St Barbara Limited

Thank you for standing by and welcome to the St Barbara FY21 Q4 June quarterly report and presentation. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr Chris Maitland, Head of Investor Relations. Please go ahead.

Thank you, Melanie. Good morning, everyone, and thank you for joining us today. Please note the disclaimers on the second slide of this presentation pack. On the call with me today are our Managing Director and CEO, Craig Jetson, Chief Financial Officer, Garth Campbell-Cohen, Deputy Chief Financial Officer, Lucas Welsh, Chief Operating Officer, Evan Spencer, and Executive General Manager of People, Val Madsen. On today's call, Craig will discuss our Q4 results, and Lucas will update you on our Building Brilliance Program, after which we will open up the call to questions. With that, I'll hand the call over to you, Craig.

Thank you, Chris, and good morning, everybody. So, look, welcome to St Barbara's June Quarter Report. I, as always, would like to begin by recognising the traditional owners, First Nations people of the lands on which St Barbara operates in Australia, Canada, Papua New Guinea, and pay my respects to Elders past, present and emerging. Before I move into the main body of the presentation, I'd like to sadly but openly discuss the fatality we had at Sinbury in May. One of our truck drivers was fatally injured when the truck they were driving travelled over a safety berm and eventually rolling into the open pit. All of Zimbabwe was deeply saddened by this tragic incident and we have been providing assistance to the employee's family and counselling to support for our Sinbury team. Every day, everyone at Zimbabwe is working to eliminate fatalities and life-changing injuries. This is our number one priority. An independent investigation has been completed with the report submitted to the Papua New Guinea Mineral Resource Authority and the recommendations were reviewed and accepted. Further education on fatigue management is underway with fatigue technology ordered for all our trucks and vehicles and will be progressively installed. This technology is already proven in PNG and operating in places and mining throughout PNG operations. So just moving on from that said update, we're moving to safety always. We had two other recordable injuries for the quarter. Both were of low severity. We had no recordable injuries in April and June. We were committed to achieving our zero harm goals. Turn to slide five on key achievements in quarter four. On slide five, it points out in the June quarter, we continue to drive our strategy of establishing three mines with greater than 10 years of operating life. We released the Leonora Province Plan and added approximately 1.4 million ounces of gold to our existing 5 million ounces of gold mineral resource. We have commenced further resource and development as well as extensional drilling and I'll discuss the Leonora Province plan in more detail shortly. During the quarter, we also progressed the Sinbury sulphide project through further metallurgical testing, along with the development of opportunities identified in the feasibility study. We have put a process package out to tender and expect to deliver the front-end engineering and design study by the third quarter of this financial year, after which we will be in a position to make the final investment decision. The Pugna Guinea Conservation and Environmental Protection Authority continued its review of the social and environmental impact statement. I expect we will submit the remaining documentation required in the second quarter of this year. We remain on track for the first sulphide ore production in the second quarter of 2024 financial year. Our Atlantic operations had a strong quarter with meal delivering record throughputs. Lucas Welsh, who will be stepping into the Chief Financial Officer's role at the end of August, has mostly recently been promoted as Chief Transformation Officer. We'll shortly take you through our Building Brilliance program. Lucas has been leading the program as the Chief Transformation Officer, which has been instrumental in delivering the process improvements which have helped Atlantic achieve a record throughput. From a financial perspective, we continue to strengthen our balance sheet with $100 million of cash contribution from our operations. After paying $21 million in debt, this quarter our cash on hand increased by 45% to $133 million. The COVID-19 situation in our operations at St. Barry has improved with a significant decrease in community transmissions. Simberi has continued to implement the Zimbabwe COVID-19 protocols with the support and guidance from external medical specialists and additional controls limit people movements in and out of the operations and on and off the islands. Currently a COVID-19 vaccination program is taking place on site. To date, approximately 22% of our employees and contractors have received their initial vaccination. We are targeting more than 80% and we have commenced information campaign for all employees, contractors and the community. As you would expect, St Barbara's COVID-19 management plan is working quite well and continues across all our sites. So turning to slide six, consolidated Q4 results. Goal production for the quarter remained at steady 82,000 which is a strong result given our operations at Sinbury were suspended for almost half the quarter. This week, the MRA has granted conditional approval for mining to recommence, with the mine production to ramp up over the coming weeks ahead. The Sinbury processing facility is expected to be brought back online into production by the end of the first half of this financial year. Our group oil and sustaining costs for the June quarter were approximately 2% lower at $1,623 per ounce compared to the prior quarter, largely driven and due to the increased gold production at Atlantic. And most importantly, we have continued to operate despite our COVID-19 headwinds. Our Atlantic operation recorded a 30% increase in product in production for the fourth quarter to 26,718 ounces. The mine focused on delivering high-grade ore from the pit. Mine ore was up 19% compared to the prior quarter. This was despite the challenges of pit dewatering and congestion due to smaller work areas on the lower benches of the pit as the mine approaches end of life. The increase in gold production was a primary driver of the 10% quarter-on-quarter reduction in all instastating costs to $1,011 per ounce. Turning to the Leonora at this point, gold production was up 6% to 45,157 ounces. The strategy for the quarter was to increase the tons, maximize the resource from mining more than one area at a time. As a result, the mine grade for the quarter was 1.5 grams per tonne lower at 6.5 grams per tonne. This lower grade combined with all purchase and cost and the cost of transitioning the new mining contractor resulted in a higher oil and sustaining cost for this quarter of $1,663 per ounce. On a positive note, Leonora, all mined at Gwalior was 27,000 tonnes higher at 195,000 tonnes, reflecting the continued focus on de-bottlenecking. This has enabled a strong increase in ore milled for the quarter at 291,000 tonnes. This is the highest quarter of milled tonnes in five years since the first quarter of FY16, and significantly increased depth of mine is certainly a great result. As expected, grade was down to 5.3 grams per tonne, as there were increased stockpile material and purchased oil to maximize the mill capacity. This generated additional ounces in revenue. At Sinbury, gold production was primarily impacted by the shutdown of the mining operations on the 21st of May due to the fatal accident at the mine. Just briefly, and on slide seven, I turn to slide seven now, an inspection of the Sinbury's deep sea tailings placement pipe identified that had been damaged leading to the halt of processing. An independent assessment has been conducted into the failure of the pipe by consulting environmental engineers and has concluded the likely cause of failure to be a local landslide in the vicinity of the pipe. We have commenced purchasing materials and expect the piping to be delivered to site at the end of the current quarter. Installation of the pipeline will be conducted in the second quarter with the plan to restart shortly thereafter. On slide 8, and turning to slide 8 now, guidance for FY22 has been impacted by the suspension and processing at Sinbury for the majority of the first half of the year. Noting that grade reconciliation issues that landing operations have been experienced for the past year, we have lowered grade expectation and guidance accordingly. For the Leonora operations, guidance includes 10,000 ounces of production from all purchase from the Linden Gold Alliance. Consolidated production for the year is slightly weighted to the second half due to the Sinbury restart. And with that, I will now hand the presentation over to Lucas, who will take you through our building programs. Over to you, Lucas.

