Pacific ops sink St Barbara result

WORSE-than-expected impairments of $A411 million on its Pacific operations has led gold producer St Barbara to post a $501 million full-year loss.
Pacific ops sink St Barbara result
Pacific ops sink St Barbara result
Pacific ops sink St Barbara result
Pacific ops sink St Barbara result
Pacific ops sink St Barbara result

It compares to a $191.8 million loss for the 2013 financial year.

The underlying net loss after tax was $94 million, compared to a $29 million profit last year, while earnings before interest, tax, depreciation and amortisation fell to $73 million from $141 million.

The $411 million impairment reflects the indefinite suspension of Gold Ridge in the Solomon Islands and the slower than expected improvement in operational performance, plus a write-down of mineral rights, including the sulphides opportunity, at Simberi in Papua New Guinea.

St Barbara had previously flagged impairments of up to $379 million.

Gold Ridge has been suspended since April due to flooding and is not expected to resume production this year, leading to a write-down of the entire investment.

On Monday, the company confirmed it was in talks to potentially transfer ownership of the mothballed mine to the Solomon Islands government.

The Pacific operations, which were acquired via the disastrous $A556 million takeover of Allied Gold in late 2012, reported a loss before tax of $86 million.

"The extent of the loss is disappointing and the impairment write-downs of our Pacific operations are large," St Barbara managing director and CEO Bob Vassie said.

"The impairments comprise a total write-down of Gold Ridge operations, where we will not be continuing to operate and a significant write-down at Simberi operations, where we will vigorously pursue a turnaround of that operation."

On a brighter note, the Australian operations reported a pre-tax profit of $98 million.

"Our Leonora operations have performed very well and will continue to do so," Vassie said.

"This, combined with the focus on turning Simberi into a cash generating operation and a program to significantly reduce costs across the company, will be the platform for St Barbara moving forward."

St Barbara's four mines produced 374,402 ounces of gold at all-in sustaining costs of $1338 an ounce in FY14.

Group net cash flow from operating activities was $20 million.

The company had $79 million cash at the end of June and debt of $340 million.

St Barbara also reported updated reserves and resources as at June 30.

Reserves fell 80,000oz to 69.1 million tonnes at 2.3 grams per tonne gold for 5.16 million ounces of gold.

Gwalia reserves increased by 160,000oz to 1.91Moz for a mine life of nine years.

The company sees potential to add resources as the orebody remains open at depth.

Total group resources are 209.4Mt at 2gpt gold for 13.16Moz, down from 13.2Moz in 2013.

The Leonora operations are slated to produce 180,000-200,000oz in FY15 at a cost of $720-750/oz.

Guidance for Simberi is expected to be updated following an engineering and maintenance program on the processing plant.

Shares in St Barbara were unchanged at 10c.


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