Why St Barbara Share Price is Down 8.5% Today (ASX:SBM)

Why St Barbara Share Price is Down 8.5% Today (ASX:SBM)

The St Barbara Ltd [ASX:SBM] share price is plummeting today after it revised its production and cost guidance for FY21.

St Barbara is an Australian gold miner with operations in Australia, Canada, and Papua Guinea.

Challenges at Leonora and Simberi

While its Atlantic Operations in Canada continue as expected, St Barbara has hit some challenges at both their Leonora operation in Western Australia and Simberi in Papua New Guinea.

At Leonora, they took a hit from negative grade reconciliation in both stope ore and Jasper stockpile material, which impacted gold production. St Barbara said the lower grade in the short term, based on mine position and timing, is a contributing factor to the change in guidance.

In March, St Barbara awarded their Gwalia mining services contract in Western Australia to Macmahon Holdings, who would be replacing Byrnecut. The swap was set to happen on 5 May, but the change in mining contractors has taken longer than expected.

As St Barbara said:

The recruitment of critical roles and experienced operators by Macmahon has been well below expectations, with the resultant shortfall in personnel a further factor in this guidance change. While St Barbara continues to work with Macmahon, WA-based workforce availability has ultimately impacted the planned mine schedule and has led to the deferral of mined ore tonnages from FY21 into FY22.

St Barbara has also ran into problems at Simberi in Papua New Guinea. As they noted:

Operations have been impacted by ore variability, as a result of low mining rates not achieving planned face positions, which is affecting gold recovery.

Operations have also taken a hit from the pandemic, which is affecting workers availability.

Higher costs, lower production

As a result of all these factors, St Barbara had to revise their guidance and costs for FY21.

It’s now looking at production to be in between 330,000 and 360,000 with all-in sustaining costs (AISC) of between $1,547 and $1,695 per ounce. That’s a drop from its previous guidance of 370,000 to 380,000 ounces, and higher costs from their earlier AISC of $1,440 and $1,520 per ounce.

At time of writing the share price was trading at $1.88, down 8.54% from $2.05 at yesterday’s close.

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Best,

 Selva Freigedo

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