St Barbara (ASX:SBM) - Managing Director & CEO, Craig Jetson
Managing Director & CEO, Craig Jetson
Source: The Mining Journal
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  • St Barbara (SBM) has cut its 2021 production guidance as the timing of a transition to its new contractor Macmahon (MAH) falls “well below expectations”
  • In March, Macmahon was selected to provide all underground mining services to the Gwalia Project in Western Australia
  • However, the transition has been slower than expected and has driven a shortfall in personnel
  • All up, total production for 2021 has been dropped from between 370,000 and 380,000 ounces to between 330,000 and 360,000 ounces
  • Meanwhile, all-in sustaining costs are expected to jump from between $1440 and $1520 per ounce to between $1547 and $1695 per ounce
  • Shares in St Barbara have fallen 9.15 per cent this morning to $1.86
  • Macmahon’s shares have also fell by a slight 1.28 per cent to trade at 19.3 cents

St Barbara (SBM) has cut its 2021 production guidance as the timing of a transition to its new contractor Macmahon (MAH) falls “well below expectations.”

In March, Macmahon was selected to provide all underground mining services to the Gwalia Project in Western Australia, starting from May 5. St Barbara said the transition was a key initiative for its broader Leonora Operations that would deliver “a compelling business case for the future of Gwalia.”

However, the shift has been slower than predicted.

“The recruitment of critical roles and experienced operators by Macmahon has been well below expectations, with the resultant shortfall in personnel a further factor in this guidance change,” St Barbara said in a statement this morning.

“While St Barbara continues to work with Macmahon, WA- based workforce availability has ultimately impacted the planned mine schedule and has led to the deferral of mined ore tonnages from FY21 into FY22.”

As a result, production at Leonora has been cut from 175,000 ounces to between 150,000 and 160,000 ounces. That, in turn, has driven an increase in estimated all-in sustaining costs (AISC) from between $1590 and $1630 per ounce to between $1815 and $1950 per ounce.

St Barbara also noted this morning that its Simberi Operations in Papua New Guinea are likely to take a hit.

In addition to a reduced workforce due to COVID-19 restrictions, mining activities have been held back by ore variability — the result of low mining rates not achieving planned face positions, which has thereby affected gold recovery.

St Barbara has previously targeted 2021 production of 95,000 ounces, but overall output has since been cut to between 80,000 and 90,000 ounces. Likewise, anticipated AISC have jumped from between $1720 and $1810 per ounce to between $1790 and $2030 per ounce.

The only region to maintain its guidance is the company’s Atlantic Operations in Nova Scotia, which remains on track to produce between 100,000 and 110,000 ounces with AISC at between $958 and $1050 per ounce.

All up, St Barbara’s total production for 2021 has been dropped from between 370,000 and 380,000 ounces to between 330,000 and 360,000 ounces, while AISC are expected to jump from between $1440 and $1520 per ounce to between $1547 and $1695 per ounce.

Shares in St Barbara have fallen 9.15 per cent this morning to $1.86 at 11:13 am AEST.

Macmahon’s shares have also fell by a slight 1.28 per cent to trade at 19.3 cents at 11:14 am AEST.

SBM by the numbers
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