PRECIOUS METALS

Soft quarter for St Barbara

St Barbara shares dropped this morning after the company reported weak quarterly production figures

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While group production for the September quarter rose from 86,197 ounces of gold to 87,569oz, it included the addition of a third operation, Atlantic Gold in Nova Scotia, on July 19.

Production at Gwalia in Western Australia was particularly weak, dropping from 49,966oz to 38,153oz as grade fell from 9.9 grams per tonne gold to 7.4gpt gold.

"This result reflects ongoing management of competing activities (development, production, project activities) in a constrained ventilation environment whilst the Gwalia extension project (GEP) is nearing completion," St Barbara said.

"As forecast, lower grade stoping areas are currently being mined as part of the Gwalia centre-out mining sequence.

"The mine sequence is also in a generally lower grade area at the current depth and this combined with some dilution associated with overbreak on the last stope on the end of a level has resulted in an average grade milled for the quarter of 7.4gpt gold."

Full-year guidance for Gwalia is 200,000-210,000oz of gold, weighted to the second half as the company completes the GEP and paste aggregate fill (PAF).

St Barbara said the ventilation component of GEP remained on track to double ventilation rates in January 2020 with three shafts completed, and the pilot hole for the final underground raisebore vent shaft was nearing completion.

Installation of the associated cooling plant, vent fans and power station expansion are well advanced, and the crushing level for PAF has been fully commissioned and wet commissioning of the mixing and pumping levels is underway.

Atlantic produced 22,355oz for the full quarter, in line with June quarter production of 22,948oz.

A rise in milled grade from 1.16gpt gold to 1.29gpt offset power outages last month, caused by Hurricane Dorian, and maintenance of the detox tanks, which interrupted production for a week.

Guidance for Atlantic won't be announced until later this month but analysts have widely-ranging forecasts.

Canaccord Genuity analyst Reg Spencer forecasts full-year production of 99,000oz at all-in sustaining costs of A$736 an ounce, while RBC Capital Markets' Paul Hissey models 60,000oz at $650/oz.

In Papua New Guinea, Simberi production dropped from 36,231oz to 27,061oz as milled grade fell from 1.68gpt gold to 1.19gpt.

St Barbara described it as a solid performance and said the operation continued to perform very well.

At that rate, Simberi remains on track to meet the lower end of full-year guidance of 110,000-125,000oz.

St Barbara is expected to release its full quarterly results, with cost data and commentary, on October 16.

Shares in the company dropped 2.3% to $2.775, the lowest point since June.

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