St Barbara share price on watch as profit slumps 24% lower

The St Barbara Ltd (ASX: SBM) share price is one to watch as underlying earnings surged thanks to strong production and gold prices.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The St Barbara Ltd (ASX: SBM) share price is one to watch this morning as the Aussie gold miner reported a 24% drop in underlying net profit after tax (NPAT).

Why is the St Barbara share price on watch?

St Barbara reported total gold production up 5.4% to 381,887 ounces at an all-in sustaining cost (AISC) of $1,369 per ounce, up 26.8% from the year prior.

The Aussie gold miner sold 381,105 ounces of gold at an average realised price of $2,123 per ounce, generating sales revenue of $827.7 million.

Lower output from the group's Leonara and Simberi operations were offset by strong production from St Barbara's Atlantic Gold acquisition.

This comes as global gold prices continue to surge to new record highs amid the uncertainty created by the coronavirus pandemic.

Gross profit and earnings before interest, tax, depreciation and amortisation (EBITDA) both jumped 26.1% higher to $442.9 million and $415.7 million, respectively.

However, a significant increase in depreciation and amortisation expenses affected the company's bottom line, resulting in underlying NPAT of $108.5 million.

Cash contribution from operations totalled $273.2 million with net operating cash flow climbing 16.1% to $279.5 million.

The St Barbara share price has been rocketing higher this year and is up 24.2% prior to this morning's open. The group's FY20 return on equity came in at 10% with a 7% yearly change in closing share price.

The Aussie miner reported a $98 million net cash position as at 30 June 2020. That comprises cash and term deposits of $450.5 million offset by $307 million of debt.

Dividend

All eyes will be on the St Barbara share price this morning as management announced a 4 cents per share (cps) final dividend.

Including the 4 cps interim dividend, St Barbara will pay out a full-year dividend of 8 cps. Based on Friday's closing price of $3.39 per share, that translates to a dividend yield of 2.4% per annum.

Outlook

Unlike many ASX companies this earnings season, St Barbara did provide FY21 guidance.

The Aussie gold miner expects gold production of 370,000 to 410,000 ounces this financial year. St Barbara is forecasting an AISC of $1,360 to $1,510 per ounce for those production levels.

Sustaining capital expenditure of $97 million to $115 million is expected with growth capital of $49 million to $57 million. Management is expecting exploration expenditure of between $30 million to $35 million.

COVID-19 continues to present challenges with St Barbara citing a focus on liquidity and capital management in the short-term.

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Gold

Gold bars and Australian dollar notes.
Gold

Down 21% in a month, should you buy Newmont shares before they trade ex-dividend?

This gold stock has been battered by the markets.

Read more »

A man slumps crankily over his morning coffee as it pours with rain outside.
Gold

Why is this ASX 300 stock crashing 32% on Monday?

Let's find out why investors are hitting the panic button this morning.

Read more »

A few gold nullets sit on an old-fashioned gold scale representing ASX gold shares
Gold

Are ASX gold shares still worth buying after the US election?

We discuss some expert opinions on where gold is heading to next.

Read more »

Gold nugget with a red arrow going down.
Gold

ASX 200 gold shares dive on US election result

Gold shares are going wild this Thursday.

Read more »

Calculator and gold bars on Australian dollars, symbolising dividends.
Gold

2 of the best ASX gold stocks you could buy now

Bell Potter is bullish on these gold stocks. Let's find out why.

Read more »

A man slumps crankily over his morning coffee as it pours with rain outside.
Gold

Why is this ASX gold share crashing 22% today?

Let's find out why this gold miner is down in the dumps on Tuesday.

Read more »

Gold bars with a share price chart in the background.
Gold

Why ASX 200 gold stocks look 'undervalued' heading into 2025

The ASX Gold Index is up 37% in a year, but gold stocks are still looking undervalued.

Read more »

A mining executive from Red Dirt Metals chats on her mobile phone looking pleased with a mining site and mining truck in the background
Gold

Which soaring ASX gold share now has $200 million more financial firepower?

Funds will be used to expand operations.

Read more »