Regis Resources Limited (RRL) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Regis Resources Limited September Quarterly Update. [Operator Instructions] I would now like to hand the conference over to Mr. Jim Beyer, Managing Director and CEO. Please go ahead.

Thanks, Darcy, and good morning, everyone. Thanks for all good afternoon for those on the East coast. Thanks for joining us on the September quarter update. I note the quarterly was released earlier today, and I'll make occasional references to some of the diagrams and the figures. Well, it's clearly been a tough quarter for us, mostly anticipated, but some unexpected items adding to our challenges. But firstly, on the area of safety, I'm very pleased to report our safety metric of lost time injury frequency rate continues to be better than the WA Gold industry average. As we saw the 12 months -- the average move down just very slightly, in fact, rounded and held at 1.3. So very pleased with that. On COVID, in general, to date, we've had no confirmed cases in our business. Regis continues to maintain a range of measures and controls. Management plans consistent with advice from state and federal health authorities and commensurate with what we see as the community risk profile. I would say the company supports the ongoing vaccination rollout programs and sees this as a critical element of the long-term path out of this period of uncertainty and potential health risk. Albeit by doing so, we are introducing some short-term risks associated with implementation and acceptance and more on COVID impacts a little bit later. So on to our operations. On the production front, the September quarter, we hit about 102,000 ounces at an all-in sustaining cost of AUD 1,521 an ounce. While the quarter was always expected to be soft due to activity schedules, we did see some unplanned short-term operational issues arise, which made it a little bit weaker than expected. While planned scheduling of activity was always understood to impact on our production relative to the prior quarter. We saw increased labor turnover and the requirement to introduce less experienced operators and training also played into our performance and the time to fill. This clearly is a trend across the resources industry with generally increasing demand for experienced operators, certainly exacerbated by the COVID-related restrictions on labor availability in WA. Looking a bit more at the parts of our business now. Duketon, as I said, was a weak quarter as expected. Moolart produced 14,185 ounces at a cost all-in of $1,720 an ounce. We did see an increase in the mill throughput as proportion of softer oxide and transitional material was being fed was a helpful impact. However, this material was also a weakness in the quarter as we saw a short-term variation in actual grade to plan, as we always presented. And this variation was associated with mining through near surface oxides, including laterite depletion zones in the Blenheim pit as we progress towards pressure material, and this variation impacted on the fee. With notoriously variable swings as we pass through these in grades either way as we pass through these depletion zones. Now the variability is expected to continue until the end of this current quarter. But once we're through it, we will see head grades lift and a subsequent increase in production coming out of the Moolart operation in the second half. At Rosemont, production was down 24,243 ounces produced for the quarter, all-in sustaining cost of $18.68 an ounce. The underground pleasingly has settled in and is now continuing to deliver at its planned production rates. Development was strong and gives us confidence that we'll continue at this pace. Open pit performance at Rosemont on the other hand was adversely affected by some relatively minor geotechnical concerns that did require a delay in operations or catchment fences were put in to manage this risk. And this work is now considered to be complete. Garden Well produced 34,646 ounces, all-in sustaining around AUD 1,400oz an ounce. Again, impact on this quarter. We did have a major mill shut where we changed out the mill motor. And as a result of that, we had some subsequent monitoring and adjustment before we could return to full production rates. We did also see some lower recoveries from the high-grade zone coming out of Tooheys Well. This area is known to be metallurgically more complex, and it was more complex than our original testing indicated requiring more oxygen. We have added extra liquid oxygen capacity where we are at the moment. In fact, the bullet was delivered last week. It's being installed, and we see that coming online in November to help get on top of this issue of lower recoveries, which will allow us to return to feeding that high-grade material in at rates that we planned. Total material movement at Garden Well was down a bit as well, 13%, partly because we rescheduled equipment, reallocated it, some of it to Rosemont, but also we saw some COVID-related drop in equipment performance, specifically around the drill and blast area. To recover this performance, we mobilized additional personnel where we -- as -- but that took time as well as the equipment earthmoving drill and blast and some grade control equipment to get on top of this and their operational from this month. As I said, labor restrictions also impacted on our surface haulage trucks. These are the trucks that bring the material in from the satellites in the high-grade areas. Now maintenance personnel numbers in this area have increased as we've got on top of that. The driver labor shortage has been mitigated, but certainly, the turnover in this area has been amplified by COVID. The bottom line here is that COVID-related issues are an area of ongoing exposure for us, while these restrictions are still in place. At Tropicana, safety performance continued to be strong. Production came in slightly above our expectations with a full quarter of 28,915 ounces for an all-in sustaining of $1,204 an ounce. Boston Shaker underground continued to deliver and lifting the feed grade to the mill by about 8%. In addition, the mill had a strong quarter, increasing by 11% tonnes