Simberi production falls

ST Barbara has downgraded full-year guidance off the back of soft quarters at Gwalia in Western Australia and Simberi in Papua New Guinea’s New Ireland Province.
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The company trimmed FY20 group guidance to 370,000-400,000 ounces of gold at all-in sustaining costs of $A1330-1420 an ounce from 380,000-420,000oz at $1240-1330/oz.
Despite a better overall quarter in which 94,159oz at $1364/oz was produced (up from 87,569oz at $1421/oz), the softer outlook was due to delays at Gwalia and lower grades at Simberi.
While the new paste aggregate fill plant at Gwalia has been commissioned, challenging ground conditions have delayed the progress of the final ventilation shaft.
Ventilation has increased, but the full benefits and increase in development won't be realised until the final shaft is complete, which is now expected in April.
Gwalia produced 42,022oz of gold at AISC of $1471/oz in the December quarter.
In its second guidance downgrade this financial year, the mine is expected to produce 170,000-180,000oz at $1470-1540/oz, down from 175,000-190,000oz at $1390-1450/oz.
"It's close to what we previously planned," St Barbara managing director Bob Vassie said.
At Simberi, production fell from 27,061oz at all-in sustaining costs of $1603/oz in the September quarter to 23,070oz at AISC of $1851/oz due to a drop in grade from 1.19 grams per tonne gold to 1.08gpt.
Simberi guidance was lowered to 105,000-115,000oz at AISC of $1500-1645/oz from 110,000-125,000oz at $1285-1450/oz.
The bright spot for St Barbara was the Atlantic operation in Nova Scotia.
Atlantic had a record quarter, producing 29,067oz at AISC of $823/oz, up from 22,355oz at AISC of $970/oz in the September quarter.
"The trend here is good," Vassie said.
"We're not experiencing a drawn-out turnaround period and we've not had to send anyone over there to show them what to do."
Vassie said the performance was particularly pleasing given it was during winter, but the team had made modifications based on learnings from the previous year.
"Q3 coming up has probably the worst two winter months but we're prepared," he said.
Atlantic guidance was left unchanged at 95,000-105,000oz at $900-955/oz.
St Barbara's quarter-end cash balance increased by $3 million to $79 million after $24 million in tax payments, $15 million in growth capital and $10 million spent on exploration.
The company slightly lifted its full-year sustaining capital guidance to $79-88 million from $77-87 million.
Growth capex was raised from $35-42 million to $51-59 million, incorporating Atlantic for the first time.
"We're spending a lot on our future," Vassie said.
Exploration guidance is $31-41 million, including $11-13 million in Nova Scotia, where it is having early drilling success.
At Simberi, the sulphide drilling program below the Sorowar pit is complete, ahead of an updated resources and reserves statement to be released next month.
"The very encouraging news is drilling at Sorowar has indicated significant additional sulphide and oxide mineralisation," Vassie said.
A decision on whether to proceed to a feasibility study on a sulphide expansion will be made next month.
Vassie presided over his 21st and last quarterly at St Barbara, announcing last month he will step down on February 3.
His replacement is former Newcrest Mining executive Craig Jetson.
"I've lowered the bar slightly for him," Vassie joked of the lower guidance.
Vassie will remain at St Barbara until the end of March to manage the transition.
On Wednesday, St Barbara shares dropped 3.6% to $2.90. The stock rose above $3 this week for the first time since September.