions. We are planning a more detailed update on the province plan for Galalia and Leonora in the June quarter. Slide 19, in terms of Leonora province plan, the timeline incorporates the information from the two previous slides, which includes the expected increase of mineral resources and plans to launch a pre-feasibility study covering Tower Hill, Harbour Lights and considering a mill expansion. The indicative timeline for assessment, development and production reach of the major areas within the Leonora Province Plan ensures we will deliver building brilliant strategy as outlined and announced in our December announcements. Yesterday we released the results of the Sinbury's sulfide feasibility study, which highlighted a robust project with strong financial returns. The Board has approved a pre-investment work of $13 million and final investment decision targeted for March 2022 or sooner. The next steps include completing the supporting trials on waste rock management and tailings footprint with submission to SEPA and FY22. We're working to update the mineral reserves for the end of the financial year reporting. Over the next three to six months, we'll complete a reserve definition drilling program. Importantly, we will continue to build on stakeholder engagement to ensure appropriate consultation supported by legislative assurances for the program. In terms of oxide drilling targets, exploration at Tsimberi is targeting additional oxide mineralization in the corridor. Six oxide targets were drill tested with the aim of defining additional inferred and indicated resources. Results highlight that Piggy Bow North and Cell Tower contain oxide mineralisation. In addition, resource definition drilling is planned to be completed and converted to unclassified and inferred mineralisation in the very near future. We expect to release these drilling results in the June quarter. as we delivered a promise. In conclusion, we've had a solid quarter and a very strong month of March across all of our operations. We expect to continue in quarter four, and as billion-billionish becomes the way we deliver. We've progressed with unlocking value in our business, expected to provide a detailed update on our province plan in the June quarter. The balance sheet remains strong, positioned with $100 million in cash and $102 million Australian in debt. Building business initiatives are starting to deliver with FY21 annualised cash contribution target already 50% achieved since launching in December. We have continued to implement COVID-19 protocols across our business and keep our people safe and maintain stable operations. With cost reduction starting to be realised and progress made with regards to Brownfield project pipeline in particular, Quarter four has been set up to finish the financial year. And with that now, I'd like to hand back and hand over for any questions that people may have. Thank you very much.

Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Alex Barkley from Morgan Stanley Australia. Please go ahead.

Hi Craig and team. At Gwalior, you stated you're trying to get to 12 mining fronts by the end of next quarter. When are we likely to see the benefit of that tonnage increasing towards the 1.1 million ton per annum you wanted FY23? And also for Q4 this year more specifically, are you expecting a better mix of tons and or grade to reach guidance? So how do you see that quarter developing?

Yeah, Alex, I think clearly quarter four is certainly going to be a challenge, but it's something that we believe we have the strategy and the mining fronts and I guess the production profile to be able to achieve it. If I look at the last few weeks in particular with Gwalior, the development work that we've, I guess, did late last year and more so in October January and February is starting to pay dividends and the mine is potentially starting to unleash itself and de-bottleneck itself. The results that we're seeing at the moment are exceptional. They will continue into quarter four. Now, of course, we don't want any more headwinds like fall of ground or any issues with the mill. We're really going to be going hard to finish the quarter strong. But we only have to repeat what we've done in March to continue on such a performance. To answer your question, in the last couple of weeks in particular, in the last month of March, we've actually been milling at around the 1.2 million tonne milled run rate. So that has been unlocked, and we certainly have enough material to feed that mill. So we're quite confident that those rates will continue on. As you said, we've developed some open headings. We've got mining fronts that we can go to now. We've started to de-bottleneck the mine quite well. The team has done a great job moving waste from underground and setting ourselves up in particular for FY22 as we finish FY21. But I think now we're starting to see the benefits of the development work, the Building Brilliance Program, the de-bottlenecking the mine, short-term mill control, management operating systems, and of course some good reliability with the mill. So I think the production quarter fall will be strong. Don't really want any more headwinds, but further growth of opportunity to keep that mill topped up. I'm looking forward to coming out later this year, or in the June quarter in particular, talking about the province plan in a lot more detail. That's starting to unfold for us.