throughput on the prior quarter. Now part of this is because in the June quarter, we had a large shutdown. But this improvement is also a reflection of increased capacity that we've seen in that plan, driven by changes to the thickness circuit that was made in the June quarter, all of which is very pleasing. Overall, gold production at Tropicana is traveling to plan. One aspect of Tropicana, I did want to discuss was a dip in the performance of waste movement associated with the Havana cutback. Much like Garden Well really off the back of inadequate D&B performance, specifically rig performance, and this was impacted by spare parts availability and shortage of skilled operators, spare parts availability, obviously impacting on availability of equipment, operators impacting on utilization. And both of these are seen as being COVID-related, tightness in the supply chain, tightness in labor availability and time to fill. To date, actions have been -- to address the issues indicate that there will be limited impact on this year's production. However, this is an area of future production risk on timing and it's expected to continue while COVID restrictions impact on labor availability. I would say the team on site have been working very hard with the contractors to deal with these issues and certainly, good progress is being made. Notwithstanding these short-term COVID-related risks overall, we're seeing what we wanted to see from Tropicana, and our guidance for Tropicana is maintained for the year. I reiterate Tropicana is a great addition to our portfolio and is providing some key strategic elements, not the least of which is the expansion and diversification on our existing production rate is reflected by its contribution, both production and cash flow this quarter or last -- in the September quarter. And clear potential future growth through life extension beyond current reserves. On the financials front, the September quarter, Regis sold 82,000 -- just over 82,000 ounces for an average price of $2,170 an ounce. That's after adjustments for hedging. This generated total operating cash flow of $93 million, $51 million from Duketon and $42 million from Tropicana. The reduction in operating cash flows relative to the prior quarter are really primarily driven by the reduction in ounces at Duketon. Now drawing against this cash generation was capital expenditure, which saw an increase over the prior quarter. CapEx was approximately $77 million, $33 million of deferred waste at Duketon in the open pits. About $11 million was underground development at Rosemont, but mostly at Garden Well and a bit over $5.5 million in plant and equipment. At Tropicana, we spent $19 million, and this is a 30% in deferred waste. Probably about 3/4 of that was Havana cutback. The rest was Boston Shaker pit because it's still in operation. We also saw some capital development at Boston Shaker underground at $2.5 million or $2.4 million and $2.7 million in plant and equipment. Now this is a significant increase in the prior quarter of $47 million. But obviously, what we're seeing now is 3 full months, whereas the prior quarter, we settled part way through the quarter, and it wasn't a full quarter. Now in addition to the operating -- or the CapEx, we saw other quite significant outflows during the quarter, $22 million in dividend payment, income tax of $21 million. Exploration and McPhillamys 10 and 16 -- $10 million and $6 million, respectively, and up $7 million associated with some residual payments of the Tropicana deal. Now this resulted in our overall cash balance reducing from about $269 million to $209 million at the end of the September quarter. Figure 1 illustrates the inflows and the outflows quite clearly quarter-on-quarter. While the September quarter was weak as anticipated, we have maintained our full year guidance across the business. This is off the back of shifting mine grades that we're expecting along with the actions that we've taken to address other pinch points that occurred during the September quarter. While maintaining this guidance, we do not further lockdowns in WA and border restrictions have the potential to cause more issues, which right now are clearly causing pressure on businesses, including this extended period to fill vacancies and labor cost pressures. The potential impacts of the requirement for mandatory vaccine for mine workers in WA is specifically adding another level of potential level of personnel turnover and availability, and that's quite real. Although at this stage, it's not clear exactly what that's going to cause and to what degree we're going to see any falling away, if any, of labor. But it's certainly a risk. The situation remains fluid and we do what we can to monitor the potential impacts and take actions where appropriate. I'd also note that in the -- certainly, we think in this quarter or it could be in the second half of the year, the stamp duty associated with the Tropicana, which we've now estimated to be down to $38 million, is quite possible, although that's in the hands of government timing. Looking to the future, we see some really interesting opportunities continuing to materialize, particularly at Duketon. The Garden Well South underground is progressing well. Our meters underground development has ramped up to 765 meters from 434 meters in the prior quarter. Figure 2, you can see where we've been adding that development in. And we've also just put some an underground ring in to start the grade control drilling in the upper areas for these -- targeting these first production zones. Just a reminder, this is about 1.85 million tonnes in the mining inventory, a grade of about 3.2 for circa 190,000 ounces. We are expecting to hit first ore later in the -- in this current quarter. I'd also note that the underground is open at depth of the existing development presenting with clear intercepts further at depth, presenting an exciting prospect for future life extension there, much like we're seeing at Rosemont as well. I think we're just getting started at both of those. This mine underground -- the Garden Well South will be a valuable addition to our production portfolio. At McPhillamys, we