Northern Star Resources Limited ($NST)

Thank you for standing by, and welcome to the Northern Star operational update. [Operator Instructions] I would now like to hand the conference over to Mr. Stuart Tonkin, Managing Director and CEO. Please go ahead.

Good morning, and thank you for joining the call today. With me is Chief Financial Officer, Ryan Gurner; and Chief Operating Officer, Simon Jessop. We provide an operational update today given a weaker production performance quarter-to-date, which makes achievement of the full year production guidance challenging. While several factors will continue to have a meaningful impact on the full year result, the company's best estimate at the current time is that FY '26 production will be above 1.5 million ounces. Significant and ongoing operational challenges remain with the existing Fimiston processing plant, which result in difficulty of maintaining throughput, and we have considered this variability, which has led to a revised outlook. At the onset of FY '26, we planned an annualized throughput of 12 million tonnes through the Fimiston plant, which was a reduced level from historical performance of 13 million tonnes, recognizing the age and condition of the plant as we operate until the new expanded facility is commissioned in FY '27. The immersed unplanned outages, disruptions and the consequential production losses will likely result in the plant achieving [ 10 million ] tonnes for FY '26, which is materially below plan. At the end of February, stockpiled high-grade ore ready to be milled totaled approximately 2 million tonnes at 1.6 grams per tonne for 100,000 ounces. This recognizes that mining activity from both the open pit and the underground are tracking to plan and will be available for future processing. At the existing Fimiston plant, we have added breakdown maintenance labor to assist with unplanned downtime. We continue to assess and balance preventative maintenance tasks to preempt and mitigate disruptions, and we will continue to do so until the new plant is commissioned in early FY '27. Pleasingly, the new Fimiston expanded plant is tracking to schedule with the added labor resources we have applied with over 800 people working on the plant and over 400 people on enabling works, including the tailings dam construction. These staffing levels and the complexity reduces over the coming months as completion nears, and we are focused on ensuring that this exciting project is not interrupted by current production setbacks or actions to deliver short-term guidance. Now at Yandal, our year-to-date progress is also below plan. This has resulted in high cost production and the company is undertaking operational review aimed at reducing costs and prioritizing higher margin ounces there. Jundee, which has traditionally been able to scale quality with quantity, is becoming more capital intensive, which is evident in activity and costs. And as part of this, an operational review, there's opportunity to redeploy surplus personnel and equipment to higher-margin operations, and we expect these changes to occur over the June quarter. So the company has also commenced work on producing medium-term forecasts. We're listening to investors on that requirement, and we will plan to release prior to the end of the calendar year. And so the opportunity today is to go through the detail of this and answer questions that we can. So with that, I'll pass over to the moderator and you've got myself, Stuart. You've got Ryan and Simon here.

[Operator Instructions] Your first question comes from Hugo Nicolaci with Goldman Sachs.

I appreciate being able to ask questions. So a bit to work through here. But look, firstly, on this year, I get not wanting to chase FY '26 and then sort of risking the outlook into next year and beyond. But translate your sales for January, February of [ 220,000 ] ounces and call the March quarter [ 330 ]. You're sort of then implying to get to that 1.5 million minimum that you need to get back to June last year, sort of 440 despite the uncertainty of KCGM and Jundee. Can you help us sort of piece together how you get to that 1.5 million ounce outlook for FY '26, please?

Thanks, Hugo. Look, January and February are representative of quarter 3, so we do expect a stronger quarter 3 than you've quite there on the exact straight line run rate. So with this guidance update today, we've considered how we're tracking in March, what's in front of us as well as the outlook of forecast. I would say we were -- there's 2 main drivers. One is the underperformance of throughput at KCGM that we were expecting to restore with the efforts put in. So we've kind of dragged right. Really, it's a throughput rate of nearly 9 million tonnes for half 2 instead of to deliver to 10 million for the full year. There's upside opportunity there as well as downside risk. And then the other element was, as we've traditionally done throughout each year, not designed by activity of the hockey stick, not expecting an outperform out of Jundee in quarter 4 has really put some ounces out of that quarter 4. So we've -- we're really looking at this from a risk lens, how bad can it be if we don't get outperformances, really [indiscernible] recognizing the contributions from each of the assets. And today is important for this disclosure to talk about KCGM mill and our outlook on Jundee. We feel the rest of the operations are tracking to plan and okay.