Okay. Jumping to Atlantic, the mine grades fell a bit quarter on quarter. Would you be expecting them to rebound towards reserve and where do you see Tukoi over the next, say, 12 months? Plus, how long should we expect to see that bump you've been getting from mine to mill grades of roughly 0.3 grams per tonne? Is that likely to continue?

Look, I think the mine-to-mill grade will balance out, particularly, I mean, it's tough in January, February, March at Atlantic, as we all know. The winter months are harsh up there and we certainly get affected in the mine an awful lot. A little bit in the processing plant as well, and I'll talk about that in a bit more detail later. But, you know, we've been certainly moving low-grade stockpiles into the mill to keep up the mill feed. while the mine has been affected by the winter in particular. So that's really the issue with grade at this point in time. If I look at how the team have gone with deep bottlenecking, the reliability is world-class. So the availability is up there with the best. The throughput is increased by 5% in the month of March as well. So building British programs and unlocking the value there is going quite well. So I see Tukoi being a very solid operation over the next 12 months, very strong cash position. So very optimistic about what's happening there.

And with the mine grade up to sort of 0.7 grams per tonne, it's been the lowest for quite a while. Was that a down quarter for any particular reason? Are you expecting that to rebound?

I suspect that's a timing issue more than something that will continue on. So as we transition and develop the mine, we're certainly going through some low-grade areas, and I think this is more of a timing problem than what we'll continue into next year.

Okay. And our last question on Sinbury's sulphide project. What sort of regulatory outcome and certainty are you looking for in the next 12 months? And could the project be approved even if you don't get mining certainty beyond your current licence in 2028. Thanks.

Yeah, Alex, absolutely. I think there's a bit of work to do yet. So we've submitted the ESIS and there are two pieces of work that are outstanding for that to be approved and we'll get that in during the next quarter. So I think, you know, we're saying somewhere between nine and 12 months for approval. I believe we can get that approved a little bit sooner, provided we work very closely with the regulators. And part of submitting the SEIS in advance of having two pieces of work not completed was, as you'd appreciate, you know, there's many thousands of pages involved in these documents. And we give the government, in particular, the opportunity to review them technically. and prepare for the last two addendums that we will put in in the next three months. So that's progressing really well. I don't believe there will be a regulatory issue moving forward. I think there's still the cloud over the Mining Act and what that would mean. There's opportunity for us around, I think, as you said, our ML needs to be renegotiated in 2028. If I look at the program as we've got it now, and the sulfide project itself, it's got about a 13 year life of mine extension at about a three million tonne run rate. At three million tonnes, I mean, it's certainly a robust project to pay it back within about three years or less. If we look at, and while we've got some time during the SEPA, approval process over the next say nine months in particular we'll look at variations for that mine plan and opportunity to be able to expand what we're currently intending to build up to say three and a half or 3.7 million tons or whatever the number economically turns out to be in the best investment case so there's a bit of work to do about that so if we build the plant and we always said we're going to build it to be expandable but now while we're in the phase of engineering and pretty much the process flow sheet itself, there's not a lot of extra money involved in making a tank bigger or adding extra pumps to increase the throughput rate. So we're looking at that. So the opportunity would be to increase the mill throughput and the mining rates through extra equipment and mining fleet more than anything and larger size tanks. I guess what I'm saying is we could increase throughput, which would decrease the risk around 2028. So there's a bit of work to be done on that, and I look forward to working with the government in making that happen.

Okay, that's helpful. Thanks. I'll pass it on.

Thank you. Your next question comes from David Radcliffe from Global Mining Research. Please go ahead.

Hi, good morning Craig and team. I've got a couple of questions, maybe starting with the Simberry feasibility study. I see there that the life of mine sustaining capital for the project looks to have doubled. Just wondering if you could sort of provide some more colour there. I see the part of that's related to a power plant upgrade, so maybe is that a big chunk of that, and when would that actually be spent?

Yeah, David, a really good question. I think the issue with the power plant during the feasibility study was the amount of power generation we would need on the island. The most uptick in capital costs in particular is the extra power that we've identified during the feasibility. So I think that's most of it. As the board have approved about $13 million for long lead items and deposits on pieces of equipment. We're currently in commercial nations and searching for power plant opportunities in terms of building extra, whether it be extra modules, whatever we do there at the final day. So I think the long lead items or the lead items in that's probably around 12 to 14 months away from now. But there's still a lot of work to do in that power generation side, which is causing some of the uptick in capture.

