With the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) set to crash through the 5,000 point mark to levels not seen since mid-2013, it could be a timely opportunity for investors to take a close look at the full year results of gold producer St Barbara Ltd (ASX: SBM).
Result Highlights:
- Underlying net profit after tax jumped to $42 million
- Cash flows from operations leapt to $113 million
- All-in sustaining cost (AISC) improved to $1,007 per ounce
- Net debt remained flat at $270 million
Now What:
According to the Australian Financial Review gold was down 1.4% overnight to US$1,139.55 per ounce. While the gold price is of course vitally important to Australian-based gold producers, almost equally important is the US dollar-Australian dollar exchange rate.
For example, the recent weakness in the Australian dollar has actually meant the gold price in Australian dollar terms has been rising. The Australian dollar was recently buying 71.61 US cents.
St Barbara has a market capitalisation of around $275 million, an ore reserve of 4 million ounces and a mineral resource of 9.2 million ounces. While its smaller size and scale can create risks compared with a giant such as Newcrest Mining Limited (ASX: NCM), its business model and leverage to specific movements in the gold price and foreign exchange rates is also more easily analysed by investors.
Although St Barbara's shareholders have already enjoyed a share price surge of 370% in the past year, the stock could certainly keep running if gold maintains its historic position as a safe haven asset for investors looking to hedge their risk during the current market turbulence.