Stuart, can just clarify then? In terms of March, so you're saying that January, Feb is not indicative. I mean, for the March quarter then, is this something like 350 to just 400 sort of the range that we should expect and then we can extrapolate the fourth quarter from then?

Correct.

Got it. And then if I can, just on -- turning to Jundee, sort of reprioritizing higher margin material and relocating people across the portfolio. I mean what do you think then is the outlook for that asset going forward here? And what does that mean for the Yandal hub target of 550,000 ounces over the medium term?

Yes. Look, we're probably -- it's probably premature to give that outlook today. We're doing the work we need to do that deep dive on the asset. I'd say it can operate up and down those ranges, but at what cost. So I guess, what we're saying today is at 300,000 ounces, which was our aspirational running rate, it's a high-cost high intensive, high development stoping drills demand. We don't believe that's the best place for Jundee to sit. We've got to do that work. Once that's complete, we'll update. And there's no risk on the redeployment of people and equipment. We can send that into other operations. But this is around a reset fundamentally for Jundee, which contribution into Yandal. We've already taken a bit of a reset of Thunderbox. This is really the combination of those 2 things, and we've just got to do that work.

Your next question comes from Kate McCutcheon with Northern Star.

Apologies, I must have messed up the company name there. So -- not yet. So at least 100,000 ounces lower for the FY versus what you thought 3 months ago. How much of that delta is KCGM versus Jundee or the other assets? That would be helpful.

Yes. So I would say, when we updated, we planned for some uplift at Jundee likely 20,000, 25,000 ounces of windfall of high-grade stopes in quarter 4. You've seen Jundee swing. It's not orebody. You've seen that performance historically before. Same as at Pogo, where you've got -- there's no good orebodies that you can have those swings, those high grades. That's what we've pulled out of that, but I'd say the bulk is KCGM. And the opportunity is also to get every 100,000 tonnes effectively up or down is 5,000 ounces. And so if we were able to afford that uptime or keep things running through that plant, the ore is there on the ROM in front of it. There's a bit of a time lag in getting it into concentrates and into door ad sales. But that's why we've had to sort of really take them back, that really hedged on KCGM as the ballpark of that step down.

Sorry, I'm not -- so the bulk of the lower ounces is KCGM. I'm not clear on the magnitude.

Correct. 2/3 is KCGM and 1/3 of that really is Jundee.

Okay. Got it. And then no update on cost today. Is there anything fatally flawed in taking the $1 million number implied in the higher guidance with the lower denominator? Is there anything else to think about for the all-in sustaining cost there?

Look, year-to-date, we're tracking within the goals that we have stated and restated or reset, I guess, in January. So if we were to depart from that, we would have included that in today. What we don't know going forward is impacts around oil. I guess what we do -- we do know that it has impacts. And so we look at the sensitivities to it. In the scheme of things, we still feel it's ounces and ounces as the denominator gold, so it's more effect on the ask. Our dollar millions are largely committed with resource at these levels. We're spending that effort and energy at work. So really, it depends on the ounce profile to get to that. But year-to-date, we're tracking within that 2,600 to 2,800 [ base ].

Your next question comes from Daniel Morgan with Barrenjoey.

Question -- my first question is just at Jundee. Can we just understand what's going on a bit more there? Is it orebody related in that it's deeper or more narrow, becoming harder to reconcile and just an old tired operational asset that we need to rethink fundamentally how big it is? Because the market has 250,000 ounces in the numbers for the next few years, which sounds like redeploying people and equipment. It sounds like a significant haircut needs to be taken to production and possibly life.