Okay, thanks. Then following on, just maybe to help us better understand it, what is the gold price you're using now for evaluating projects? Because I see you're doing this at $1,500 U.S. Does that mean that this is now across all the businesses and then specifically for Zimbari? I may be wrong, but I thought the reserves were cut at $1,300. So does that mean there's some upside to reserves as they get recut at $1,500 or are they sort of disconnected in the way you approach it?

No, no, they're certainly not disconnected. I will pass over to Garth to give you a more detailed explanation on the investment hurdles. But, you know, as we recap the different gold prices and realise the different opportunities, it does change somewhat within the projects and we're seeing the St Berry one change somewhat as well. Garth, have you got a comment?

We review the gold price assumptions each year, obviously taking into account the market and the outlook, et cetera, and we update our resources and reserves at as at the end of June. So that's a process we go through. And setting the gold price for the feasibility study, we've updated that gold price based on the outlook to $1,500. And then we also set an exchange rate, an Aussie dollar gold price, so we re-evaluate those exchange rate assumptions as well. So that's something we do annually. And then, of course, we have separate to that, we'd have our investment hurdle rates, which we use as well, and the gold price feeds into that.

Okay. So when you recut reserves, it sounds like you might be cutting them at a higher price, but I guess we'll wait and see what you do mid-year.

Yeah. I mean, sometimes the reserves are not always that sensitive to gold price changes. It depends on... In the past, Gwalior hasn't been particularly sensitive to changes in gold price. So you don't always see a big lift in reserves just because you've changed the gold price.

Okay, thanks. Maybe just moving to Gwalior then. You've halved the growth capital gone this year. Could you provide a bit more colour on that? does that actually potentially impact near term on what you're targeting to deliver and do we defer that capital into next year?

So in terms, Garth, I'll let you talk about the capital as well, but in terms of deferring the capital, I don't think that's really part of the change in what you're seeing there. I think the capital is changing significantly over a period of time at Gwala as we do things around the mine plan and the mine production in particular. And of course, the feasibility plans that we have could also change that profile of capital. We've spent a lot of capital this year on development in particular, not so much on the growth side of the business. But Garth, any other comments?

Yes, I think the questions you're asking is around the growth capital that we've adjusted down the guidance and there is some growth projects there that probably will be deferred into FY22. I think some of the capital that was in the growth was around tailings dams and some of the timing of that expenditure was will not occur in FY21, and that's part of the reason for revising down that growth capital range.

Okay, thanks. And then maybe just one final one, if you don't mind. Just the change over to mining contract for Gwalior, obviously that can cause disruption, so you think you're managing that. And then just to expand again on that, the commentary before about how we should think about lifting the ore rates that are obviously delivered to surface and how they all sort of come together when you think about that FY22 target of 180 to 200,000 ounces?

Yeah, well, look, I think the changing the mining contract is certainly something that we're managing very, very closely and working with McMahons and Burncut to make sure that the mine operation continuity is continued up and, first and foremost, is managed accordingly because of that huge distraction. But from a business perspective, to actually pull the lever on that transition now is the right thing to do, particularly as we set ourselves up for success for next year. Now, having said that, you know, as you can see, the March rates have been exceptionally good. So the performance of the people on site has been... exceptional during these changing times. So that's one. The safety and the transition is something that we're working on as well to make sure that people are not distracted and we get on and finish the year out very strongly. The other bit, I guess, was the early mobilisation of McMahons. So we have engaged McMahons to be at site. Some of their people are obviously at site now and underground. All their training, their inductions is unfolding as we speak, ready for the transition early next month. We also have a McMahons crew mobilised underground that have been doing some drilling and some development work in the intermediates and Gwalior shallows in preparing for a reserves and resources upgrade at the end of next quarter, along with... supporting burn cut in the transition so people are there mobilised. So we're certainly de-risking wherever we possibly can and planning with both organisations a smooth transition. What will that do is, given the development work, the open headings we have, the early works that's going on as we speak in the shallows, will set us up for a 2022 transition mining rates, as we said, during our Building Brilliance program late last year. So the targets that we have set ourselves, what we're doing at the moment are enabling us to reach those.

