St Barbara promises big shake-up aimed at golden future
St Barbara Limited managing director Craig Jetson has promised sweeping changes to the way the company operates as the gold miner looks to a future.
Even with the gold price hitting record, St Barbara’s net profit after tax fell to $128.2 million in 2019-20, down more than 11 per cent from $144.2 million last year.
The slump in profit was despite a 26 per cent jump in revenue to $830.1 million, cash flow increasing by 16 per cent to $280 million and EBITDA improving 23 per cent to $339 million.
It came as St Barbara grappled with higher costs at its ageing mines and delays in a crucial ventilation project.
Mr Jetson, who took the reins from former managing director Bob Vassie in February, said the strong cash flow had put the company in a sound position to pursue its growth plans.
St Barbara has completed an extension project at its Gwalia mine in Western Australia and integrated the Atlantic Gold operations in Canada it acquired in a $768 million deal finalised in July last year.
With that out of the way, Mr Jetson said St Barbara was “embarking on an integrated company-wide transformation project encompassing all aspects of our operations and capital projects”.
Greater focus would benefit the Atlantic Gold project suite and the Simberi sulphide project at operations in Papua New Guinea.
“A renewed operating model will prioritise technical expertise and embed business performance, to drive productivity improvements and cost reductions across our business,” he said. “With strong gold prices and a positive market outlook, we are committed to positioning our business to capitalise on these conditions.”
In a note to clients, RBC analysts said that despite higher gold prices, St Barbara’s earnings were flat as higher revenue was offset by increased costs and higher depreciation and amortisation.
RBC said the result underlined the necessity of the reinvestment phase the company was going through given the age of the Gwalia and Simberi mines.
St Barbara’s consolidated all-in sustaining costs (AISC) hit $1369 an ounce in 2020-21, up from $1080 an ounce last year.
The company said the AISC increase reflected lower production and higher operating costs at Gwalia and Simberi combined with a jump in sustaining capital expenditure at Gwalia.
On the bright side, the Atlantic Gold operations recorded AISC of $928 an ounce and added $122.3 million to total net cash contributions of $273.2 million across all mines. St Barbara produced 381,887 ounces of gold, up from 362,346 ounces last year, despite lower production from Gwalia and Simberi. The Atlantic Gold operations at Moose River in Nova Scotia contributed 106,663 ounces from the date of acquisition.
The company maintained fiscal 2021 production guidance of 370,000-410,000 ounces at AISC of $1360-1510 an ounce.
Gwalia was originally expected to produce as much as 210,000 ounces in fiscal 2020 but that was downgraded after delays in work to improve ventilation.
The mine, at Leonora in WA, ended up producing 171,000 ounces and is forecast to produce 175,000-190,000 ounces in 2020-21 after a strong June quarter.