By Darren Gray
Investors have bludgeoned $713 million off the value of gold miner St Barbara, after it released plans on how it intended to keep mining at its Gwalia mine in Western Australia that disappointed the market.
St Barbara said it had decided to continue using trucks to carry the ore mined from deep underground to the surface of its WA gold mine, in order to extend its life to 2031.
St Barbara also announced downward revisions to its Gwalia production guidance for fiscal 2019 to 235,000 to 240,000 ounces (previously 245,000 to 255,000 ounces). At the same time the company also lifted its Gwalia cost guidance for fiscal 2019 to between $980-1000 per ounce (previously $930-970 per ounce).
Shares in St Barbara dropped almost 30 per cent ($1.36) on Friday to close at $3.29, its lowest closing price since December 2017.
Chief executive Bob Vassie said trucking was a low capital, low risk solution and the best option. "It consumes significantly less capital while delivering greater operational certainty over the same life of mine."
Mr Vassie said the company studied the pumping options comprehensively, but decided to opt for trucks to extend the mine's life.
"The board's decided to stay trucking, and the market was really hoping for pumping. And that's caused the reaction," he said.
"We're making a lot of money at this mine, it generated operating cash flow of a quarter of a billion last financial year. So if you're doing so well you want to go longer. And our previous mine life had been only down to 2024. So we came up with a plan to mine longer and deeper," he said.
The Gwalia mine has a unique link to American history and politics, with the mine originally established back in 1897 by the engineer Herbert Hoover, who later became the president of the United States from 1929 to 1933.