Gwalia ventilation issues stifle St Barbara
St Barbara has taken another hit as the gold miner again downgraded production forecasts at its flagship Gwalia mine.
Shares in gold miner St Barbara took another hit on Wednesday as the company again downgraded production forecasts and flagged further delays in completion of expansion work at its flagship Gwalia mine in Western Australia.
Shares in St Barbara fell 13c, or 4.4 per cent, after it said a project to deliver additional air ventilation to Gwalia was still behind schedule and cut another 5000- 10,000 ounces from its expected financial-year gold production.
Now at 2km below ground, Gwalia is Australia’s deepest underground gold mine and the $112m ventilation project is critical to extend its life. It was due to be completed early this year but St Barbara told shareholders on Wednesday it was still struggling to complete the last of four ventilation bores, which now would not be commissioned until April, meaning the company’s access to high-grade ore at the bottom of the mine has been limited.
Partial completion of the project meant Gwalia production lifted in the December quarter, from 38,153 ounces in the September period to 42,022 ounces.
But its ongoing struggle to complete the project has cut full-year expectations from the mine to 170,000-180,000 ounces, from previous guidance of 175,000-190,000 ounces.
The company entered the financial year flagging total annual Gwalia output of up to 210,000 ounces, but then cut back expectations in October, when problems with the ventilation project began to mount.
And St Barbara’s Gwalia woes were exacerbated by falling grades at its Simberi mine in Papua New Guinea, cutting about 4000 ounces from quarterly production, to 23,070 ounces.
St Barbara also slashed output guidance at the mine by 5000-10,000 ounces — taking its annual production forecast down to 370,000-400,000 ounces, from 380,000-420,000 ounces.
Only its newly acquired Canadian operation performed to expectations, delivering 22,355 ounces for the period.
St Barbara finished December with $79m in cash and bullion. It held debts — the legacy of its $768m takeover of Canada’s Atlantic gold — of $112m.
By contrast, fellow WA miners Regis Resources and Westgold lifted output for the quarter, with production at Regis operations up 3216 ounces to 90,849 ounces as the company maintained its full-year output expectations at 340,000-370,000 ounces.
Regis said its Duketon gold hub generated $100m in cash flow in the quarter, with the company sitting on a $168.8m war chest as it pushes on with the approval process for its McPhillamy’s mine in drought-hit NSW.
Despite a “catastrophic” failure at the mill at its Meekatharra gold project, putting it out of commission for 20 days, Westgold lifted production by 9 per cent for the period, to 62,655 ounces.
It banked $7m in net cash flow for the period on the back of the improved production, and is sitting on cash and equivalents of $89m, although that includes $37m worth of shares in other listed companies.
Regis shares gained 2c to close on Wednesday at $4.64, with Westgold down 2c to $2.32.