Northern Star Resources Limited (NST) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Northern Star Investor Update Call. [Operator Instructions] I would now like to hand the conference over to Mr. Bill Beament, Executive Chair. Please go ahead.

Good afternoon, and thanks for joining us at short notice. To be honest, we weren't planning to host a conference call this -- on this trading update release, but there is obviously a significant amount of confusion and concern about what this virus means for the mining industry. And we couldn't address all the issues and respond to all the calls, so we decided it may help everyone if we held this call. Northern Star has been particularly proactive in confronting these challenges, going back to mid- to late February in some cases, and we'll explain that strategy in more detail shortly. And I guess we're also being proactive with today's announcement and this call, but I don't think this will be the last announcement of this nature you'll see from the mining industry or the last investor call on the subject. We believe we have acted proactively, responsibly, ethically and prudently with the extreme measures we've adopted in response to this virus; and we believe today's announcement is part of that approach. Northern Star's #1 priority at all times is the health and safety of our people and the communities in which we operate. Our people are our most important asset, and I thank them enormously for the support and cooperation they are providing in these extremely difficult both personal and professional circumstances. This is a matter of lives and livelihoods. If the mining industry gets this wrong, it will not only have tragic people consequences. It will have disastrous consequences for our social license to operate. It is against this backdrop that we moved quickly to implement stringent rules and controls aimed at protecting our workforce and enabling production to continue. We started this process in mid- to late February, well ahead of government requirements. Stuart Tonkin will provide some details of these measures in a minute. The reality is that these measures have inadvertently reduced our production and our productivity. It is as simple as that, but we did it for 2 simple reasons: first, because it was completely consistent with our #1 priority of protecting the health and safety of our people. And second, our goal is to continue producing gold throughout this crisis. The reality is that, in order to achieve these 2 objectives, we must take measures which have the effect of limiting our production capacity. We make no apology for that. It is, in our view, the only responsible and commercially prudent strategy available to us in these circumstances. The major consequence and disruptor of this virus and the measures we are putting in place is that it is just much harder to get people in, around and out of our sites than would normally be the case. The exception to that is our KCGM operation, where a large share of the workforce is residential. KCGM has so far performed in line with our guidance in the March quarter. That's not to say it will remain immune to the consequences of the virus. We cannot know what tomorrow will bring for KCGM or indeed any of our operations, and that is why we have deferred payment of our interim dividend. That is the prudent thing to do given the enormous uncertainty facing our business and industry. We have also taken a raft of other measures in the name of financial prudence; and our CFO, Ryan Gurner, will elaborate on those shortly. Stuart Tonkin, our CEO, will now outline some of the measures we have adopted.