Thanks, Daniel. So we're not meeting the grade to plan. There's some slight downgrades on some of those things. We're understanding why. It's obviously, even though it's decades, we've operated and owned it. You're seeing that decline. Questions is, I think, it's pretty evident on previous quarterlies, the departure from actual grade to reserves. So we understand the higher grade, upper levels that we're putting in the paste plant. Start brining that high grade of pillars and remnant material in, but we will look closely at the overall resource and reserve again as we do at the close of March and publish that. But I think this is more around the nearly 3 kilometers of development a month, 150,000, 160,000 stope tonnes a month. It's very intensive. We got 13 diamond drills there to -- from a discovery power wave to replace depletion. It's just a busy, busy, busy place for the same or less ounces than we developed decade ago. So it's a big system. What I'd say is maybe that creep has kept us going, and we just want to actually do a bottom-up overall plan review. It will take a number of months, I guess, us going through that information. Decided doing the best they can do with what's in front of them, but we need the intervention. And that's what we're prepared to do, is go through and really, really look at the detail. And I know you say that there's a consensus at 250,000 ounces. We can operate the mine at those levels, but it's at what cost? And therefore, we're saying as an overall contribution to Yandal or the group, is that drop level for us.

And I guess, as a broader question, I mean, you commenced a formal operational review on Jundee. I guess there's been productivity issues and some other assets and missing guidance, et cetera. Just wondering, should there be operational reviews on other assets or strategic reviews? Or why only Jundee?

Yes, fair question, Dan. I think we're really calling this out right now of expected new plan going forward for that asset, and we need the time to do the deep dive. We are doing operational reviews always as just part of our normal business. But it's usually -- when you've got an outcome or a clear view of what's not working, then you've got decisions in front of you to take. And so that's really what we're calling out this asset right now, is the current plan afoot is going to be an expensive cost one, and so expect a different plan for that. If I give the other example of Pogo, we can see around the dilution of the grades that have occurred. We get things right. The plan is robust and secure. So it doesn't need a bottom-up analysis reveal. And we've done that to a life of the plan we've got, and it's around the controls we can see in front of us to get the benefit. We've seen improved grade at Pogo, and we've still got work to do. But we don't see that fundamentally as an issue, whereas we see the current plan at Jundee is going to get harder and more expensive and more intensive, so let's intervene now and look what it looks like in the coming years.

Yes. Dan, if I could just add to that from Simon, it's more it's around the Jundee, the execution risk as well of the -- pulling all the different areas together. So as you said, we're 2.7 to 3 kilometers a month. So just trying to find where is that balance between execution risk and delivery along with the grade variability. So we do need the time and space to do that deep dive, but it is around execution risk at the higher ounces.

Right. And then maybe, I mean, a big driver today is the mill performance at KCGM. Can you just help us understand a little bit more? Because you've got a very complex thing you're achieving this year where it's going to be effectively mostly a brand-new mill next door to an existing mill. So you've got those 2 things happening in parallel and operating mill versus the project. You've got people running the existing mill, and you will have to have people run the new mill. Like is the challenges here people related and trying to do too much at one time? Or is it the old mill is old, clubbed out, unreliable and it's not worth it from a returns perspective to be patching up and applying capital to a piece of equipment that's going to shut down in several months' time? Like just help me understand what is at the core, what is driving this problem.

Yes. Thanks, Dan. Simon. If I go with the mill, so KCGM's 37 years since the asset first produced gold. So we are struggling with lots of different areas across various maintenance areas. So we have a lot of bogging events, 30% of our downtime sort of in bogging events, which is from a complicated circuit of 5 mills. We're going to only 1 of those mills goes forward. The float circuit has a lot of mechanical issues, so that's sort of roughly 30% of our downtime across the group. And then you've got aging electrical areas, which is giving us a lot of grief at the moment. So that's 20% to 30% is the electrical and air. So they're the broad areas, but it isn't -- like quarter 2 was 1 key area, which was the crusher. Since the 5th of January, we've had 0 issues with the crusher. That's performing. It's from the -- after the PIM sag through the rest of the plant is where we're having lots and lots of stoppages, which just gives us instability in the plant, and we've just got large pieces of [ downtime ]. In terms of KCGM, the new mill and the old mill, they are separate teams. So the new mill is running in parallel, completely isolated to the existing personnel running the old mill. Over the next few months, we've started -- well, we have already started the ops readiness training for operators. The maintenance systems for the new mill is all -- had 18 months of work on it. It's -- that's tracking very, very well, and we want to maintain the focus on preparation for the new mill in FY '27, but at the same time, as Stu said, every 100,000 tonne we can get out of the old mill is 5,000 ounces, which is large revenue. So they are 2 separate teams. We're just seeing much, much lower throughput than we have historically. We budgeted for that, but we haven't seen -- we've seen a material departure from what we budgeted at 12 million tonnes.

