Simberi heading for 110,000oz gold

ST Barbara has upped the guidance for its Gwalia gold mine in Western Australia after a strong March quarter, writes Kristie Batten.
Simberi heading for 110,000oz gold Simberi heading for 110,000oz gold Simberi heading for 110,000oz gold Simberi heading for 110,000oz gold Simberi heading for 110,000oz gold

Group production from Gwalia and the Simberi mine in Papua New Guinea was 91,580 ounces of gold, slightly down from 91,580oz produced in the December quarter.

Consolidated all-in sustaining costs were $A947 an ounce, lower than the $992/oz posted for December, while the average realised gold price rose to $1614/oz from $1560/oz.

Cash contribution from operations for the quarter increased to $71 million from $57 million.

Gwalia produced 66,147oz at $770/oz, compared with 63,533oz at $846/oz in the previous quarter.

The rise was attributed to an increase in mined grade from 7.9 grams per tonne gold to 10.2gpt.

The strong performance has resulted in an increase to Gwalia's full-year guidance to 260,000-265,000oz from 245,000-260,000oz at AISC of $800-820/oz, down from $840-900/oz.

Capital expenditure is expected to be $29-32 million, down from $30-35 million.

Conceptual studies were completed during the quarter into a potential materials handling system to allow deeper mining at Gwalia.

At this stage, the company is favouring the installation of two ventilation shafts, but studies will continue.

Guidance for Simberi is maintained at 100,000-110,000oz at AISC of $1350-1430/oz after the mine produced 25,433oz at $1404/oz in the March quarter.

The operation delivered 110,488oz gold for the 12 months to March 31, exceeding the targeted 100,000oz per annum run-rate for the fourth consecutive quarter.

A prefeasibility study into the Simberi sulphide expansion has been completed and is with the board for review.

The study confirmed the expansion could extend the mine life by a further eight years, but recommends additional value-engineering work to refine the economics.

The outcome of the PFS will play a part in St Barbara's strategic review of the asset.

The company closed March with cash of $114 million, up from $100 million, after debt and financing costs of $38 million.

US dollar-denominated debt was reduced by $US27 million to $189 million, and this week, a further $10 million was repaid on the Red Kite facility, reducing its balance to $11 million.

Total debt now stands at $179 million, with $146 million repaid so far this financial year.

The company said debt repayment remained its preferred use of cashflow.

St Barbara shares dropped A6c to $2.29 yesterday.


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