Thanks, Bill. So today, I need to convey that #1 cause of the March performance variance is our inability to deploy people as required under normal operating conditions related to this COVID pandemic. I'll reinforce Bill's comments in saying the strength of Northern Star's culture is key to meeting the challenge, and we've always said our people are our #1 asset. They discover our mineral resources. They operate productively and responsibly to meet all stakeholder expectations, and now those same people are doing extraordinary things to maintain the health and safety of our staff and communities whilst rising to the challenge to protect livelihoods of their dependent stakeholders. I acknowledge and thank them for their efforts and focus at these times. The resources sector is first class in assessing and managing safety and financial risks. As outlined by Bill, our actions are derived from our mature risk management culture and are necessary due to the new risks associated with the COVID pandemic, placing Northern Star now in a stronger operational position from these -- implementing these changes. So now to our operations. All of our operations are presently continuing but under strict personnel controls to mitigate health risks. These restrictions have and will continue to impact productivity and costs but will allow protection of cash flows whilst these decisions remain in our control. At this stage, supply chain has not posed a material impact or threat to production, so I will focus on the labor effects today. In Alaska, we've rapidly implemented stay-or-go decisions for our Pogo staff in anticipation of border lockdowns and mandated quarantine periods. We immediately lengthened the roster there to buy time. As you know, our Pogo team consists of resident Alaskans, Lower 48 state employees and expatriated Australians, all of which we're dependent on. Subject to continuing controls, we can now manage continuity of operations without impacting health risks to the state or to the community, which is the strength of the isolated operation environment where Pogo is located. We've maintained pay and benefits and have increased support for the Pogo staff to accommodate that disruption in those longer roster cycles that we've implemented. And we -- but we still expect through skills distribution a continued impact to the operational activity until those restrictions are lifted. To our Australian operations, [ client player ] can be a strength and a weakness, as we've seen. It does allow us ultimate control over the health filter of staff at the operations. And our -- and the acceptance of these heightened measures by our staff and contractors has been outstanding, including the requirement to modify their behavior during their R&R. At Jundee, we have extended and aligned rosters, which reduces risks, but it does impact flexibility of skills across the teams. Jundee is maintaining open-pit and underground operations, whilst we've stopped exploration activity. We are deferring expenditure that can be caught up on later. To Kalgoorlie, as Bill spoke about, our residential teams at KCGM and at Kalgoorlie operations remained the strength of those operations, but we also depend on some fly-in, fly-out team skills, which are facing the same restrictions as Jundee. We have introduced the heightened health filter to protect the Goldfields community, which will reduce available staff and impacts flexibility that we typically enjoy in those synergies across our mines there. The good thing is the local government and Goldfields business leaders, their community, they are all fully aligned on these necessary measures to protect the lives and livelihoods of that region. So today, I'd like to reiterate that our operations are presently continuing but under very strict control measures as response to the COVID pandemic. These restrictions and our ability -- these restrict our ability to deploy people as we normally do, and that affects 2 primary things: our productivities and their costs. Examples of that are on less-productive time; compromised team sizes or team skills; and in regards to costs, increase transport measures such as multiple planes or buses to ensure we're adhering to social distancing measures. These are all things that limit and impact those things. I will now pass to Ryan to discuss the financial measures taken, and then we'll go to questions. Thanks, Ryan.

Thanks, Stuart. Good afternoon, all. Northern Star has announced today a range of capital management initiatives which have and are being undertaken to ensure the company is in the strongest possible position in response to the COVID-19 pandemic. These measures and steps have been proactive to keep Northern Star in a strong position and provide flexibility to respond to any operational and/or macroeconomic scenarios that may present in the coming weeks and months as a result of COVID-19. Capital and liquidity management has and will continue to be a key focus throughout this period of uncertainty that is currently being experienced by all countries, industries and companies. In light of this, Northern Star has today elected to defer payment of its interim $0.075 per share dividend, which was due to be paid 30th of March, to the 27th of October 2020. As a third act of prudence, Northern Star has taken some initial precautionary steps to extend maturities of some of its underlevered 2020 calendar year hedges to calendar year 2021. This decision has simply been a proactive measure to reduce the delivery risk if one or all of our operations are disrupted or shut down due to COVID-19. Northern Star retains the flexibility to deliver these hedge commitments at any time up until any extended maturity dates. And if and when prudent to do so, we would look to deliver our commitments as they stand. Northern Star is in a strong liquidity position to manage our business through this time of uncertainty and, as at the 25th of March, had cash and bullion of approximately $534 million. Recently, Northern Star drew a further $200 million from its revolving credit facilities and now has $700 million in corporate debt comprising of a 4-year $400 million term loan and a 3-year $300 million revolving facility. The only scheduled debt repayment in the next 12 months is $25 million on the 31st of December 2020. Northern Star appreciates that some stakeholders may see these debts as overly conservative. However, we prefer to take a risk-averse approach now to be in the best possible position to respond to any scenario to protect our people and our business in what is a very dynamic and challenging time. I will now place the call back to the moderator and open for questions.

[Operator Instructions] Your first question comes from Daniel Morgan with UBS.

Bill and team, I was just wondering if you could provide any color on splitting the various production impacts at all. I know you said KCGM had not been included in what you're talking about with the production impacts but just seeing if you could talk about the other various sites. So I would imagine Pogo has received the lion's share of impacts from these people movement issues to date.

Yes. Look, as you're watching as things unfold, it's really about way. So we've tried to well and truly be proactive and in front of the actions that we've implemented before governments or other mandates, regulators have jumped in. So we locked in -- locked down Pogo very quickly. And we gave the people 24 hours to say you either expect to stay in the roster for the next 30 days-plus and either leave the state or stay in the state. These are pressure decisions that we appreciate the staff having to take. And we appreciate their understanding and acceptance of, their family issues and all these things. So look, these are the types of things that affect there, but we've got it in a controlled environment now. When you look into the other sites, it's really this [ right pathway ] to reduce time, productive time; and just taking skills that we're managing through. So it's just that reduced -- the same reason, but it's just that reduced activity fairly evenly across those operations.