continue to work with New South Wales DPIE in relation to permitting the project. I must say the rate of progress -- we are making progress, but it is frustrating. Surprising at a time when new projects and the associated benefits that flow to regional and state economies of what we need coming out of these major COVID impacted economy. However, we do know that senior state representatives can see the clear value as well and are working to help move the project along. Regis is continuing to work with a number of departments, DPIE, planning, which is responsible for making the recommendation to the IPC. The MEG, the Department of MEG, which is mining, exploration and geoscience for working on aspects of our mining lease application. The Feds are involved as well. The Department of Agriculture, Water and Environment are also a key part of the approvals that will continue to flow. As I said, progress is being made to close out outstanding elements of these approvals and licenses. As we close in on getting a clear pathway for all the required approvals, we do anticipate at this stage, a recommendation with IPC, certainly potential in the first half of calendar '22. But at the end of the day, we don't have guaranteed visibility on that timing and the actual timing of any decision is largely outside the company's immediate control. Garden Well Main underground. Now this is a new area where we have been talking about this in the past. Figure 3 shows this key initial zone of interest that's marked as a potential underground area. This is certainly taking shape as potential production zone. The mineralization extends down plunge of the existing open pit, the Garden Well pit, as you can see. And drilling results continue to firm up this high-grade plunging shoots underneath the main pit. Some of the examples of intercepts 9.6 meters at 4.4 grams, 10.8 meters at 2.3 grams, 24.5 meters at 3.2 grams, 9.6 meters at 3.7 grams. These are strong results, and they're demonstrating the potential value that we're looking at of establishing an early access to the zone via a decline between Garden Well South underground mines in the existing area and the growing new area. And you can see it on the diagram where we've marked that conceptual decline. The key here is that the broadly spaced -- while the drilling is broadly spaced in that area, the data collected with from that drilling, along with the open pit, provides enough confidence that a potential small production area could deliver enough ounces to at least pay back the potential decline establishment costs and may provide a modest return. So we're working on that at the moment to evaluate that potential. The real extra spicy sauce that comes from this decline is not only do they give us the access to this certainly quite significant Garden Well Main area, but it also allows us to follow up on the high-grade results that we've seen in this prospective area between the [ Garden Well ] South and the mine and you can see that area clearly marked in the diagram. I think it's in Figure 3 as the under drilled area with a couple of intercepts that we've got, we see there's great potential in this. So we're working to evaluate and hopefully, we'll be in a position to make a decision on this in the current quarter. As you can see, this is clearly a production zone that reinforces the broader strategy at Duketon to use underground extensions from the open pits to stop the inevitable production decline from our pits and maintain our production levels from these multiple underground sources. I would say we haven't included any update in this report of the Rosemont extensions, but we're also seeing some of the extra opportunities there. And it's also too as exciting with this new potential production zone to the south. Along with down plunge extensions that are crystallizing. And what we will be doing is we'll provide more details on that and more generally, our exploration update across the Duketon Belt, Greenstone Belt in a couple of weeks' time when we provide the biannual exploration update to the market. In summary, the quarter was difficult. We experienced the variation in performance we were expecting plus we experienced other operational variations. As I mentioned, This, along with the impacts of COVID that gathered a bit more steam in the form of turnover and time to fill roles made it a challenging quarter. But in the quarter, we did make some progress on McPhillamys, albeit slow, but progress nonetheless in the formal approvals process. We're still confident there's a pathway to get our project approved. It's just taking time. Our first full quarter from Tropicana, which was delivered as planned. We made progress at the underground at the Garden Well South underground project, and that's clearly gathering momentum to be more than we thought. Excitement is certainly building around the Garden Wll mine potential area as a whole new potential high-grade production zone with -- it's been a tough operating for -- a tough operating quarter for Regis and we and the WA industry in general, I think, and certainly resources is not out of the COVID woods yet. But at least we are on a planned path forward. Hopefully, we'll see some clear air on this in the new year as the government strategies to open up borders gather traction, and we can start to access and rely again on the very important element of our industry's workforce that comes from interstate. But despite the near-term challenges, the company's [ bones ] are solid and they're growing. Just talking through some of these growth potential illustrates. Pleasingly, if we look beyond a single quarter or 2, we can still following our plan of growth our life -- and growing our life as a potential profitable business producing at a rate of 0.5 million ounces a year with an all-in sustaining under USD 1,000, almost 5 million ounces of reserves and over 10 million ounces of resources. So a challenging month challenging quarter. But it's still clear we have a great future in front of us with more potential being opened up. All right. So look, on that note, I'll hand it back to Darcy, and we will look to deal with any questions that people would like to ask.

