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St Barbara share price sinks lower on production guidance downgrade

The St Barbara Ltd (ASX: SBM) share price has sunk lower after it provided an update on its FY 2020 guidance.

At the time of writing the gold miner’s shares are down almost 5% to $2.65.

What was in St Barbara’s update?

According to the release, after completing its regular quarterly operational reforecast at Gwalia, its near-term production expectations have been revised.

The release explains that while the remaining Gwalia Extension Project (GEP) construction and raiseboring program is nearing completion, it is currently competing for constrained ventilation with scheduled production and development activities.

This has negatively impacted production and led to a downgrade to its guidance. Gold production for Gwalia is now expected in the range of 175,000 and 190,000 ounces, down from 200,000 to 210,000 ounces.

Unfortunately, the lower production means an increase in costs per ounce. Gwalia’s all-in sustaining cost (AISC) has been lifted to between A$1,390 and A$1,450 per ounce, from A$1,230 to A$1,290 per ounce.

Furthermore, sustaining capex is now forecast to be between A$60 million and A$65 million and growth capex is estimated to be A$32 million to A$38 million. This is up from A$55 to A$65 million and A$30 to A$35 million, respectively.

Atlantic Gold guidance.

Management took this opportunity to provide its first production guidance for the recently acquired Atlantic Gold business.

For FY 2020, Atlantic Gold is forecast to produce between 95,000 and 105,000 ounces of gold. This is expected to be achieved at an AISC of between A$900 and A$955 per ounce.

Its sustaining capex is forecast to be between A$13 million and A$17 million, whereas exploration is expected in the range of between A$11 million and A$13 million.

Finally, no changes have been made to the guidance of its Simberi operation. Its first quarter production and costs have been in line with expectations.

Elsewhere in the industry, the shares of Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) have both edged lower this morning following a mixed night of trade for the gold price.

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Motley Fool contributor James Mickleboro 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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