St Barbara's Pacific resurrection

ST Barbara could ‘turnaround’ its struggling Papua New Guinea and Solomon Islands operations in six to 12 months, according to Macquarie Private Wealth.
St Barbara's Pacific resurrection St Barbara's Pacific resurrection St Barbara's Pacific resurrection St Barbara's Pacific resurrection St Barbara's Pacific resurrection

St Barbara's acquisition of Allied Gold last year attracted plenty of criticism from brokers, but the yet-to-recover share price has also helped shift underperform forecasts into more recently made outperform ratings.

In the case of MPW, its outperform view is based on what may be achieved by St Barbara's management of the Pacific operations.

In its report following the Western Australian gold miner's arguably surprising, even if small, half-year profit announced last week, MPW said the new fleet at the Gold Ridge mine in the Solomon Islands was significantly improving ore body access and recovery rates.

It noted that stripping rates improved at the Simberi mine in PNG since some of the old Gold Ridge fleet arrived.

"With the next step being the commissioning of the Simberi oxide plant in the March quarter, ramping up to full throughput during the June quarter, we see the current quarter as the marker of the operational turnaround at the Pacific Operations," MPW said.

The investment bank has a 12-month price forecast of $1.70 for St Barbara shares, which recently closed above the $1.30 level, but also provided a caveat on the challenges ahead.

"While we continue to believe that the operational turnaround of the Pacific Operations will be time and cash consuming for the company at current levels, we believe that this is now well understood by the market," MPW said.

"We see blue sky in the St Barbara operations, which can be delivered by the turnaround of these assets over the coming 6-12 months."


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