And I was wondering if you could elaborate a little bit on the Australian workforce into Alaska, tooling the team up there with the new mining method. So what is the situation of people at site who are Australian and helping or people who -- just wondering how do we think about production impacts in the months ahead and the turnaround. Is the mining method change embedded yet at site? Or is there still risk of the turnaround not going as well for the next few months?

No. Those things are in place. The team is skilled. And in fact, the acceptance in the team -- they happily -- they'll happily stay there indefinitely and work. That's not the issue. It's all those other things around change management in the roster side and those skill sets. That operational investment you saw around a point in December where we've got Pogo where we need it. That's not an issue in that regard. It's purely regulatory changes, as you know, hourly, daily modified. We've kind of lockboxed it at the moment. It's really around the next iteration of a roster change and watching how the U.S. sort of transforms over the near-term period. We can't say the future there, but we know what's within our control. The message is nothing is changing with the skills that are there at the moment.

Right. And speaking to some of your peers and other companies in the mining industry, it -- many are talking about similar things, splitting teams and changing rosters or mass areas changing and things like that, but no one that I've been talking to was talking about material impacts to production, which you're outlining today, from Australian operations. Does that mean you're being more proactive than other companies? Or how should I take this…

Yes. Look -- yes, Dan, absolutely. As I said, we are so proactively ahead of the curve. You will see the rest of the resource sector go to a longer even time rosters. So we've got a lot of 2-in-1s. So you've basically got to create 4 panels out of 3. So there will be a spreading of the skills across -- you're diluting your skill base down because you're creating extra panels. So you will see that happen radically across the industry, every industry.

Your next question comes from Matthew Frydman with Goldman Sachs.

Firstly, just wondering what the impacts that you're seeing as it stands at the moment. I appreciate things are obviously changing on a day-by-day basis, as Stu alluded to, but I guess if I look at your indication of around a 10% or 15% impact across the March quarter, that implies production in the month of March is around maybe down by 40% or 30% to 40%, in that region, assuming that January and February were relatively unaffected. Is that the right kind of quantum that you're talking about at the moment? And I guess that ties into Bill's last comment on creating 4 panels out of 3. That would kind of indicate a circa 30% impact to your productivity at the moment. Is that the right number to be thinking about?

Look, Matt, it's half the quarter, effectively. We jumped early on changing things. When you change things rapidly, you take that immediate hit, right? So it's there are the things you have to do proactively. You might have been right or wrong when you did them, but that's the immediate effect and how it's affected that quarter. Yes, we have hockey sticks. It's intra quarter, intra year. We know the impacts. And we've still got to wait to run in the quarter, so that's why we've put that guidance there. The other part of the question is just on how this continues. Now we've got times and plans and stability of the teams on site. All that thinking, in time, makes a massive difference to how we're rotating mining schedules. And you'll start to see all those iterations [ that drop under optionality ] now. The teams are literally jumping to attend to and to get all that risk out. So time is of the essence, and time to act on making sure you don't have a problem on your site, basically, but particularly you maintain control of your operations. And what -- all those things, we did proactively and early. We take that hit, but we lessen the longer-term impact of those things.

Sure. So it sounds like -- all things being equal, assuming things don't worsen here, which clearly they certainly could in a lot of jurisdictions, it sounds like maybe you've taken a bit of a bigger hit in the March quarter, but that will set you up better going…

Correct, correct.

To get worse, yes. Okay. Secondly, just wondering if you guys are currently seeing any issues with actually selling gold either in Australia or Alaska. There are other companies globally that are flagging, obviously, transport and refining. And bullion is an issue, or perhaps in terms of payment pushing out. Have you guys seen any issues there at the moment?

Matt, it's Ryan. Look, no. [ We serve Perth Mint ], who's a quality counterparty who is guaranteed by the state government. So we're not seeing any issues there. We have the ability to monetize that gold when it's picked up by a security. So as it stands, lots of contingencies in place for that, and we don't see any risk from Northern Star's side.

