St Barbara share price slides on 70% profit slash

The gold miner posted its FY22 results today.

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Key points

  • The St Barbara share price is trading lower today after the company posted its earnings results
  • The gold miner noted its earnings were affected by COVID-19 and it realised lower production volumes
  • Overall gold production volumes are tracked to be slightly higher in FY23

The St Barbara Ltd (ASX: SBM) share price is in the red this morning, down 2.46% in early trade after the company posted a largely negative earnings card for FY22.

Shares in the gold exploration company are trading for 89.3 cents each at the time of writing. Yesterday, they closed for 91.5 cents each.

Let's go over the report's highlights.

What did St Barbara report?

The company advised its net profit after tax was lower due to lower volumes realised from its Simberi and Atlantic gold mines and higher operating costs. A significant after-tax impairment was also recorded for its Atlantic gold unit with a value of $158,715.000.

Group gold production fell overall for FY22 to 280,746 ounces of gold, down 14.31% yoy.

St Barbara also said it was materially affected by COVID-19, which caused labour shortages and operational disruptions. A particular outbreak in Papua New Guinea impacted its Simberi mine operations in Q2FY22, which the company said severely affected its production in Q3FY22.

What else happened in FY22?

Throughout FY22, St Barbara made several acquisitions. The company bought Bardoc Gold Limited near Kalgoorlie in Western Australia to access the Zoroastrian and Aphrodite underground gold deposits, which is planned to increase its total group production of gold by 3 million ounces.

St Barbara also purchased NS Gold Corporation to access high-yielding gold prospecting locations in Nova Scotia, Canada.

Cash on the company's balance sheet also shrank during the reported period to $98,512,000, down 26.13% from the prior year. The cash burn was primarily attributed to the halt of production of its Simberi mine and through the acquisitions of NS Gold Corporation.

What's next?

St Barbara provided its outlook for FY23.

It expects gold production to fall between 280,000 to 315,000 ounces, with all-in-sustaining cost per ounce to be between $2,050 per ounce to $2,150 per ounce.

The company also predicted capital expenditure to be between $75 million and $95 million, with growth capital anticipated between $95 million to $120 million.

Finally, its exploration expenditure is tracked to be between $19 million and $28 million.

St Barbara share price snapshot

The St Barbara share price is down 36.8% year to date. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is down 7.79% over the same period.

The company's market capitalisation is around $726.20 million based on the current price.

Motley Fool contributor Matthew Farley has no position 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 Scott Phillips.

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