And Daniel, I mean, the question of the people and the stretch and the interactions, I mean, this has been something that management and the Board have been really closely in front of mind, is that is one impacting the other. And so Simon's saying they're separate teams, they're literally physically ring-fenced the activity, but the bandwidth of making sure that near-term decisions doesn't compromise the delivery of the new plant, that's really important, and that's what we're reinforcing as well across the group. So doesn't mean we've surrendered or given up on delivery of near-term targets and guidance. We still work on that, but we isolate the go-forward new plant has the attention and efforts because the end of the day, that's the multi-decade the multiyear investment, that's multi-decade sort of uplift is the step change for the group and the company, and we are very close. I mean the back of the 3-year builds, and it's looking great. I was bolting around the plant a week ago looking at the to do list. It's impressive quality and we're excited to see it turned on. It's even more pleasing when you look at the old part and the deterioration of it that we've made this decision 3 years ago to replace it. So we thought we could get this plant, really the existing plant singing right up to the point. There are elements of the existing plant we may utilize and repurpose in the future. So we don't want it to fall in a heap either. So those decisions around keeping it going, there's never a financial case to say let it fail and stop it prematurely. Unfortunately, it's always a point to keep it rolling. So at the moment, efforts and energy on both of those, but they're separate teams.

Your next question comes from Levi Spry with UBS.

Two questions, please. Firstly, on FY '27 guidance, I guess, thinking about KCGM plant, can you just step us through what's still on that to do the list? And what are the assumptions behind the 23 million tonnes for next year? Or what other assumptions are in there? Yes.

Thanks, Levi. I'd say those things haven't changed from what we've said today's announcements about the here and now in existing plants. The expectations for the completion of the new build is a ramp-up during quarter 1 of FY '27. Ideally, we're at the early part of that quarter and the 23 million tonnes is related to the full year with planned and unplanned assumptions on the downtime, what I believe we will provide is a bit of a ramp-up curve that shows and explains quarter 1 shouldn't be times by 4. Every plant around the globe that's being commissioned in this case has those ramp-ups. You've got the McNulty that basically says early when you're building these things, you need to settle them in. And so the start rate isn't the exit rate, but these are all dependent on the final tie-in. So a lot of the labor, there's nearly 900 people there that's decreasing in the next couple of months as we close out these projects. Really, that labor by the end of June should just be starting to move across to Stage 2, which is all where the ultrafine grinding circuit to redundant happens. And we should be powering up and turning over and getting flows-through the new plant. So those are the things that are still on track. We've obviously added the cost and the labor to achieve that time line, and we're pleased with that progress today.

Okay. And then if I just think about the working -- the works towards producing a medium-term forecast, so the steps are a reserve and resource update at the end of March, guidance in between 7 and then be into that medium-term forecast at the end of the calendar year with Jundee potentially the main moving part. Is that the summary?

Yes, Jundee, but I guess we should have greater information on time lines for Hemi as well. So the way we would explain medium term is what investors -- listening to investors what the request and rightly say multiyear production costs and capital. And the real levels is that multiyear ramp-up of KCGM, the new plant, coupled with the build of Hemi and then the rest of the assets at what go-forward level they are at, which would include options that we'll assess for Jundee, how big it is. Is it and what is a cost profile? That's how we would talk about the multiyear. So to your point is absolutely resource reserves is a key bookend. We get that end of March. We do the work in quarter 4 around budgeting outlook forecasts. Ideally, we've completed this deep guide on Jundee with decisions, and then we're able to provide the market with medium-term being multiyear costs, production and capital.

Your next question comes from Matthew Frydman with MST Financial.

Can I just follow on from that question, I guess, on the FY '27 ramp-up at KCGM and understanding that you provide us a bit of a ramp-up curve in time? But can you maybe sort of break down roughly or conceptually how much you've seen throughput from the new mill in FY '27 versus how much from the old mill in your prior guidance? I guess I'm just trying to understand what is the likelihood or the range of outcomes if these issues at the old mill continue into FY '27 through the crossover period. Does the old mill represent 10% of the production that's at risk of ongoing failures? Or is it 25%? Or if you sort of give a ballpark on that, that would be helpful.