[Operator Instructions] Your first question comes from Peter O'Connor from Shaw and Partners.

McPhillamys, you said first half calendar year '22, but in the release, it's -- if I read it correctly, said first half FY '22. Just could you clarify the timing that you do expect or hope to get the approval?

Yes. Look, there's a very slim possibility in the first half. But realistically, we think that even that would flow. Certainly, IPC would flow in into the first calendar half [indiscernible].

Okay. And working capital, the build of ounces at Tropicana you noted in the release, when are we expecting release of those?

If you're talking about the buildup of ounces on hand, that we've got Peter, that's just -- there's nothing special in there. It's just there's ounces on site at Tropicana, ounces on site at Duketon...

You're talking about the gold on hand as part of our cash and gold balance. That's probably -- it's probably already gone. That usually goes within a couple of days, Peter. We don't tend to hold our gold stocks for long, particularly during the first quarter and the third quarter, we sort of let that roll pretty well. But we'll push hard to get that all out the door at the end of the first half and second half because it's obviously more important then. But yes, stuff just moves very quickly.

Yes. I just want to call on that because -- sorry, you called it out so I wanted to ask. And Jim the Garden Well Main, fascinating. Just to understand what you're talking about. So the decline will be funded via potential ore that you'll pick up underway from south through to the main areas that how I understand your comments. And then the price is at the end of that, which is the drilling you've done under the main pit at Garden Well?

Yes. Look, the concept that we're pushing hard on, and we haven't approved it finalize the work yet. But what it's -- we have the option -- we could spend another year drilling out that area underneath Garden Well Main and prove it up to be arguably the same size and scale as the Garden Well South area. The drilling in that area is slow and there's some pretty hard [indiscernible] slow and expensive. So we've taken a view on this to drill up enough confidence for a relatively small area that warrants and would pay for a decline across and make a modest margin on it. It doesn't need to be [ 1,000 ] ounces. By doing that, we can commit to the area earlier, and we'll put a decline across, as you can see on that conceptual decline. Our objective would be to get to Garden Well Main as quickly as we can. Once we're there, we can then start to open that area up as a production source and continue to drill out more of the ounces down plunge. So we're looking carefully as to where that decline would be to give us the right purchasing angle. But the added benefit that we get is that area in Figure 3 call that's marked as being under drilled. You can see some of the intercepts through there that just haven't been followed up. And clearly, there's mineralization there because it was mined out as part of the open pit, it just hasn't been drilled out much. So it gives us a platform to drill that as well. So we see that -- and it's a similar strategy to the 1 that was followed at Tropicana, where we've opened up Boston Shaker, found enough material underneath the old Tropicana pit to warrant a decline going cross, which is effectively an exploration decline that's paid for by the ounces that we'll get to when we get there. And then we use that as a platform to drill off more material, which, by the way, is proving to be a pretty appropriate strategy there as well. But that's the concept here, Pete. We prove up enough reserves enough material to give us confidence. We're not it's -- we're not wasting our money going out there. There's no potential for loss and a modest return, and that will give us the platform to continue to grow production underneath Garden Well Main, but the added benefit of opening up that new area. We don't need the area to have any ounces to justify it, but we certainly see that as being a very attractive exploration target as well.

Okay. So when you say the decision is possible during December quarter '21, is that likely to come up with exploration update? Or is that a separate part of that? And when would a decline kick off towards the area if you've got the approval this quarter?

Yes. Look, we'd look to push that. It will be separate to the biannual exploration update. We certainly we'd be looking to do that sometime over the next 2 to 4 weeks. The decision on Garden Well Main is still a bit further down the track. And I'd like to think that we can get that done before the end of the year. If we did, I think we've already -- if the potential is there, it's a stub break off from the existing development and we can push on. So I don't think there'll be too much of a delay there. We just need to make sure that we're not drawing away unnecessary resources from the development program for the Garden Well South. So things like ventilation and stuff, but that's all being looked at, at the moment. But we're not talking about a major delay waiting to get on to it.

Okay. Last quick one, Figure 2. You've got in green, the underground development previous. You've got in red underground mining June quarter '21. Is that supposed to be September quarter '21? And if it's June quarter, where is the September quarter development on that slide?

Yes, that's the September quarter.