Sure. Is that the case in Alaska also, that arrangement…

Correct.

Yes.

Fantastic. One last one for you quickly, Ryan, just on the potentially deferring the hedges. Would there be any costs associated with rolling the delivery of those hedges forward, anything material?

Well, look, Matt, yes, there are. Nothing is for free, but it's not material. And to be honest, it's much cheaper than buying options, so having that flexibility, we think, is very useful.

Your next question comes from Nick Herbert with Crédit Suisse.

Just one from me, please. So just thinking about an absolute worst-case scenario here if all sites were ultimately forced to shut. Are you able to advise what a monthly holding cost is across the business if operations did entirely cease?

Yes, Nick, that's a very good question because like -- we've made some very, very prudent financial business decisions that we'll either wrap in 3 months time and will show the -- but I think we've put our balance sheet in a fantastic shape in the last week to be in this position. And you have seen jurisdictions around the world, South Africa, Peru, Québec, Ontario, closing. So look, we're doing the work behind the scenes of what our holding costs look. I'm not going to tell you on the phone right now because we're still working that out, but we've got a balance sheet of what we've done and how we've enacted over a long period of time to put us in an unbelievable position to ride out a very long storm here.

Yes. No worries. Okay, yes, it's fine. Maybe we can take that offline once you work through that.

Your next question comes from Sophie Spartalis with Bank of America.

Just a few questions from me. Firstly, just in terms of the FIFO restrictions, just for everyone on the call so we all understand, what are the government restrictions today? And have you been more proactive on those restrictions? And have you sort of taken things into your own hands? And then secondly, just in terms of the operations: We had Pogo and the Kalgoorlie operations all looking for a step-up in grade in the second half. I guess, will that grade come through? And really how are you balancing given the spread of the skill set? Is it really a matter of trying to maintain throughput where possible in the mills, or will you be chasing sort of grade to try and catch up where possible?

Yes. So I think it's the -- I'll deal with the first part of that question. It's we are well ahead of the curve and have been for a period of time on implementing these what we see coming, as far as restrictions in the operations. And the FIFO rules are very, very strict; and it's radically changing across the whole sectors. And you'll see companies coming up, and it's probably in the next 1 to 7 days. But if we don't have very, very strict FIFO operations and protocols around it, we will not have the license of the government to be able to commute people intrastate. We've already been banned from interstate, as I understand it. We've got probably our workforce who comes from interstate who can't come in. So that's affected us again. But you will notice every company, no matter what sector and what prime commodity, is putting in radical procedures and policies, social distancing on planes, extra charters, what Stu already mentioned. And we need to make sure it's all done correctly. We have checks at airports, [ bag checks ]. You name it. We've got it in place. And we've been doing that for a fair period of time, again, well advanced from the people, considering what was coming. But you'll see everyone, I suppose, is resorting to this measure because, if we stopped with that, we lose our social license to operate.

Yes. So it's Stu. So I guess our philosophy on that -- of improvement in grades and throughput have been selective -- whilst we can operate, we'll operate as hard as we can. There are all the options to us. You've heard it on previous quarters how we've been pretty selective and strict of having an underground, all these sort of things that are there. We will update at the March quarterly really what the impacts of that are. We're doing all that work and also reschedules in the plans and the optionality. So it's probably more for the March quarterly content on the optionality of those assets.

Okay, but then this as a follow-up, Stu: Given the limited number of people that you've got on site, is that impacting the number of plants you can either open up or even operate and therefore the flexibility to blend where needed, so you're becoming more restricted on what grade also goes through the mill?

It certainly does. And we'll have to get what we can get, and that's -- that grade will be what it will be. And there are modified mine schedules, but this isn't -- this is about an impact. This isn't about erosion or loss of the inherent value of these assets, this deferral, disruption. The inherent value is still there. It's important that we -- however long this goes for, we'll keep our skills and our culture and our team together because they're ultimately the ones who drive the value of these assets. So all those things you asked are real. We can't quantify them. We can't read the future. But we'll try and update as best we can. And I think the quarterly will be a bit more nuts and bolts on all that.

