The St Barbara Limited (ASX: SBM) share price could tumble in early trade after the company revised its FY19 production guidance and announced the results of a key feasibility study.
What did management say about FY19 guidance?
Initial FY19 production guidance for the Aussie miner had anticipated the Paste Aggregate Fill (PAF) circuit to be operational in early Q2 December FY19, but as previously advised, is now due to be completed in Q4 June FY19.
This delay has lowered expected full-year production to 235,000 – 240,000 ounces (down from a previous 245,000 – 255,000 ounces range) at an all-in sustaining cost (AISC) of $980 – $1,000 per ounce (up from $930 – $970 per ounce in initial guidance).
Management also said the production for FY20 will remain ventilation constrained until the additional ventilation from the Gwalia Extension Project is available (currently forecast in H2 FY20) and FY20 production is expected to come in at 200,000 – 220,000 ounces.
The revised cost information associated with the updated guidance is expected to be released in July 2019 with FY20 guidance and its Q4 June FY19 quarterly report.
With regards to its Simberi mine which has continued to perform in recent months, FY19 guidance has been increased to 130,000 – 135,000 ounces (previously 120,000 to 130,000 ounces) at an all-in sustaining cost (AISC) of $1,245 – $1,300 per ounce (previously $1,275 – $1,375 per ounce).
The Simberi mine announcement should offset some of the damage from the downgraded production guidance but ultimately the higher AISC is likely to see some early declines on the ASX this morning.
What were the results of the feasibility study?
St Barbara announced it had completed the feasibility study for the Gwalia Mass Extraction (GMX) project which indicated that an optimised trucking case is the preferred option compared to previously discussed hydraulic hoisting options.
Overall, the feasibility study found a number of issues including that the combination of higher development requirements and anticipated future orebody geometry doesn't consistently support the 1.4 million tonnes per annum (Mtpa) throughput on which the study was based.
The company also noted that continued trucking presented the highest net present value (NPV) of the three haulage methods considered as part of the study.
Is St Barbara a Buy?
The St Barbara share price is marginally down so far this year at $4.65 per share in line with fellow Aussie gold miner Northern Star Resources Ltd (ASX: NST).
Meanwhile, its larger rival Newcrest Mining Limited (ASX: NCM) has seen its share price rocket 18% higher on strong quarterly production figures and a new joint venture with Greatland Gold announced last week.
I'm not looking for gold exposure in my portfolio but I do think the ASX gold miners can provide a good defensive position and the potential to capitalise on the inflation-hedging properties of gold.
For those Fools who are feeling a little more speculative, I'd suggest checking out these top growth shares to find the next hot stock.