Your next question comes from David Coates from Bell Potter Securities.

Tough quarter, I mentioned, crossed most of the boxes I think apart from safety, thankfully. So -- just in terms of geotechnical issues, there are some grade issues, more shutdowns or kind of stuff and labor and stuff also all kind of causing disruptions across the board. Yes, some of those things seem like sort of delaying production as opposed to losing production. But some of those things might also in kind of lost production as well. Can you just give us a sense of how over the balance of the year, what strategies you guys are putting in place to make up that delayed production, I suppose.

Yes. So for example, if you're looking at Rosemont open pit, where we had to hold up work to get -- to put in some catchment fences for some unstable ground. We're getting to the bottom -- to the end of the Rosemont pit in some areas. And as a result, it's very tight in the space. Therefore, if you get some loose rocks, it causes some things that you can deal with when you're much higher up in the sequence or you've got a much bigger floor, you can manage the risk differently, but we had to pull back and put the fences in and make sure that they are adequate before we went back in. Now part of the reason that we're obviously sort of in that space as we're getting towards the end. So end of that pit in those areas. So really, it's more of a medium-term timing issue rather than lost production on that front because we've just had to shuffle our production around, and that's basically consistent with some of the other areas as well, which is a key reason why we're still holding firm on our guidance. These issues apart from maybe some of the transitional recon we've had as we pass through this transitional area up around Blenheim. The rest are all sort of timing. And even the transitional area, the answers that we've lost there because it's a highly variable zone. It's quite possible it could swing the other way, which is what we tend to see over time. we're not banking on that, but that's always a possibility. But we just know that we got to get through this ground, and then we'll be in the high-grade area as planned, which will have -- we have more confidence of because it's -- our experience tells us that you get this variability. So the bottom line is, yes, we have seen movement around. Some of it's resulted in us having to change our timing on when we feed material in. We're still confident that we were on top of those variations and that we can still come in within our guidance range at Duketon and obviously, Tropicana as well because we've held our corporate guidance. But the key there is our recovery at Duketon, and we're still confident that we can come in on that -- in that range.

Thanks, Jim. Just a question on Tropicana, which you touched on the drill and blast issues. So it sounds like they're kind of, I guess, delaying the completion of that cutback and access to the ore that's underneath can you said, I think that FY '22 production [ cut ], it might delay perhaps production growth that you've been looking for in FY '23. Is that kind of how I should interpret that?

Yes, that's the potential. We think FY '22, our current year is still fine. Obviously, it's being monitored pretty carefully. But -- and we were up there last week looking at that. And so we've sort of got pretty new information there. Certainly, the potential impacts of a slower cutback at Havana because that's the longer-dated new production source has an impact on when that comes on. But again, those actions are underway there and a recovery plan to get back on top of that. So at the moment, we're watching that very carefully. I guess, to some extent, we've got a -- the unknown that's around is whether the COVID impacts will continue to cause a problem there. That's a bit of an unknown for us. But we know that the team on site and the contractor have been working to lift the performance. And we have seen that performance of the drilling fleet and the overall material movement sort of lift back up to where we're needing it to go. It's not quite there yet, but it's on its way. So we're still watching that carefully and not ready to make too much of a call on that negative impacts on that. It's just a risk that we're monitoring at the moment.

Your next question comes from Patrick Collier from Credit Suisse.

Just 2 for me, please. First one, just on the elevated turnover. Do you mind giving some sense of quantifying, and maybe what the turnover in the last quarter so looked like compared to last year or 2?

Yes, sure. So the industry is generally runs when things are normal. I don't know, probably somewhere between 20%, 25%, maybe a little bit percent turnover. We've certainly seen, and some of our contractors have seen and granted in some areas of the business, even in normal times, turnover can be much higher than that. But we've seen elements of maybe 40%, 50% turnover on an annualized basis in the last quarter in certain sections, not everywhere, but in certain areas. Truck drivers are hard to come by, surface truck drivers. And although, yes, the -- we know that our mining contractor has always had a strategy of taking on and training green horns. So they always have an element there. They've got an excellent training program that they run to keep themselves fed with the right type of operators. But where we have seen in some of our other contracting areas, surface haulage, those truckies have been drawn off to other operations or other parts of the resources gain or they've just lost access to interstate drivers because the border restrictions have just made it virtually impossible to fill. So yes, normally, we'd see turnover 20% to mid-25%. But we've seen that step up in certain areas of our business to 40% or 50%. And it's not just the turnover that's causing the issue. It's also the time to fill because labor is -- skilled labor is scarce, and that means it just takes time to fill roles. They are being filled, but it's taking time. So that just adds to the issue.