Thanks, Craig. In December last year we released slide 9 which shows the two near-term uplifts we're looking to achieve over the next three years across our operations and these are progressing as planned. Building Brilliance has started successfully with initiatives focused on sustainable productivity improvements to underpin our operational performance. The Building Brilliance initiatives delivered a cash benefit of $41 million in FY21 above the target of $30 to $40 million for the year. Building on this, our target is for $60 to $100 million in Building Brilliance savings for the coming year. The next two slides have some highlights of the program that demonstrate some of the productivity improvements which are driving our guidance for the coming year. As you can see from the three charts on slide 10, the Building Brilliance program has had a significant impact on key performance indicators in the mill at the Atlantic operations. The Building Brilliance program has encouraged everyone to review processes and ask, how can this be done better? A great example is where one of our frontline employees noticed that the angle of the spray bar in the trommel wasn't optimal. Through the program he was able to raise this issue and it was promptly addressed. We adjusted the angle to ensure the fine particles were able to be efficiently separated and passed through the trommel screen. Previously this material had been discharged from the trommel with a scat and would have been reintroduced into the mill later. This together with other minor modifications to the plant resulted in the plant setting new throughput records in Q4. Similarly, the maintenance team critically reviewed their maintenance program to determine how they could best maintain the plant while minimizing shutdowns. Our prior approach was to have regular shutdowns and perform maintenance on all equipment. Now we regularly inspect equipment and perform maintenance only as and when required. Critical to this is having ongoing monitoring to avoid having unplanned shutdowns. With this approach, we have seen an increase in mill availability. The Building Brilliance Initiative saw the introduction of downcomers, which forced slurry down into the carbon and leach tanks to increase residence time. We also installed sparge units to inject more dissolved oxygen into the same tanks. These initiatives improved our recoveries by approximately 1%. The next slide, slide 11, shows some key metrics which are driving increased operational performance at Leonora. A common enabler for these initiatives is the commissioning of Wi-Fi underground. It has enabled greater usage of tele-remote operations, which has had two positive impacts. The first is safety. We've been able to reduce the number of people working underground, such as loading, where operators can now operate the machinery from the surface. This also has the benefit of reducing idle time during shift changeovers when this equipment is run remotely from the surface. The strong Wi-Fi network has also enabled real-time allocation of equipment, again further reducing idle time. One of the key drivers of performance equality is the number of development fronts. you can see there has been a considerable change from the start of FY21 to where the year ended. As more fronts open up underground, the team are better able to manage utilisation of equipment and we have the ability to have more equipment operating at the same time. This increase in development has arisen from multiple initiatives. Two examples are installing ground support and cut length. The time taken to install ground support has been decreased by the introduction of the Epiroc Boltek and using self-chilling anchors instead of cable bolts. By reducing the time taken to boulder heading, we've reduced the development cycle time. We also worked with Orica to identify the optimal detonators and explosives to use for our ground conditions, which has led to a 5% increase in cut length per blast. And with that, I'll hand back to you, Greg.

