Why the St Barbara Ltd share price is falling today 

Shares in St Barbara Ltd (ASX: SBM) are down 1.5% to $3.96 today, on the news that processing and mining operations at its Simberi project in Papua New Guinea were impacted by a work stoppage. 

According to an update released by the company yesterday evening, production was suspended on March 7 and will resume today at a reduced rate, as most of the local workers are expected to remain inactive. 

St Barbara didn’t specify the reasons for the stoppage, but described it as an “illegal industrial action” under PNG law. The company engaged in discussions with workers to address the issue and expects a mediation led by the local government to commence this week, with the option of terminating employment for those who refuse to resume work still on the table. 

A protracted impairment could impact the company’s performance, as St Barbara operations are concentrated in the two gold projects of Gwalia and Simberi, and in FY 2017 Simberi accounted for about 30% of its gold production. However, the company remains confident that the mine will achieve its full year production guidance of between 115,000 and 125,000 ounces of gold. 

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Motley Fool contributor Tommaso Autorino has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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