Okay, that's very clear. And then just secondly, on the drop in head grades at Moolart Well. Just -- are you able to give a sense of how much of that is from the lower grades so that [ transition ] versus just the processing of stockpiles.

Well, it's probably a combination of both because when you go through the transition if you're not getting the material that you want in terms of tonnes, then you go your stockpile and you pull off your low-grade stockpile, which is what we've been doing. The other issue, as you go through the transition, sometimes you mine through it and you find the grades are better or you get more tonnes than you planned. Other times, the grade is not as good. So what we experienced during the September quarter was that we didn't get quite -- we didn't get the same number of tonnes. And the grade that we did get was a little bit lower than what we were expecting. So we had to supplement the feed with more of the low grade. So we sort of got the impacts from a couple of different sides, exact proportions of that I don't have the exact breakdown on that. Probably, I reckon we probably lost 20% of our ounces associated with that from 10% to 20% of our ounces associated with that for the quarter in Moolart, but that's just an estimate.

Your next question comes from Matthew Collings from Morgans. Pardon me, Matthew, you may have yourself on mute.

Sorry. I was double muted. I think everyone's ticked off most of the questions, sorry. Jim and Jon. But Garden, well, just a quick 1 on the Tooheys ore comment that note, feed grades and recoveries were lower as higher grade [ Tooheys ] came in was the grade down because that's a recovery challenge meant you put less Tooheys Well ore in than expected? Or was the grade of the Tooheys ore lower and it was more complicated?

No, it was the former. So -- We've got some carbonaceous material in that Tooheys Well feed and the grade is a good grade, but it required more oxygen to get the recovery recoveries that we were planning on. So rather than [indiscernible] all the way, we adjusted our schedules and said low grade material [indiscernible] while we got additional oxygen capacity to help deal with it. So once that additional capacity is commissioned, which should be over the next -- it should be running early in November. We will be able to -- we'll see recovery lift, and we'll also see the proportion of fee from Tooheys Well increase, which will deliver the better grade. So the grades are fine from Tooheys, we just backed off because we weren't getting the recovery and we didn't want to lose the ounces.

That's very clear. On the COVID vaccination front, you guys got a pretty good handle on the vaccination status of your staff and team as we get closer to this 1 December deadline from the state government?

We've got a handle on it. We keep driving to -- we've got a major program of educating people, collecting the data on how many people are vaccinated. As with any population, a fair proportion is a bell curve here, fair proportion coming and telling us without asking others are telling us reluctantly. Others don't want to tell us until close to the date. The points that we're emphasizing to our workforce is you need to get your first vaccine -- if you haven't got it, you need to get your first vaccination now, because if you wait until the first of December, there won't be enough time to get your second vaccination, which you have to have by the 31st of December. And that's our drive, making sure that people are getting that message. And I think, generally, we've seen as this -- quite frankly, people who decide not to vaccinate -- and this is the concern sort of underlying around the industries, generally are their people -- is there a reasonable chunk of people who don't get -- decide that they don't want to be vaccinated. And obviously, they're making a conscious decision to lead the industry in general. I think generally, people -- we all think that, that number is very low, but pushing hard to get all those that may be reluctant, but still, resign themselves to doing it, we need to get them done quickly because they're at risk of not being available in early January because they just haven't -- they're not in a position to get the second vaccination yet, which will be frustrating if we get there. So there's a -- just -- we're just pushing hard with the communication. We know we've got over 50%, but capturing the data on people is a little bit more challenging. So we just drive it and keep requesting it, and doing everything we can to make the vaccines available for people and telling them where they are. And pushing in to [indiscernible] them where we need to.

Your next question comes from Daniel Morgan from Barrenjoey.

I was wondering if you could just address a longer-term question. Can you just reiterate how long you are looking to keep the open pits running? How long can they keep filling the mills? And where does the ore come from? And also with a particular also focus on the Duketon North mill?

Yes. Well, look, our reserves that we have at Duketon are predominantly open pit. So we're not talking running out of open pits in a year or 2. Our life there, albeit I think we've got a couple of years at Moolart or 1.5 years or so at the back end of low-grade stockpiles being processed. But we've got a good solid 4.5 to 5.5 years of life in the operation. And we'll continue to be feeding in open pit material. The key is that the underground allow us to maintain our -- because of the grades -- that allows us to maintain our total gold production. So I think it will be quite a while yet before we're a pure underground producing operation. We -- as far as I can see out into the 5- to 7-year profile will continue to be a combination of surface and underground feed. And probably that's really the way we would want to be. The undergrounds are great, but the surface -- the pits give us the cornerstone of the baseline of production and the undergrounds are the cream on the top. So I don't -- we don't see ourselves running out of open pit ore anytime within the next anticipated life, which is 5.5% of reserves and of mining and [indiscernible] processing.