Okay. And then sorry. Just one more, if I can. Bill, just in terms of the FIFO rules. And obviously you're a major employer in Kalgoorlie. You talked around the sensitivity of Kalgoorlie. Just noting that obviously there's a number of indigenous people who live in and around Kalgoorlie, is Kalgoorlie an extra sensitive area that the government is monitoring and that's why you keep referring back to your social license to operate? Is that an asset that we need to consider here?

I think -- so I think it's any region or any suburb in Australia at the moment because, if you have any outbreak anywhere, the government has already indicated by state and federal they'll shut communities and shut suburbs down. So we can't control that. We're just sensitive of our operations. We are transporting people intrastate. We -- we can't underestimate. There are risks associated. We think we've got great protocols in to manage that, but there's still a bit of a risk there and we need to make sure we manage that risk and don't put the communities we operate at risk.

Okay. So right now, you've got a license to move people intrastate.

Intrastate, yes…

Inside…

Intrastate.

Not across the WA border, we don't and don't take it.

Your next question comes from Paul Howard with Hartleys.

Just on KCGM, what makes that so unique that it's not as affected as the rest of the columns, assuming it's sort of the same population sort of supplying workers to those places?

Yes. KCGM has been 100% residential growth. So we're relying [ on some qualified teams ] to do our other ops. The other important part of KCGM is half of the feed going to the mill is from those low growth [ stockpiles ], so it has the ability to keep doing that through the mill. So I mean each site can be affected in different ways due to skills. So I guess that's the reason there.

Great. Okay, cool. The other one was perhaps for Ryan. So you spoke about deferral of expenditure at Jundee. Can you elaborate as to what extent that is?

Sorry. I missed -- can you just repeat that -- first part of that, please?

Yes. So just the deferral of expenditure at Jundee. Just could you elaborate as to what extent that is?

It's things like any capital expenditure for expansion projects that are going into the next year's budget. It might be moving jumbo crews out of your main deep lines and putting them into ore development. Those are the type of things that -- or if you start to reduce your team sizes, you put them onto your stoping equipment. Loaders and drills play to that. So it's exploration is probably the first immediate one, stopping not just the unnecessary of the spend but more reducing the density of people in and out of the camp to reduce [ the subsidies ] -- [ to allow the subsidies to assume major states ], things like that.

It's pretty simple, guys. If you're not a revenue-generating employee in the mining industry, no business wants you on there.

Yes, fair. Cool. So is exploration curtailed not just at Jundee but across the business as a whole?

Correct.

Right.

Yes. Okay, cool, all right. And then just one final one. And perhaps excuse my ignorance, but today's announcement described debt of $700 million. I kind of sort of thought it was $500 million. I'm just wondering where I'm missing that $200 million.

Yes. So Paul, so we just recently drew the extra $200 million on our revolver just as a prudent measure. So we did that in the last couple weeks. So our net debt position doesn't change. We just did that as a prudent measure.

Your next question comes from Warren Edney with Baillieu.

I've got 2 questions. Just I want to know whether you had any -- you've put in place any additional hedging. And the other one was just in terms of line covenants now. I mean, if -- I'm just wondering how much wiggle room you've got. What are the trigger points in terms of production, et cetera?

Yes. Thanks, Warren. This is Bill. Obviously to the first one is the reason we push the hedges out is really simple. It's we just don't want delivery risks. If things do go [ very sharp ], yes, well, then we've got no delivery risks associated with that business for 12 months. So we just saw that as a very, very sensible and prudent decision to not ever have come to a head on cash settling hedges that we do. So we thought that's a very smart thing to do. I'm not saying it's going to happen, but yes, if it does, then we've got -- we've been protected greatly from what our actions have done. I'll ask Ryan…

Sure, yes. So Warren, just in relation to the covenant. So we've got a number of financial undertakings, which there is presently a significant headwind. So not expecting or experiencing any stress there at all and not expecting to -- either too.

Your next question comes from Peter O'Connor with Shaw and Partners.

Just 2 questions from me. One, Stu, back to the question on the fixed costs or the monthly run rate of costs if you do shut down. Is the way to think about it, given we all look at fixed and variable costs in mining operations, just your fixed costs component, whatever we think that may be, is effectively that monthly run rate?