Thank you, Lucas. So moving on to slide 12, lays out our Leonora Province plan, which I want to spend a bit more time taking you through. Next quarter, we commence the previsibility studies for Hill and Harbour Lights. The 1.4 million ounces of additional resources we announced in June will underpin the mill expansion study, which we aim to complete by the end of this financial year. At Leonora, our strategy is to fill the mill. As such, we continue to explore opportunities for both toll treatment and oil purchases, as well as joint ventures and acquisitions where we can deliver superior returns. Exploration drilling is planned between Gwalior, Tower Hill and Harbour Lights. There is also resource definition drilling in Tower Hill and Harbour Lights with a special focus on testing potential high-grade extensions to known targets. There are also regional testing targets in Jasper Hill area, which is located approximately 20 kilometres from our Leonora operations. As you would know, in early June, we acquired a strategic 19.8% equity position in Kin Minerals, which has approximately 1.2 million ounces of gold resources and is approximately 45 kilometres to the east of our Leonore operations. We believe this has further exploration upside and strategic. So in terms of the update of Atlantic permitting on slide 13, I thought it would take you time to walk you through some of the many permits we're working on. under Atlantic Operations as we move towards developing greater than a 10-year operating life. Under Nova Scotian law, we're required to seek regular permit updates to change where we store waste rock at the operation, with all the final permits expected to be issued by the third quarter of FY22. As per the original plan, when Two Coin Open Pit finishes operation, we intend to convert it into a tailing storage facility. We expect this to be done in place by the third quarter of this financial year. The conversion is required for the processing plant to continue operating in FY23. For Beaver Dam, we submitted the revised environmental impact statement to the federal government and expect this to be approved by the end of the current financial year. In parallel, we are progressing the mining license applications for Beaver Dam which we anticipate being completed by the end of the third quarter of this financial year. After the environmental impact statement is approved, we will apply for the industrial approved, which will allow us to commence construction and mining. At this stage, we're on target for the first store to be delivered from Vita Dam in the first half of 2024. We're also working on the permits for 15 mile stream and environmental impact submission to be completed in the first quarter of the next financial year. So in conclusion, on slide 14, we've had a strong June quarter and expected to be improved operation performance Atlantic and Leonora to continue into FY22. We've progressed our strategy of establishing three mines with greater than 10 years operating lives. We will provide further details on the Leonora Province Plan Simberry Soil Flow Project and Abiva Dam throughout the year. Operating cash flow for the quarter was $100 million, further strengthening our balance sheet, which remains strong with $133 million of cash and $82 million of debt. We also have a $200 million of undrawn debt facilities available. The Building Brilliance Program delivered a cash benefit of $41 million in FY21, above the set target of $30 to $40 million for the year when we launched the program. Our target for the coming year is $60 to $100 million in Building Brilliance savings. So with that, I'll thank you for listening, and I will now hand back to the moderator and open the line for any questions people may have. Thank you.

Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from David Radcliffe with Global Mining Research. Please go ahead.

Hi. Good morning, everyone. A couple of questions are really around Atlantic and just looking at the guidance there for this year, is that kind of lower rate? Can you maybe just point to what's really driving that? Is it a combination of throughput, grade or the conversion activities? And then it sounds like the pit only really operates this year. Does that mean that all the reserves have actually been depleted at Tokay or is it sort of finishing a little bit earlier maybe than we expected?

Yeah, David, they're really good questions. I think if I start with the grade and the reconciliation problems we have, we've been conservative because of our lack of reconciliation accuracy over the year and what we're learning. So that's point one. Point two, I think, would be given the process plant improvements through building bridges, given the productivity improvements in the mine, has certainly increased production, which has brought that end of life of mine a little bit sooner than we probably would have anticipated a bit over a year ago. Also, the productivity of a mine, as you would appreciate, as it gets closer to end of life, we are in the bottom of the pit. It narrows and pinches down, and productivity is very, very difficult to maintain. It would be number two. The third piece of that, as you know, we've had plenty of low-grade to medium-grade stockpile that we'll bring online strategically towards the end of the year, which will lower the overall gold units going to the mill. And that's the other main drivers behind that. The permitting for Beaver Dam is critical and it's certainly on a tight timeline, but we're still working very hard with First Nations. and the government regulators to make sure that we fill all the obligations we have under those permit applications. And of course, we have submitted the applications that we need, and I think we're on round three now of questions from the regulators to be answered. So things are progressing quite well. Much slower on the regulatory front than I would have anticipated a year ago, but that's been driven by many different factors in Nova Scotia. but we're certainly working through the list as hard as we can. We've also restructured the team at Atlantic and have dedicated general managers now, one for the operation, and this is six months old now, but one for the operation, one for permitting and technical permitting, and one for community engagement, government engagement. And they're all working as one, that we're certainly resourcing the strategy to permit as soon as we possibly can without cutting corners. Okay, thank you.

So convert to a towing facility at the end of this financial year, then by the time they're processing stockpiles in 2023, and then if the permitting comes through, obviously then moves to Beaver Dam. Can you quantify maybe how big those stockpiles are and how long they would last, given that, you know, I'm imagining there's no plan B if there's a delay on the Beaver Dam permitting and just trying to understand, you know, could there be a gap or do you think those stockpiles could carry you for, you know, so long?

Yeah, look, I believe that the, I haven't got the exact tonnages of low and median grade combined, to let you know exactly what the tonnages are, but we would have enough bridging of low-grade and medium-grade to get us through permitting at this stage. The low-grade and the medium-grade stockpiles will always plan to be processed at the end of all the sequences of, be the dam 15 mile stream, Cochrane Hill, or strategically in between. So what we're doing, the permitting delay is an issue for us, and we will work through that. The low-grade medium-grade stockpiles keeps us in free cash and makes some really good money. It's a very low-cost operation up there. And the high-grade in Beaver Dam and beyond is still in the ground waiting for us to bring in. The pre-engineering work that's going on, by the time we permit, we'll be shovel-ready to upgrade roads and also start the mining operation. The engineering is ready, or will be ready, and it's the permit timeline now. But the low-grade, medium-grade, which to answer your question, we'll bridge that gap. Okay, all right, thanks.