And just your questions on guidance. I mean you reiterated guidance today, but you said that there's some risk to that emanating from the external environment, i.e. COVID and this vaccine issue as well. Is there a -- in your thinking, is there a time you're thinking about border reopenings that goes to your view? Or maybe another way of putting it is when the borders in WA need to open for you to meet your cost guidance? Or is that a risk if that's prolonged?

Yes. Well, how long is a piece of string? The reality is that we've seen these issues that we talk about at Duketon and have been issues that we've struggled with and then got on top of at the Duketon operation. If the border closures remain in place for another half a year, I can't quite quantify and it's -- there's a combination of issues here around COVID that we've I think we're all grappling with. 1 in part is the border closure. I mean before the borders closed, hundreds and hundreds of workers in the resources industry in WA were flying in from the East Coast, particularly up in the big operations up north, and that's stopped. So clearly, there's a labor shortfall. We've had our company has had a number of people that have actually moved as part of the COVID impacts, and they live here in WA. But all those that are, I think, are willing and able to move have moved, not too many more. We've now got not many, but we've had a couple of people leave in the last quarter that just said they can't -- the restriction is just causing them too much [indiscernible]. So they've resigned and gone back to the East Coast, not huge numbers. But the piece that -- so I think if it doesn't -- we're managing it reasonably at the moment. The piece that I guess I'm trying to emphasize is there is a little bit of an unknown around as to what the implications will be when the -- 2 things: One, the mandatory element of vaccinations gets locked down, exactly do we know how many people are going to basically resign themselves to not working in the resources industry. We'd like to think that, that number is low and very low. But I guess we've got to see what happens there. The other element is -- What really will make a difference to -- in general, to manpower availability and the pressures that we're dealing with on things like labor rates as well will be when the borders ease, and the ability for our workforce to be as mobile as they were 2 years ago come -- start to come back. Now the time -- there's clearly a path forward there. The state is working on vaccinations. But as we all can see, I think, and has probably been expressed, we're not going to see much movement there until the new year. So exactly what that looks like and the timing, I don't know. I mean it's going to happen. You can see we know that it has to happen, it's the timing. And I guess what we're trying to do is just highlight the fact that it actually -- it's just a risk to us. And quite frankly, I would be surprised if there isn't people else -- everybody in the industry is just cognizant of the risks that we're -- and the unknown sort of continue to float around. We head into in the near term with this mandated requirement, which, by the way, we support, we think it's important to protect our site and our people, particularly as borders open up. But it just you manage 1 risk and it creates another one that has to be managed as well.

And last question for me. I mean I think this will be hard to answer, but I'd like to hear your perspectives on is about the industry. And I think there's a thought that border reopenings for WA and the rest of the country and internationally would lead to a drop in this cost inflation that the industry is experiencing. But just wondering if potentially people on the East Coast and elsewhere, may be reluctant to trust that these borders are going to be open and they can do FIFO operations and things like that going forward. Like -- can I ask about your perspectives on that and what engagement you might have had with the government to see situation normalize in, say, I don't know, late 2022 or that may enable FIFO to begin? Or is there a risk to it not normalize?

Look, I think the there is engagement with government on this clearly at the representative element, Paul Everingham and the team at the CME as well as [indiscernible], as -- are doing a lot of work representing the industry on this front. What do I think is going to happen? What I'd like to think will happen is that whatever the definition of normality is, we return to it in the new year, in the first half of calendar '22, and the actions that are being taken around Australia and more globally, but specifically within Australia starts to give us the confidence that the country can deal with this issue, and from a health management perspective and allows us to return to some semblance of normal operation in terms of intrastate mobility. Until that occurs, these pressures are going to be honest. So I'd like to think that that's going to be dealt with and managed in the new year, in the first half of next year. But I'm not Nostradamus or a clairvoyant. So I -- we just have to continue to engage. And I don't think the government authorities are oblivious to the issues, and we're just trying to manage this -- and everybody is just trying to manage as best they can.

Your next question comes from David Coates from Bell Potter Securities.

I had a follow-up, which is pretty much along those lines. I don't know if you have any additional comments you wanted to make about industry lobbying or representation to the government on how much pressure maybe we put on to open the borders up, but you've made a few comments on that already.

Yes. I mean it's happening clearly, and there's good discussion. I think there's good relationships that have been worked on there. We just got to work our way through this period.

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

Just to clarify the stamp duty comments you made in your opening remarks, what was the number? And what was the timing?