Look, we're not going to give you those numbers on this call and just to understand there's different stages of peeling all that back. Presently, all the prudent measures that we've done in that balance sheet, and you can see the strength of that, allows us just to operate for a lot longer and maintain all that. So there's no risk and threats to those salaries and the employee benefits. And we can maintain throughout the periods, but as far as [ a few remaining costs and what could have been ], we just have -- we have to be aligned to the restrictions that are placed on us and the duration that's typically impacts us. We have just ample headroom and balance sheet strength to weather all of those scenarios throughout that period.

Okay. And a question for Ryan. The liquidity you've mapped out seems to be very good for your business. Your dividend payment that you've just, well, canceled is only $55 million. Debt repayment, end of the year, $25 million. Uplift on your sales out of the hedge book takes this quite -- $15 million a month. It's -- and as well the gold price is an all-time high. The backdrop you're painting is one of extraordinary liquidity cost. It's not just you as a company but generally. So it's almost like your -- there's no revenue for a period and high fixed costs. I just -- I sense and I understand why you've done this, but you really are mapping out an event which is an advantage to you which is just extraordinary.

Yes. Peter, it's Bill. I'll answer that, yes. We unashamedly will protect the livelihoods of our employees by maintaining a very, very strong balance sheet if it all went [ past open ]. If we look back in 3 months and have overreacted, well, happy days and crack champagne. But in the end of the day, you've got the Prime Minister stood up on the weekend saying we're in for 6 months at least, playing to these. So if you know where the future lies, then please give it to us, but we will look at how it's unfolding and protect the company and its people at all costs.

And I'll just add we haven't canceled the dividend. We've just deferred it.

Deferred it.

Okay, great. And Bill just mentioned the Prime Minister, but thinking more globally, I find it fascinating. There were comments from somebody else in your jurisdiction offshore just talking about a start back at work around Easter, so a couple weeks away. I sense that you're taking a conservative route and you're not believing in a 2-week restart…

Our Premier has come out and said he's effectively shutting schools. So I don't know who's coming back to work on 13th April, but anyway. Look, we'll just stick with what we're doing. And we want to make sure that, again, we preserve our balance sheet so we continue to go through this storm. No one knows when it's going to stop.

And we can unwind. We can pay back debt early. We can bring those hedges forward. All those things are available to us. So these are just things that they may seem either precautionary today. And none of us will know, until we're standing in that circumstance, whether they were necessary or required, but we can always bring forward. If the sun starts shining, we can bring those things forward.

Your next question comes from Daniel Morgan with UBS.

Sorry, guys. I was just on mute. Just the release itself says you're requesting deferral of the hedges. You've been more definitive, I sense, on this call about pushing them back. You've got the option. I just want to be crystal clear if there's anything in the contracts on your hedges that prohibit what you're trying to do.

Yes, Daniel -- no. So I think right now it's important to know that we have the ability to do it. So some of these deferrals, we have executed. So we've actually -- probably deferred 30%, but more important right now it's about our ability to deliver.

Okay. And just back to Pogo, a couple of quick questions. I believe you were trying to get to 5 mining fronts at Pogo, which would allow you flexibility. Just wondering. How close were you to getting to that position before these measures were put in place?

Look, we were absolutely on track for what we guided and how the -- how our second half is ramping up. And it's you can see the disappointment of our team of seeing the restrictions put on them when they're sort of starting to fire on all cylinders, say. The world has changed rapidly, and it's then -- it's still in that state. The development is where it is. The states are coming on line, and we're getting those production tonnes and grades. So this isn't something that's lost. This is just deferred.

Right. And success, in simple terms, in terms of development indicators, you're talking about 1,500 meters or greater a month to set yourself up for success. Where were you prior to these impacts coming in…

We're going to cover these things -- I -- we're going to cover these things in our quarterly nuts-and-bolts details, so please just give it to that. We put the call on today to address particularly events related to COVID-19, all right? So we'll go through all these nuts and bolts and everything as we move up and down, but just for all the callers and questions: It's really around our preparedness, our strength in balance sheet and our actions and the potential threats and risks that we have been prudently managing. That's the world is looking at either health or money. We're looking at both, and we're managing through that to protect all our stakeholders.

Your next question comes from Matthew Frydman with Goldman Sachs.

