Shares in gold miner St Barbara Ltd (ASX: SBM) have fallen nearly 7% following the release of updated production and cost guidance.
About St Barbara
St Barbara is a gold producer and explorer with 3 main assets; the Gwalia mine in Western Australia, the Simberi mine in Papua New Guinea and the recently acquired Atlantic Gold operations in Canada.
Production & Cost Guidance
In today’s update, St Barbara revised its production and cost guidance for FY20, with near-term production expectations for the Gwalia mine being revised as follows:
- Gold production to be between 175,000 and 190,000 ounces (previously 200,000 to 210,000 ounces)
- All-In Sustaining Costs (AISC) between $1,390 and $1,450 per ounce (previously $1,230 to $1,290 per ounce).
- Sustaining capital expenditure (capex) is forecast to be between $60 to $65 million (previously $55 to $65 million),
- Growth capex between $32 to $38 million (previously $30 to $35 million).
To summarise, costs up will be up and production will be down for the Gwalia mine.
On the positive, St Barbara has provided guidance for Atlantic Gold for the first time, which is:
- Forecast to produce between 95,000 and 105,000 ounces
- AISC between $900 and $955 per ounce
- Sustaining capex of between $13 to $17 million, and
- Exploration spend of between $11 and $13 million
Production and cost guidance for the Simberi mine remains unchanged.
Summary
It’s been a tough 2019 for St Barbara shareholders. In February, the share price hit $5 per share, but has since declined almost 50% to the current price of $2.60 per share.
However, if you take five year view, it’s been an incredible ride for shareholders with shares up over 1600%.
This shows the inherent volatility (and opportunity) with shares in gold miners and explorers. Depending on when you bought, you may or may not have done well.
It’s been a horrid week for gold mining shares, with fellow gold company Northern Star Resources Ltd (ASX: NST)
If that sort of ride is not for you, you may prefer to look at the three proven, dividend-paying companies discussed in the free report below.
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At the time of writing David does not have a financial interest in any of the companies mentioned.