Look, good question, Matt. I think we looked at it from -- also the spread capacity and more of the weight in the back part of the year of the new plant. So at a very reduced rate, even a 50% performance out of the new plant outstrips the old plant, so -- and we expect a better outcome, clearly a better outcome than that to get 23 million tonnes. So what I'd say is that we will -- we wish to switch over to the new plant and lean into it as soon as possible and the reliance on the old plant has not been there. So yes, I think the run rate of 9 million tonnes in the half 2 should not really continue in FY '27 and deteriorate the overall outcome. The level -- if we were not to achieve 23 million tonnes from the new plant in FY '27, either because of a delayed start or because of unplanned downtime throughout the year, one offset from that is the differential in grade feeds. So the tonnes that would be displaced would be the lowest grade stockpile, 0.6 kind of grams, and we would preferentially put in your underground and your gold pipe high-grade feeds. So even if it wasn't 23 million tonnes, it doesn't mean the ounce profile is proportionate. So that's one lever. And then ideally, we've built a 27 million tonne per annum plant. Our attitude is we've given ourselves multiple years to get up to that consistent rate. But day 1, when we turn it on, it should do that. And then it gets turned off, gets fixed or adjusted or talked up. All of that planned downtime is why it's 23 million. It's not running at that rate. It's running at a 27 million tonnes per annum plant or better. And then it's been deliberately brought down or the reliability as we settle things embedded in delivering a full year, a lower overall tonnage. So there's lots of moving parts involved in assumptions. It's never smooth. So we'll try as best we can to show people how the ramp-up would look like, and we'll try to provide as much transparency as we can. It could be lumpy, but I just explained that this is a 3-year build. It's a $1.5 billion construction [ 6 plus ]. It's there for multi-decades. We want to get that right because it is a real step change benefit to the business and the value creation.

Yes, understood. So just to be clear on that, so you're saying that the 23 million tonne target is purely what you expect to put through the new mill in that first year and then hypothetically, anything that you get out of the old mill is separate to that or on top of that? Or I'm guessing that opportunity to -- it's either running one or the other, the distinct turnover. You don't have the opportunity to potentially squeeze out of the [indiscernible].

Yes, correct. It's running one or the other because part of the stream feed through the crushers and SAG is the new part of the new circuit. So there's minimal downtime of the switchover, but there aren't -- you can't run both at once.

Yes. Got it. No, makes sense. And then maybe secondly, a bit of a broader question, and Simon described the various issues that you're facing with the old mill, which, I guess, effectively could be summarized as an overall issue of asset integrity at probably, unfortunately, the most important asset in the whole business at the moment in terms of the amount of revenue that it produces anyway. So I guess the broader question is, is there anything that needs to change in the business to prevent this kind of issue going forward, be seeing this kind of string of downgrades is just a confluence of events which have been outside of the control of the site team or the executive team in terms of [indiscernible] outcomes that have led to these short-term issues in your view? Or are there things that you think you can do going forward that could be changed structurally, culturally or whatever the case may be to drive, whether it's drive better compliance to plans or better compliance the guidance or improved asset, integrity outcomes, all those sorts of factors?

We take accountability for that -- for those downgrades. They've been largely within our control on the things we've tried to manage and the risks we've understood. When you're managing risks, you're putting in all the mitigants and sometimes they get realized. There are external factors that impact even now if I get a phase shift on a power out in Kalgoorlie, a nanosecond of power blip, and I can have hours or days of cleanup and bogging of pumps in that plant because it's the tech and it can't deal with it. Now I can blame our systems and lightning, but ultimately, it's the integrity, understanding operability of that existing plant. And as that example, I'm pleased that the new plant should be able to manage these type of things. And as we get that sort of battery storage and those other things that sit behind it, we don't get impacted in those ways. That's how we thought about it. But when we talk about multiple downgrades, each of those are finite events and that have been updated as best we can when they occur. We're not trying to second guess or predict or game messaging. We're working hard to growing business, which is never a straight line, to give transparency on what we know when we know it. And that's really what today is, too, is, right now, with the performance to date, we can't see -- we see great risk in delivering the lower part of the guidance. So we've explained, we believe we can do above 1.5 with the continuing outlook we have for the next 4 months. So these are the examples. And if we go back to, yes, on the 2nd of January, on the first, we had the sales. We had lots of things in place and plans. We updated the market when we're aware of those things. When we've calculated the costs, we update the market on the cost that we calculate. So I'd say our learnings out of that, we don't enjoy bad news as anyone else. We're working very hard to get it right. We absolutely are learning and have learned from these experiences and we intend to incorporate that into our outlook going forward. It doesn't mean we're sandbagging. It doesn't mean we're trying to put in buffer, but we certainly need to give you, the audience here, the basis of the assumptions of why we call out what we call out. I get that on the external, it appears that we haven't been forthcoming with information. It's not the case from our side. Everything we've put out, we have a -- we're a technical team. We've got science and background and assumptions based on plans, contingencies, et cetera. If I was sitting here in January, I absolutely thought 1.6 was a very comfortable floor that we would clear and as is our team. So to be sitting here as soon as now saying things haven't gone well, I get it. It's disappointing for us as this audience, and we've got to learn from that.

