Cost hikes prompt St Barbara review

Shares in St Barbara have taken a dive as the gold producer weighs up the future of two of its operations, while announcing the closure of its Melbourne office. 

In a statement to the ASX, St Barbara told shareholders it had decided to start a strategic review of its stake in the Simberi gold operation in Papua New Guinea and push back a final investment decision on a planned sulphide expansion.

It referenced significant inflationary pressures as well as some project scope changes that had driven up costs compared to those calculated in the feasibility study.

St Barbara also revealed that a sale could be on the cards.

“St Barbara has received unsolicited enquiries from potential investors in Simberi and anticipates the Sulphide Expansion project to proceed either under St Barbara or different ownership,” St Barbara said.

A corporate restructure was also announced, where St Barbara said it would undertake a re-design of its operating model which would include merging its Perth and Melbourne office into one, closing the latter in due course.

St Barbara also signalled to permit challenges at its Atlantic operations, where it is currently seeking to convert the Touquoy mine into a tailings management facility as it approaches end of life.

Among them was a request for additional information from a government department in Nova Scotia “late in the process”  that St Barbara implied had set back its plans and placed “business continuity at risk.”

St Barbara has lodged an application for an interim mine solution while it responds to the query, but has said that it would need to put the operation under care and maintenance if approvals are not received in time.

The announcement follows rumours of a potential transaction between St Barbara and Raleigh Finlayson-led Genesis Minerals, though Genesis said there were no discussions occurring at that time. 

St Barbara shares were down 17 per cent to trade at 94 cents.