St Barbara Limited Revises FY24 Guidance Following Simberi Q4 Oxide Operations Update

By: PNG Business News June 03, 2024

St Barbara Limited has provided an important update on its gold production outlook from the Simberi Operations for Q4 June FY24. The Company has also revised its full-year production guidance due to ongoing challenges with equipment, fuel supplies, and air transport services resulting from inadequate availability of foreign currency affecting Simberi’s in-country supply chain.

Q4 June FY24 Production Impact

Initially, Simberi’s gold production for Q4 June FY24 was expected to exceed 20,000 ounces, thanks to anticipated access to a higher-than-average grade ore zone in the Sorowar pit. However, the critical Sorowar ore zone will not be accessible until Q1 September FY25. Consequently, the processing plant will be limited to more typical ore grades of approximately 1.0 g/t Au for June, reducing the expected production to around 14,000 ounces for Q4 June FY24.

This shortfall is primarily due to lower-than-targeted total mining movement volumes, attributed to poor excavator availability. These issues have delayed the targeted face position for accessing the higher-grade Sorowar ore zone.

Revised FY24 Guidance

As a result of these operational challenges, St Barbara has adjusted its full-year production and cost guidance for FY24. The revised production target is now set at 52,000 to 56,000 ounces, down from the previous range of 60,000 to 70,000 ounces. The All-In Sustaining Cost (AISC) has been revised to A$3,700 to A$3,900 per ounce, compared to the earlier estimate of A$3,200 to A$3,400 per ounce.

Equipment and Supply Chain Challenges

Total material movement has been significantly impacted by the availability of the excavator fleet, a problem that persisted through Q3 March FY24. Restoration of usual performance has been hindered by delays in the arrival of repair components, driven by the insufficiency and unpredictability of foreign currency for Simberi’s supply chain. St Barbara has attempted to mitigate these constraints by using alternative suppliers and procuring parts directly from overseas, but these measures have added to logistical timelines.

Additionally, the availability of foreign currency continues to affect diesel fuel and jet aviation fuel supplies in Papua New Guinea. While alternative diesel fuel supply arrangements have limited disruptions to mining operations and power generation, Simberi’s air transport services have faced significant additional costs due to curtailed domestic flights across PNG.

Fleet Enhancements and Future Planning

Despite the challenges, the excavator fleet has now returned to target availability. In response to the recent issues, St Barbara plans to expedite the acquisition of an additional excavator initially scheduled for FY26, aiming to mitigate future impacts from supply chain disruptions. The trucking fleet is also performing at target levels following recent supplements, with further enhancements expected from the arrival of two larger 60-tonne Volvo articulated dump trucks. These trucks will be trialed ahead of selecting the most suitable fleet for the proposed sulphides mining expansion from FY28.

The purchase of a skid-mounted sizer, suitable for both oxide and future sulphide ore, is progressing well. This unit is expected to enhance protection for the overland conveyor and grinding mills, thereby reducing vulnerability to downtime.

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