Greg, just to give you a hand there, David, we had at the end of June 2020, we had 5 million tonnes of material, and we'll have more, which we'll update you when we bring out the reserves and resources in a few weeks' time.

Brilliant. Thanks, Chris. If I can, just a quick one on Zimbari. So can you maybe just quantify the capital replacement pipeline? Is that in the sustaining or the growth guidance? And then maybe how does the sort of the loss or damage to the pipeline impact your thoughts around the sulfide project? So do you start to think now that maybe you need to have two pipelines or is this just such a freak event that, you know, you're happy to wear that risk going forward?

Yeah, Dave, I think there's a couple of ways I'd like to answer that. One is we could... The pipe is end of life, no doubt, and it was always due to be planned to be changed and upgraded along with the mixing tank, the seawater pumps and the land facilities as part of the sulphide project. So it was always planned to do. I think... You know, clearly the failure took us by surprise. It was picked up on a routine maintenance inspection using ROVs. And it's clear there's been a landslide that's been the root cause of the failure of the pipe. It certainly doesn't change the methodology of a single pipe system. What we've decided to do, the break in the pipe and the damage is at the 54 metre mark. out of a 500 metre long pipe. It would be, the science would tell us that we could potentially start if we wanted to, provided we had tight process control. But I think it'd be prudent to say to replace the pipe now and upgrade all the seawater facilities on the surface, including the pumps and mixing tanks, dewatering, et cetera, is probably the right time to do that now instead of doing it twice. So I think it's about, it'll be an $8 million growth capital exercise because we will upgrade the facility to handle the new and the higher throughput rates of the sulfide program. It'll be just ready, be ready well in advance now, and we'll use it when we get going at the end of this year through to the commissioning of the sulfide project.

Brilliant. Thank you. Thanks for that, guys. Thanks, David.

Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Alex Barkley with Morgan Stanley, Australia. Please go ahead.

Thanks. Hi, Greg and team. A couple from me. A quick follow-up on Atlantic, given that Beaver Dam start in FY24. Does that mean looking at your 2020 Investor Day presentation, you'd be doing that lower end of guidance if fever got delayed? So I'm just eyeballing the chart. Is that sort of 50,000 ounces? Does that sound right?

Well, it's a good question, Alex. Yet to be determined. I think what I'd have to say, the... The timeline to permit Beaver Dam is what I would call conservative and worst-case scenario. And we would certainly hope to bring that forward. And there's two ways that we can do that. One is the upgrade of the whole road facility should be and could be taken out of the permits for the Beaver Dam, the mine. So if we get off to that, we'll close some of that gap very, very quickly. The overall effect... We'll guide on that at the year-end and certainly have better information available at that time. There will be and could be an effect, yes, absolutely.

Thanks. Another question on some very stale fires, the approvals. Given some of the tailings issues you've had in your remediation strategy, Do you think that would in any way influence that environmental permitting process or not really related?

Look, it's absolutely related with the lens and the sensitivity around DSTP and any sort of tiles management and dam management as far as that goes is certainly problematic when you have an issue. We've been working very closely with SEPA and the regulators. And they have been honoured to have a look at, one, the footage of the damage, two, the remedial plan and their plans to upgrade the system. And they've been kept in the loop from a communication perspective since the day of failure. The application for and submission for EIS is well advanced. There's only two more amendments to go into that, and that then is completed. And the communication and the discussions between the two, knowing full well that we're going into a complete new system and we've decided to stay down to rebuild that system, more robust and ready for the sulfide throughput, has certainly gained the support of SEPA. So once all that engineering solutions are in place, I don't see the two being connected and we're still on a pathway to get the approvals as soon as we can.

Okay, that's very helpful. Thanks. That's all from me.

Thanks, Alex.

Thank you. There are no further questions at this time. I'll now hand back to Mr Maitland for closing remarks.

Thank you, Melanie. Thank you, everyone, for attending today's call. If you do have any other questions or issues you'd like to chat, please do not hesitate to reach out to myself or to David. We'll help you where we can. But thank you for today's call.

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