St Barbara shares drop on Gwalia downgrade

St Barbara was the biggest loser on ASX 200 this morning, after it lowered production guidance at its Gwalia gold mine in Western Australia.

The company said extension works at its Gwalia project required ventilation, which put constraints on scheduled production and development activities.

St Barbara subsequently lowered its 2020 financial year gold production for Gwalia from between 200,000 ounces and 210,000oz, to 175,000oz and 190,000oz.

The all-in sustaining-cost guidance at Gwalia also increased from between $1,230/oz and $1,290/oz, to between $1,390/oz and $1,450/oz.

Shares in St Barbara were down 8.5 per cent to trade at $2.54 each at 2.15pm AEST.

The company said the ventilation constraints would be resolved by the third quarter of the financial year.

“The investment in the Gwalia extension project has been fundamental to extending Gwalia’s mine life to 2031,” St Barbara stated.

“The Gwalia extension project will approximately double the underground ventilation, and activities themselves will no longer compete for resources, enabling increased development and production.”

The Gwalia project is located near Leonora.

St Barbara’s financial year production and cost guidance at its operations in Papua New Guinea and Canada remained unchanged.