38.

The timing was?

The original estimate was 44, but we pulled it back to 38. We've submitted the necessary paper work to the government. [indiscernible] The timings in their hand, Jon, you think you could [indiscernible].

Yes, that's right. I mean, we've -- the advice that we've had is, it may be towards the end of this year. But like Jim said, the timing is really up to the government there. We've certainly done everything we need to do in the time frames we needed.

And have you -- Jon, that's calendar?

Calendar, yes.

Yes. Okay. Got it. Jim, Tropicana, you talked on 1 of the earlier questions about your on-site there, I think you said just recently. How many times you've been on site, how many JV interactions have you had and if you could sum it up in a world or a sentence, how is that going? And is it what you thought it would be or different?

So we've been up to site a couple of times, 3 times if you count the original [indiscernible] view. And that's -- but we've had multiple interactions locally here in town with the management team with Mike, [ Ericson ] and his team. I think the relationships are great, very open. I think we've certainly been asked probably a lot more questions and getting into some of the detail that they may not have had with their prior JV partners, but that's no surprise to them because we're new to the game, and we're just pushing into things, but they've been very understanding of that and quite cooperative. What they're doing and what Tropicana is looking like in relation to what we thought we were buying into. We're very pleased with what we've seen. We like when there were no, I guess, what's -- no surprises on the downside that we've spotted, it's what we were -- the potential for the long-term growth, which is really what Tropicana is about, getting back to 450,000, 500,000 ounce production for the next few years. That's underway. The -- as I said, the timing on that is really being driven hard by the team, [indiscernible] COVID impact . So we're pretty -- in terms of our -- what we've seen from Tropicana, we're happy, very happy with the relationship, very happy with the engagement. Operationally and life of mine planning and where the opportunities lie and the results that we're getting from the diamond drilling, all of that is consistent, if not a little bit better than what we're anticipating. So overall, we're very pleased with the deal that we've done. We're very pleased to have it in our portfolio. And we look forward to continuing to deliver what we were expecting [indiscernible] possibly more.

Okay. Can I swing back to the vaccination because it's been fascinating discussion. And thank you very much for being so open with your thoughts and comments. So if I was to try and look at what are the critical dates, not just for you but as an industry? Is it is December on looming [ vax date ] then January 1? Are they the 2 critical points where we have a oh s*** moment and go, who's not coming back to work?

Well, they're the key dates. At the moment, we still -- there's a lot of detail in the government directive that we still need to see and understand, and that will clarify things like ability for -- reasons for not getting vaccinated, although I think understandably, we expect that to be pretty tight. But the first date that we're all working to is the first of December, by which time you must have had, if you're visiting or going to a work site, you must have had your first shot. And then the next key date is that by the end of the 31st of December, i.e., the 1st of January, you must have had your second. There's obviously, as I said, that there's usually a little bit more information in the detail of the directives as to how that works, and we haven't seen that yet. But as I said, I understand that our groups with [indiscernible] CME and [indiscernible] are both working with the government to try and -- with the state, to try and get that clarified so that we understand a bit more of the detail at the end of the day. If -- the way it's running at the moment, if somebody hasn't had their second vaccination shot by 1st of January, they won't be able to travel to a mine site in WA. Full stop.

So have you, as a Board had thoughts or discussions about mandating vaccinations is a business risk indication?

We don't have to, Peter, it is mandated. It's a requirement of government for anybody to go that's going to a mine site must be vaccinated. It's not an option.

I was thinking more about your opportunity in the shorter term to make sure you're ahead of the curve, that was all.

Well, yes, but I mean, we could mandate it from tomorrow, but then there's the practicalities that everybody has to deal with. You can't say tomorrow morning from 8:00, everybody must have it because it takes time. It's becoming a lot easier to get your vaccination shot. There's no doubt about that. I think we were talking yesterday that when you go to Bunnings now and get your sausage, you'll be able to get your shot at the same time. So just to make sure you get onions with the right thing. But you can't -- so we have looked at it and said, it's a mandated obligation from the 1st of December because that's what it is. It really wasn't a decision that the Board had to make.

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

All right. Thanks, Darcy, and thanks, everybody, for joining us. Obviously, a fair bit going on and with this quarter, but we're certainly looking forward to getting on top of things. And as I've outlined in there, there's a couple of exciting opportunities for further growth. If we look beyond the end of our -- and into next year in the future, there's some certainly some great things that continue to come track for us. So as always, if anybody has got any follow-ups, please drop us a line or give us a call, and we'll be happy to, where we can, fill in any of the -- answer any queries. Thanks, Darcy.

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