Just a couple of quick follow-ups. Firstly, just following on the conversation on Jundee, and obviously activity is being deferred there. Is it too early to give a sense of an updated time line on the mill expansion and whether that will still be completed by the June quarter?

Matt, it's going. And those guys are in absolutely quarantine, not moving in and out; and they're doing an awesome job. And we appreciate their efforts in that regard. So those are the type of things where you've got to shut down your crews or you've got construction crews, but yes, just all this will matter depending on how the next days and weeks unfold. Or we'll update this throughout the quarter.

Okay, but activity is still continuing at this stage but subject to further changes. And…

Correct. And [indiscernible] underground mining and while we can.

Sure. And I guess the second one is a bit more general, but if you look across your assets today, given the various stated impacts and various measures you've had to take, are there any assets which are currently operating in a cash flow negative position? Or is there anything which is draining cash?

Not -- no.

No, there's not. And there are things you stop straight away. So no [indiscernible] collections affecting the cash flow.

Your next question comes from Trent Allen with CLSA.

Sorry to jump in at the end. Just a couple of very general COVID-related questions. In terms of thinking about the risks, have you identified anything in your own supply chains, like around reagents or consumables, that might be a problem? And also, is there much difference when you're thinking about an open-pit versus an underground mine in terms, for example, of keeping the appropriate separation between people as they're coming and going?

Yes. Look, so I probably said in my comments that it hasn't been -- impacted us, and we don't foresee supply chain being impact. As far as logistics and goods and services moving -- sorry, goods moving across borders, those things are in place just given long quarantine periods and all that. So that hasn't been seen as an issue given in our mine sites we can actually selectively put it in whatever stocks and stores we have in different places. All these things are real. I don't think that's the thing that will trip up if there is any trip-up at the present moment.

And just on obviously your second part of the question, Trent, is a valid one. Yes, it is a lot easier to segregate people in an open-pit environment than an underground environment, but it's very manageable and we're working through all that. And that here include all the social distancing. We're splitting shifts. We're doing shift change outside and we're doing different meal times and takeaways and that sort of stuff. And obviously, with our mills set up and stockpiled, we have a very, very insular business moving forward.

The last question we have time for today is from Michael Orphanides from Tribeca Investment Partners.

My question is around stamp duty as a result of the Super Pit transaction. And are you happy with the level of stockpiles you have at the various sites?

Mike, it's Ryan. Look, that will be obviously due and payable. We're still waiting on the office of the state revenue about when that assessment will occur. It could be 3 months time. It could be 6 months time. It could be 12 months time. So that is being weighted. How much of the extent do you look? It could be between $35 million to $55 million, depending on how things are treated and depending on how the OSR sees things. So that is in the background. We've obviously got contingencies for that. So we're just really waiting on getting an assessment. And I think, to be honest, we've been -- we'd be negotiating to push out that payment if we had to, anyway.

I think that's why any government payment at the moment, I think, people in general, personal business, will be having those discussions when and if they're due. The second part is stockpiles. We've got a very large stockpile business. I think we've got 1.5 million ounces of gold in stockpile our share on KCGM; and another 140,000, 150,000 ounces on the rest of our operations. So for any company that's got a very good position, if activities were curtailed to another level, then Northern Star is in an unbelievable position.

Thank you. That is all the questions we have time for today. I'll now hand back to Mr. Beament for closing remarks.

Thanks for that, in very trying times. I would like to finish by making one point absolutely clear. Northern Star's #1 objective here is to protect the health and safety of our people and of those in the communities that we operate. Our second objective is to maintain production. That is also in the best interest of our people because it keeps them in a job, and it is in the best interest of the community because governments need the royalties and taxes we pay to fund the huge financial assistance they are providing to people and businesses throughout this crisis. Our third objective is to ensure we protect the long-term interests of our business as best we can. We have some of the best gold assets in the world, and the significant long-term value of our business is intact. And to realize that value, we must maintain our social license to operate, but for the time being, the inevitable consequence of achieving these 3 objectives is that our production and productivities are restricted to a degree. That is a small price to pay to ensure we achieve these longer-term goals. In these circumstances, it's not about our share price and it's not about maximizing earnings. It is about people, lives and livelihoods. I believe our strategy is effective. It is prudent, and most importantly it is responsible. Thanks for joining us today.

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