Why the St Barbara (ASX:SBM) share price will be on watch today

The St Barbara Ltd (ASX: SBM) share price will be on watch this morning following the appointment of an underground mining services contract.

| More on:
ASX share price on watch represented by man looking through magnifying glass

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The St Barbara Ltd (ASX: SBM) share price will be on watch this morning following the appointment of an underground mining services contract. It could be a positive day for the company, especially as the gold spot price rose 0.77% higher overnight to US$1,738.17 an ounce.

At market close yesterday, the gold miner's shares finished the day down 2.2% to $1.985. Let's take a look at the announcement and what it might mean for the St Barbara share price.

Contractor agreement

The St Barbara share price could be on the move following the company's latest announcement.

According to this morning's release, St Barbara advised that it has selected Macmahon Holdings Limited(ASX: MAH) as its underground mining contractor at the Gwalia mine at Leonora Operations in Western Australia. This new deal replaces outgoing internationally renowned underground mining specialist, Byrnecut, who ran operations for 7 years.

St Barbara stated that Macmahon brings a fresh perspective to further develop the Gwalia mine. It is projected that mining performance and productivity will improve. This will be due to operating costs being driven down. St Barbara says that the change fits in with its 'Building Brilliance' transformation strategy.

The initial contract will run for a period of 5 years. An option to renew the agreement for another 3 years will also be available.

Both St Barbara and Macmahon are expected to formally sign the underground mining deal this month.

Quick take on the Gwalia mine

Acquired in 2005, Gwalia is Australia's deepest gold mine, holding 2.1 million ounces of gold in reserves. So far, St Barbara has extracted more than 4 million tonnes from open cut and underground operations.

St Barbara Management commentary

Managing director and CEO Craig Jetson welcomed its new partner, saying:

St Barbara is delighted to appoint Macmahon as a key partner in our commitment to instill a performance-led-culture at Gwalia.

This change is indicative of St Barbara's determination to enliven Gwalia's future, to safely and sustainably rebuild operational performance and to secure future investment by delivering predictable and strong financial returns.

We would like to thank Byrnecut for their service over the past seven years and look forward to an orderly and effective transition. During the handover period management will be focused on the well- being of our people and continuity of operations.

St Barbara share price review

The St Barbara share price has lost around 20% over the past 12 months. Although most of the fall could be attributed to this year's steep spot gold price decline. The company's shares are not too far off from their March 2020 lows of $1.615.

Based on the current share price, St Barbara has a market capitalisation of roughly $1.4 billion.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

A man and a woman sit in front of a laptop looking fascinated and captivated.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a volatile, but positive, day for ASX shares this Thursday.

Read more »

A cloud with a blue arrow pointing upwards through its middle symbolising a rising asx share price
Record Highs

Xero and 2 other ASX tech shares cracking all-time highs on Thursday

The price peaks follow a significant lift in the NASDAQ overnight following Republican Donald Trump's US election victory.

Read more »

A US flag behind a graph, indicating investment in US shares
Share Market News

What the US election outcome means for ASX shares

ASX shares are having a mixed reaction to the US election results today.

Read more »

Excited group of friends sitting on sofa watching sports on TV and celebrating.
Share Gainers

Why Block, GQG, Neuren, and Sigma shares are racing higher today

These shares are rising on Thursday. But why?

Read more »

A woman with short brown hair and wearing a yellow top looks at the camera with a puzzled and shocked look on her face as the Westpac share price goes down for no reason today
Share Fallers

Why Clearview, NAB, Resolute Mining, and Westpac shares are dropping today

These shares are under pressure today. But why?

Read more »

A young man talks tech on his phone while looking at a laptop. A financial graph is superimposed across the image.
Share Market News

Appen share price lifts 5% on oversubscribed SPP results

The technology company has announced the results of its Share Purchase Plan.

Read more »

A man looking at his laptop and thinking.
Bank Shares

Why is the Bendigo Bank share price tanking today?

There are a few things that could be driving this bank lower today.

Read more »

Male building supervisor wearing high vis vest and hard hat stands and smiles with his arms crossed at a building site
Broker Notes

1 ASX 300 stock just upgraded by brokers (and 2 downgraded)

Here's the latest ratings changes.

Read more »