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St Barbara share price tumbles lower on Q4 update and FY 2021 guidance

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The St Barbara Ltd (ASX: SBM) share price has come under pressure following the release of its fourth quarter update.

The gold miner’s shares are down 2.5% to $3.70 at the time of writing.

How did St Barbara perform in the fourth quarter?

During the fourth quarter of FY 2020, St Barbara delivered an 18.6% quarter on quarter increase in gold production to 108,612 ounces. This was achieved at an all-in sustaining cost (AISC) of A$1,301 per ounce, which was a reduction from A$1,405 per ounce during the third quarter.

This led to the gold miner reporting a big lift in its quarterly operational cash contribution to A$126 million, up from A$86 million in the third quarter.

As a result of this strong finish to the financial year, St Barbara’s full year consolidated gold production came to 381,887 ounces. This was in line with its guidance of 370,000 to 400,000 ounces.

Also in line with guidance was its costs. St Barbara reported an AISC of A$1,369 per ounce in FY 2020, compared to its guidance range of A$1,330 to A$1,420 per ounce.

And with an average realised gold price of A$2,127 per ounce for FY 2020 (up 20.7% from A$1,762 in FY 2019), St Barbara’s cash balance is growing nicely.

At the end of the financial year the company had cash at the bank and term deposits of A$405 million. Total debt stood at A$316 million, with A$200 million to be repaid at the end of July.

What to expect in FY 2021.

Management expects its FY 2021 production to be broadly in line with what it achieved in FY 2020.

It has provided consolidated gold production guidance of between 370,000 to 410,000 ounces with an AISC of between A$1,360 and A$1,510 per ounce.

It also revealed that its sustaining capex is expected to be between A$97 million and A$115 million, with growth capex of between A$49 million and A$57 million. It also intends to spend between A$30 million and A$35 million on exploration activities.

St Barbara’s Managing Director and CEO, Craig Jetson, notes that FY 2021 will be an important year for the company.

He explained: “The year ahead is an important one for our business. Our mature operations, Leonora and Simberi, are entering new phases and Atlantic Gold has a strong project pipeline that we intend to realise.”

“We are reviewing our operating model to improve productivity and margins, supported by an enhanced technical expertise. For us, that means being in command of our value chain, optimising operations and, all the while, prioritising safety and ensuring the wellbeing of our people and communities.”

The chief executive also revealed that it is looking at expansion projects and acquisition opportunities.

“We will improve our business and how we work so we can embark on our growth agenda. This includes delivering on current brownfield expansion projects, maintaining a prospective exploration pipeline and identifying suitable assets for future acquisition where it adds shareholder value,” he concluded.

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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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