Brilliant. Thanks very much, guys.

Thank you. Your next question comes from Red Spencer from Canaccord. Please go ahead.

Thanks. Good morning, guys. First question for me is in relation to Leonora. I note that your slightly revised guidance does imply a 58% list in required production queue on queue. Assuming that that 1.2 million tonne per annum rate, can you remind me as to how much lower grade third party ore as mill feed that might comprise? I'm just trying to back out what kind of mining volumes and or grade, you would need to hit that guidance number.

Yeah, Rez, I think we have been impacted by some grade issues in recent times. But, you know, we're still planning on reserve grade and the head grades for the mill as we plan. I think the confidence to get us to the production levels will be around reliability, grade holding up to where it is, and certainly continuing for the March run rates that we've been able to achieve. And of course, if I look forward, if you take the March results into the quarter, then we get across guidance quite well. And of course, these are the targets and the numbers with us set ourselves for the future. So I think coming off the back of March into the quarter, into quarter four, to deliver guidance, is the future sort of numbers that we will run the operation to. In terms of third-party ore, as you would know in different announcements, we're actually funding some development with Second Fortune and we've received some of their ore and that's sitting at the processing plant as well. We're bringing in some low-grade stockpiles and we may use the opportunity to use Second Fortune to replace some of our lower-grade stockpile ore that's in the province. And we haven't fully decided to do that at this stage because of the mining rates and what we've been able to do to run the mill at the rate of about 1.2 million tonnes in the last few weeks to continue that on with our own underground and province laws. So there's a few things in the mix of how we're going to achieve guidance, but we don't want any more headwinds either. We've got all that to mine. We've got enough mining funds now. If grade holds up, which we certainly believe it will, then we'll come home with a very strong sale, as long as what we did in March.

Okay, thanks. Can we expect any disruption on the contractor changeover, or does your guidance and budgets provide a little bit of fat in there for any potential disruption?

Yeah, look, no, we're not certainly running with any fat anywhere. Given the headwinds in the first half of the year, we had fall of ground and other issues. So there's certainly any fat that we had was consumed back in those days. And this is really now showing us how we can have to operate the mine and move forward. I'd have to call out both contractors. So McMahon's, in particular, for the early mobilisation of their people and equipment, been ready and also, as we speak, in some of the early works in the shallows, but also the performance and the professionalism of the burn cut, working with us through the transition period. And at the moment, you know, both are working exceptionally well together underground. The St Barbara team are working very closely in support and the planning process as well. So, look, I'd like to call out everybody that's working extremely hard at Gwalior to... to bring the core to fall as strong as it can.

All right, great, thanks. Our last question for me is from Barry. Should we assume lower recoveries going forward, given that your mill feed blend is likely to comprise a high proportion of that transitional ore? I guess, how should we be thinking about recoveries on the oxides prior to any commencement of production from sulphides?

Yeah, Reg, I think if you'd asked me that question in February where I was getting some sleepless nights over recovery and the transition material and potentially the lack of all-body knowledge that we had, the drilling programs during the feasibility study have opened up a lot of oxide opportunity for us and we're currently putting that into our plans. So what you saw in January and February was very ordinary recovery rates. And they were throughput rates too, not just recovery, but March, in particular, the last half was a lot stronger in recovery and we certainly have got more all-body knowledge now coming out of feasibility. We've got two very strong oxide targets that we are currently drilling out and getting more information about that that we'll put into our 22 and 23 plan. That will stabilise recovery back to the recovery of old

more than where we have been the first several months of this year okay um so i guess in the near term then uh recoveries may uh may end up being towards the lower end uh but that should pick up again as some of these new uh cleaner oxide sources come into the plant

Yeah, that's correct. The more all-body knowledge we can muster over the next few weeks with the data we're already compiling, the better off we'll be mining the oxides accordingly to improve everything.

Okay, excellent. Thanks, Craig. Thanks, guys. I'll pass it on.

Thanks, Reg.

Thank you. There are no further questions at this time, and that does conclude our conference for today. Thank you for participating. You may now disconnect.