St Barbara shares plunge 30% on mine troubles

Shares in St Barbara have fallen 30 per cent after the company said gold would continue to be extracted from its flagship Gwalia project via trucking, after a study found other methods unsuited to the underground mine.

In a statement, St Barbara said it conducted a mass extraction feasibility study to assess two hydraulic hoisting options for haulage of its production, instead of its current method of trucking, but concluded that neither of the two alternative options would be feasible.  

St Barbara chief executive Bob Vassie said the company vigorously pursued the hydraulic options, which would extend the ore body that could be mined.

“But the geometry of the gold ore didn't support pumping at scale, and there were also ventilation issues,” he said.

“The ventilation issues associated with the pumping options that contributed to significantly higher capex required for the pumping alternatives.”

Instead, the gold miner will instead spend $100 million on the installation of additional ventilation and cooling at the mine, which would eventually extend mining to 2.3 kilometres down.

The company also said production at Gwalia for this financial year was now forecast to be lower. Its paste aggregate fill circuit, originally anticipated to be operational by the second quarter of this financial year, was now expected to be running by the end of the financial year, St Barbara said.

The production at the mine, which is located near Leonora in the northern Goldfields, was previously anticipated to be between 235,000 and 240,000 ounces, down from between 245,000 and 255,000oz.

Gwalia’s all-in sustaining costs also increased, from $930-970/oz to $980-$1,000/oz for the same period.

The company said production would continue to be constrained by the ventilation issues until the second half of next financial year.  

According to BNIQ data, St Barbara is the ninth largest gold miner in WA in terms of gold production in the state, with its Gwalia mine producing 268,000oz last financial year.

Opened in 1896, Gwalia is Australia's deepest gold mine, and was once managed by Herbert Hoover, who later became the 31st president of the US.

Shares in St Barbara, were down 30 per cent to trade at $3.26 at 1.40pm AEDT.