Your next question comes from Ben Lyons with Jarden.

Might just carry on that train of thinking. Stuart, I mean, it's very disappointing. But to then tell us it's going to take 12 months to give us what we want when you've got all of this science and all the technical capability and aptitude and everything else, you just mentioned that sits behind it, haven't you just embedded a 12-month overhang on the stock price?

Well, that's not for us to decide, Ben. So what I'm saying is we've given enough time for us to do that thorough work. And I think it's important we need to resource the reserves. These things take time to go through and look at plants. When you look at things like Jundee, we want to work out the current development that's there, to get the best out of that and do things in an orderly fashion. This is an irrational kind of immediate changes. It's around shifting in an orderly fashion structurally that asset to a better place. It will take time. I've said out there that, yes, calendar year is when we'll give that update, our traditional outlook comes in July or August on the year's guidance. We ideally will have great visibility around things like Hemi, but there are things that are out of our control. So when we've got it, we'll let you know. But at the moment, you can believe there's no overhang or not. I think people voted today on the market open. I don't know if you call that an overhang.

Yes. There's other management teams that can build a processing plant within a 12-month period that -- I'll leave that. Just on the KCGM, yes, I don't want to put pressure on them by adding them in a public forum, but as soon as they get their environmentals in 12 months or a couple of million tonnes circuit. Anyway, we're just talking about an Investor Day and the disclosure that really I would have thought should have been at your fingertips already. But my second question, just on KCGM. Is it just tonnes? Or is it also grade that we're talking about here? I mean we've been habituated, I guess, to think of Golden Pike North is a 2-gram orebody. Charlotte is a 2-gram orebody. The high-grade stockpiles at 1.6 on the ROM today. So have we got a grade reconciliation issue at KCGM we need to discuss as well? Or is it just simply tonnage through the mill?

Yes, Ben, Simon. Look, the grade of Gold Pike is performing exceptionally well. The reason the average grade of that 100,000 tonnes on the stockpile of [ 1,000 ounces ], sorry, at 1.6 is because it's still got some grade from OBH and some grade from Fimiston South or Great Boulder. So the actual Golden Pike is performing very, very well. Our recons have been 99% of late, so the GP down the bottom is performing 2 grams. So very happy with the reconciliation. The only reason the average is down is because there's other grades in there.

Your next question comes from John Sharp with JPMorgan.

Maybe just to dig into the comments you made from Kate's question. Just beyond KCGM and Jundee, is Pogo achieving grade required to support FY '26 guidance? Or is it -- in your view, is it underperforming? Is it less than adequate? Just interested in your views there.

Yes. Thanks, John. So I think it was part of the first half delivery was below plan. I think we called that out in January. We've considered to date and how it's going to go into quarter 4 in this update today. It's improving. Actions are working. So we're okay with that. We will look closely at that reserve grade given some of the mining factors on it. But end of the day, we don't see it as broken or reconciliation being an issue. We identified some of the mining factors that were diluting that grade today.

John, just to add to that, I was over at Pogo a few weeks back and had a really good sitdown with the team there, and we've seen grade. Certainly did in December. January and February have been good months, and the teams put some really good work into rectifying the October, November issues that we did have in terms of dilution. So Pogo is tracking to plan, and we've factored that into our operational update.

