St Barbara (ASX: SBM) share price drops, maintains full-year guidance

The gold production company’s share price is falling this morning…

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The St Barbara Ltd (ASX: SBM) share price is lower in early trading as the gold exploration and production company released its Q1 FY22 earnings.

At last check, St Barbara shares were changing hands at $1.51 apiece, down 1.95% from the open.

St Barbara share price XXX as Q1 production slumps

St Barbara detailed several investment takeouts in its report, including:

  • Group gold production of 67,000 ounces, a 19% decrease from the previous quarter and 8% down year on year
  • Leonora gold production up 15% quarter-on-quarter to 51,757 ounces
  • Group All-In Sustaining Cost (AISC) 8% lower quarter on quarter at $1,492 per ounce
  • Aspiration for a new open pit at Trevor Bore by 2024
  • Drilling at the Trotsky prospect at its Simberi operations has identified additional oxide mineralisation
  • Syndicated financing agreement AUD$200 million and CAD$100 million extended to July 2025
  • Maintains full year gold production guidance in the range of 305,000 to 355,000 ounces.

What did St Barbara get up to in the first quarter?

Overall gold production for St Barbara came in 19% lower than the previous quarter and 8% down compared to the same time last year at 67,000 ounces.

Total gold sold was also lower this quarter with around 57,918 ounces recognised versus 95,535 ounces last quarter and around 66,000 ounces in Q1 last year.

However, the company did manage to secure a higher realised gold price of $2,408/oz on both the previous quarter and the same period in Q1 FY20.

A chunk of this sale price and volume was driven by the company fulfilling “9,000 ounces delivered to call options that matured in the quarter at a strike price of $2,213 per ounce”.

St Barbara also explained much of the drop in production this quarter came from its Simberi operations remaining offline while repairs continued on its deep-sea trailing placement (DSTP) pipeline.

It is expected to return online and into production by the end of the second quarter in FY22.

Whilst it experienced headwinds from its other sites, the company’s Leonora operations saw its gold production actually increase 15% quarter on quarter to 51,757 ounces.

The company also managed to secure a lower all-in sustaining cost (AISC) on its gold production of $1,492 per ounce, an 8% decrease from the prior quarter.

Furthermore, St Barbara left the quarter with $42 million on its balance sheet – down from $133 million in June. This followed a flurry of capital spending including net investments of $21 million and a dividend payout of $13 million.

Aside from this, drilling at the company’s Trotsky prospect at its Simberi site has “identified additional oxide material to extend the operating life before the conversion of the processing plant to sulphide treatment”.

What did management say?

Speaking on the announcement, St Barbara managing director and CEO Craig Jetson said:

Exploration at both Leonora and Simberi have yielded strong results in the last quarter demonstrating the upside in our brownfield portfolio. I have set the aspiration of a new open pit commencing operation at Trevor Bore in 2024. This is the first step in delivering on our Leonora Province Plan.

What’s next for St Barbara?

From the momentum sustained this quarter, the gold giant maintains its full-year production guidance of 305,000 to 355,000 ounces of gold.

St Barbara forecasts it can achieve this production at an AISC range of $1,710 to $1,860/oz.

The bulk of the company’s forecasts appear to be underlined by its Leonara operations where it models overall gold production of 180,000 to 200,000 ounces.

However, it also sees 60,000 to 70,000 ounces of gold coming from Simberi and 65,000 to 85,000 ounces from its Atlantic operations for FY22.

It has been a difficult year for the St Barbara share price, having posted a loss of 35% since January 1 and a 45% drop over the last 12 months.

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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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.

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