The St Barbara Ltd (ASX: SBM) share price is having a tough start to the week.
In morning trade, the ASX gold stock is down 6.5% to 21.5 cents.
Image source: Getty Images
Why is this ASX gold stock sinking?
Investors have been selling the gold miner's shares following the release of an update on its production and cost guidance.
According to the release, St Barbara's Simberi operation did not achieve the targeted face positions in two of the key mining locations, which means that lower than anticipated average mined grades are expected for the second half.
In light of this, the ASX gold stock has revised its FY 2025 production and all-in sustaining cost (AISC) guidance for Simberi.
Production from Simberi for the second half is anticipated to be between 32,500 and 42,500 ounces at an AISC of between A$3,400 and A$3,800 per ounce. This will mean full year production of 55,000 to 65,000 ounces at an AISC of A$3,900 to A$4,200 per ounce.
This compares to the current gold spot price of A$4,641.17 and its previous guidance of 65,000 to 75,000 ounces at an AISC of A$3,200 to A$3,600 per ounce.
What happened?
The ASX gold stock advised that its Sizer crusher was commissioned successfully and together with SAG mill resets in January and February the availability and throughput has lifted substantially.
The two new excavators were also commissioned during February and additional Volvo AH60 articulated trucks have been sourced and due for arrival from March to further boost mine fleet capacity.
However, the average mined grade is expected to be lower than was being targeted as a result of face positions not being achieved in time in two of the key mining locations.
Though, these gold production figures do not include the ongoing gold recoveries from the decommissioning of the Touquoy processing plant in Nova Scotia, consistent with treatment in past quarters.
Commenting on the update, the ASX gold stock's managing director and CEO, Andrew Strelein, said:
We are pleased with the progressive improvements made over the last couple of months which are anticipated to translate into an improved June 2025 Half Year with gold production expected to be between 32,500 and 42,500 ounces at an AISC of $3,400 to $3,800 per ounce. However we were already trending to the low end of guidance after the December 2024 Half Year and therefore this lower average mined grade outlook will now leave us short of achieving our previous annual guidance and so this revision has been necessary.
Gold production is anticipated to be weighted more to the June quarter relative to the March quarter with the benefit of a full three months of benefit from the Sizer and improved SAG throughput and availability together with improving grades in the schedule.