Okay. And just sort of to follow on from Matt's question, just with the planning and guidance framework. Now I know you said at the start of the year, you're pretty confident in hitting guidance. But what needs to change to ensure future plans are more realistic? And probably more important, how do you balance between sandbagging your guidance versus overpromising? Is it planning? Is it -- what is it?

Yes. Thanks, John. Look, it often comes out of the stability of the asset. So you appreciate over the recent years, we're growing -- investing and growing and expanding assets and they're changing from areas. And that's where you're extrapolating. You're not inside the range, and you see other businesses in companies generally that can keep the needle pretty tight on stability. They're not growing, and they're maintaining or even harvesting. So when we get those assets to those happy places, that gives us greater consistency. It's the rate of change and the shifting of things at the moment, which has made that forecasting difficult. Perhaps we've been too optimistic on success. They may be some more contingency and realism in some of the ramp-ups. And I'm not calling that sandbagging, but I'm saying both ups and downsides that are realistic. They are the things that we can start to incorporate into future outlooks. And then just give you as much disclosure on the assumptions so that when things move or change, we can update and provide that, but equally, people can do their own math on the flex of those things in their models.

Your next question comes from Hayden Bairstow with Argonaut.

Just a couple for me. Just on the KCGM stockpile and Simon, you mentioned the sort of 1.6 grams. But how much of that is candy grade stream or the mill only running it effectively, I guess, a 9 million tonne run rate for 6 months? Can you put a -- is there a fair bit of 2-gram dirt that you can push through to get a better growth for this half to offset some of that?

Yes. Thanks, Hayden. We are doing that. So we are putting aside the lower-grade portion of that. It is purely the throughput. So we can see head grades of 2 grams day in, day out. It's purely down to how much volume we can get through there. There's not much more we can grade stream realistically above that is the odd block in the pit that's 3 grams and things. We do get pieces of that. So yesterday, we mined 4,000 ounces at 3.4 grams out of the open pit, but it's not going to be that average consistently. So we are trying to grade stream as best we can. There is no stockpile material going into the feed at all. It's purely around how much volume we can get through the process plant.

Yes. Okay. But almost 30%, 40% of the feeds from that higher underground grade I presume, but we can't get to a 2-gram head grade for the whole mill [indiscernible].

Yes. The underground is getting some of that pushed to the side because we're still in ramping up the underground. So the underground is tracking at sort of that 1.7 grams year-to-date, and that's because the stoping contribution is still building and we're developing a large mine. So some of the underground grade is put to the side, and we're feeding as much of the open pit high-grade material through the process plant as we can to get the right blend.

Okay. And just a finance question. I mean, you've obviously got plenty of debt facilities to draw upon. But do we assume then that over the course of this calendar year, you are going to be drawing down some of that $1.5 billion of debt, just looking at the fact that where the cash flow might be through this final phase of the build. And also, you still got that outstanding staffing the total between the grade in and Saraswati of $330 million. Have we got any idea on the timing of when that stuff has to be paid?

It's Ryan. Yes, it is uncertain, I'll say, but my expectation is not this financial year on the stamp duty. A bit more color on the quarter. We are free cash flow positive for January and February. Just above that breakeven. So we have increased our cash in bullion holdings for the 2 months. And obviously, the next 4 months, we're telling it based on the math that there's going to be an uplift. So I'm confident that our free cash on that basis will be positive.

And obviously [indiscernible]

[indiscernible]

Your next question comes from Mitch Ryan with Jefferies.

Just can you help me from a strategic perspective, I guess, given underperformance of the stock relative to your global peers and your view of the long-term inherent value of the company, what are you doing to prevent the company being taken over at a discount? And has the company received any approaches this financial year?

Thanks, Mitch. Today, I seem to feel more vulnerable with this. And so these are things and questions we'll be looking at and discussing with our Board, mate. So yes, absolutely, we've got to knuckle down and perform. Our attitude around this is we see enormous long-term value. So we've got to work to restore that and build that up. So I won't comment on vulnerability or otherwise or takeover risks, but my attitude is we've got work to do. We know what we're doing. It's going to take some time. And it's something the Board takes seriously and reviews.

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

Okay. Well, thank you so much for your time joining the call today. Have a good morning, and we look forward to talking to you soon.

Thank you. That does conclude our conference for today.