Why St Barbara Ltd Shares Are Down Today (ASX:SBM)

Why St Barbara Ltd Shares Are Down Today (ASX:SBM)

The St Barbara Ltd [ASX:SBM] shares are down today after releasing its FY21 fourth quarter report. St Barbara is an Australian gold miner with operations in Australia, Papua Guinea, and Canada.

Production hit

St Barbara has reported lower production this quarter. The group’s gold production was 82,698 ounces for the quarter, well below the 109,000 it had produced in the same quarter last year. All in sustaining costs (AISC) came in at $1,623 per ounce, 2% lower when compared to the previous quarter.

St Barbara said that it saw ‘significant improvements in operating performance’ at Atlantic, where it achieved record mill throughput rates. St Barbara also said Gwalia had its highest quarter of mill throughput in almost five years, with ore mined at Gwalia up 16% from the previous quarter. This is despite running into delays after mining service contract changes took longer than expected.

Full-year gold production came in at 327,662 ounces at an AISC of $1,616 per ounce.

St Barbara had to revise their guidance in May, after hitting some challenges at both their Leonora operation in Western Australia and Simberi in Papua New Guinea.

In May, St Barbara had to stop operations at Simberi after a tragic fatality. The Mineral Resources Authority launched an investigation into the incident which caused St Barbara to withdraw FY21 guidance for Simberi in June.

Simberi had to stay shut down for almost half the quarter. However, St Barbara said that it’s gotten conditional approval to restart mining at Simberi and expects to bump it up in the next weeks. They also expect that their processing facility will come back into production by the end of the second quarter in FY22.

What could happen next?

For FY22 St Barbara expects gold production to be between 305,000 and 355,000 ounces and AISC to come in higher than this year, between $1,710 and $1,860 an ounce.

Shares fell in early trade to a low of $1.68. At time of writing, they’ve recovered slightly with the share price trading at $1.76, or 1% down from yesterday’s close.

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Selva Freigedo,
For The Daily Reckoning Australia

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