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St Barbara Ltd – Q1 September 2019 FY20 Report

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

St Barbara Ltd (ASX: SBM) is an Australian based gold producer and explorer. St Barbara’s assets include the Leonora Operations in Western Australia, the Simberi Operations in Papua New Guinea, and the Atlantic Gold Operations in Nova Scotia, Canada. St Barbara has a market capitalisation of A$1.7 billion.

St Barbara - Q1 september Report

Key developments from Q1 September 2019 quarter report

  • Consolidated gold production for Q1 September FY20 was 87,569 ounces, down 1.5% from the previous quarter. This includes 4,362 ounces produced by Atlantic Gold prior to St Barbara’s acquisition on 19 July 2019.
  • Consolidated All-In Sustaining Costs (AISC) for Q1 September FY20 was A$1,421 per ounce, up 16% from the previous quarter.
  • Gwalia gold production for Q1 September FY20 was 38,153 ounces, down 23% from the previous quarter.
  • Simberi gold production Q1 September FY20 was 27,061 ounces, down 25% from the previous quarter.
  • Atlantic gold production Q1 September FY20 was 22,355 ounces, in line with the previous quarter.

What were the drivers of this result?

Production was down at Gwalia due to the remaining Gwalia Extension Project (GEP) construction, and raise-boring program is competing for constrained ventilation with scheduled production and development activities.

Production was down at Simberi due to a focus on stripping campaigns at the new Botlu pit as well as extensions of the Sorowar pit, leading to a drawdown of lower grade stockpiles for processing and reduced mined grade.

What is the outlook for St Barbara?

St Barbara management announced that the Gwalia (Australia) gold production for  FY20  is revised to between  175,000  and  190,000  ounces  (previously  200,000  to  210,000  ounces),  with  All-In  Sustaining  Costs of between A$1,390  and  A$1,450 per ounce (previously A$1,230 to A$1,290 per ounce). Sustaining Capex is forecast to be between A$60 to A$65 million (previously A$55 to A$65 million), and growth Capex between A$32 to A$38 million (previously A$30 to A$35 million).

FY20 guidance for Atlantic Gold is forecast to produce between 95,000 and 105,000 ounces, at an ASIC of between A$900 and A$955 per ounce, with sustaining Capex of between A$13 to A$17 million, and exploration of between A$11 and A$13 million.

FY20 guidance for Simberi gold production is unchanged at between 110,000 and 125,000 ounces at an AISC of between A$1,285 and A$1,450 per ounce, with sustaining Capex of between A$4 million and A$5 million, plus growth Capex of between A$3million to A$4 million.

FY20 guidance for Atlantic gold production is between 95,000 and 105,000 ounces at an AISC of between A$900 and A$955 per ounce, with sustaining Capex of between A$13 andA$17 million. Growth Capex will be advised in Q2 December FY20.

An important point to note is that the spot price of gold has slightly dropped in the last few weeks. This is in light of a potential new US-China trade deal (11 October Trump announced that China and the US had reached a tentative agreement for the first phase of a trade deal) and a new potential Brexit deal. If these deals are reached, global economic and political concerns may ease, causing gold to not be as favourable, as it has been in the last number of months.

What is the market reaction?

The initial market reaction to St Barbara Q1 FY20 report is slightly positive. St Barbara share price is up around 2 per cent and is currently trading at around A$2.58 (11.15 am, 21 October). St Barbara has a P/E ratio in the low-teens and an annual dividend yield of 1.5 per cent (fully franked).

 


 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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