Profits down: St Barbara (ASX:SBM) share price slides 5% on half-year results

What did this ASX gold miner report today?

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Key points

  • The St Barbara share price is in the red today 
  • The gold miner reported a 63% drop in underlying profit in its half-yearly earnings results
  • The company will not be paying an interim dividend.

The St Barbara Ltd (ASX: SBM) share price is in the red today on the back of the company's half-year results.

At the time of writing, St Barbara shares are swapping hands at $1.39 apiece, a 3.33% fall, after the share price dropped as low as $1.34 earlier in the session. In comparison, the S&P/ASX 200 Index (ASX: XJO) is down 0.33%.

Let's take a look at what the gold miner reported today.

St Barbara share price drops

Highlights of the company's half-year (H1 FY22) results include:

What else happened in the half?

The company's underlying profit dropped 63% from $39.9 million in the first half of FY21 to $15.1 million. This was due to a drop in contribution from the company's Simberi and Atlantic operations. However, this was partly offset by a higher contribution from its Leonora operations.

Gold production fell 18% compared to the first half of 2021, while the AISC also fell 4%. Partially offsetting this decline in production was a boost in the realised gold price. This jumped by 13% to $2,417 per ounce.

The board has decided not to pay an interim dividend due to the operational issues at the Simberi mine in Papua New Guinea.

Gold production at Simberi is not achieving its target rates and there is still uncertainty as to when the mine will return to full workforce participation. This is due to high COVID-19 infection rates.

As the company reported on 18 February, there were 139 active cases among the mine's 600 strong workforce.

Nonetheless, the company reported cash contributions from its operations of $41.583 million.

In December, St Barbara revealed plans to acquire Bardoc Gold Ltd (ASX: BDC) for $157 million. If approved, this will provide St Barbara with access to advanced Aphrodite and Zoroastrian underground deposits.

Management commentary

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

I'm pleased to present St Barbara's strong results, which we've achieved in spite of several enduring headwinds, including those brought on by the COVID-19 pandemic.

We now have all three assets in operation, are well progressed in the scheme of arrangement with Bardoc Gold and are laser focused on delivering to our upcoming pre-feasibility and feasibility study milestones.

As we continue to execute the province plans put in place in late 2020 delivery of these plans underpins our new aspiration of annual gold production of 600 thousand ounces (koz) per annum with ten years of life – a real differentiator in the market.

What's next for St Barbara?

As Jetson outlined, St Barbara has aspirations to produce 600 koz of gold annually from its mining operations.

This includes 270 koz at its St Leonora operations once its proposed 2.1 million tonnes per annum processing facility is installed and 180 koz from its Simberi operations once it has completed its sulphides project.

St Barbara also has a plan to produce 150 koz from its Atlantic operations once production comes online at Beaver Dam, Fifteen Mile Stream, and Cochrane Hill.

The company said it has business continuity plans in place to reduce COVID-19 disruptions at all of these operations.

St Barbara hopes to achieve shareholder approval of the Bardoc Gold acquisition before the end of the financial year. A meeting of Bardoc shareholders is planned for 30 March 2022.

According to the company's report, the board will reassess whether it pays a final dividend at the end of FY22.

St Barbara share price summary

The St Barbara share price has dived 35% in the past 12 months while it is down around 5% year to date.

For perspective, the benchmark ASX index has returned around 5% over the past year.

St Barbara has a market capitalisation of about $989 million based on today's share price.

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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