St Barbara Ltd (ASX: SBM) shares are edging lower today despite the company reporting its Simberi Sulphide Feasibility Study highlighted "a robust project with strong financial returns". At the time of writing, the St Barbara share price is trading 1.98% lower at $2.03.
St Barbara is a gold mining company with projects comprising Leonora in Western Australia, Simberi in Papua New Guinea and Atlantic in Canada. The majority of the company's revenue is generated by gold sales from its Gwalia underground mine at the Leonora project.
The company has a diversified asset portfolio consisting of both underground and open-cut mines and exploration projects.
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Feasibility study
St Barbara advised that it was "pleased to announce" the results of the Simberi Sulphide Feasibility Study today. It seems investors aren't quite as upbeat about the news, driving the St Barbara share price lower.
The company's board has approved pre-investment work of US$13 million in a new sulphide mine, with a final investment decision targeted for March 2022. Key changes from the 2020 pre-feasibility study (PFS) include an increase in nameplate capacity, with an option to expand supported by an improved all-in sustaining cost (AISC) of ~3%.
The pre-investment work will enable a ramp-up in mining, ongoing drilling to further increase ore body knowledge and studies to de-risk the project. Early construction activities will commence upon approval of the social and environmental impact statement (SEIS) which has been submitted this month.
Management comments
St Barbara CEO Craig Jetson commented that the sulphide project is on track for profitability, he said:
The future of the Simberi Sulphide Project has been endorsed by the Board, with a commitment to pre-investment work that will take place as we update mineral reserves, complete reserve definition with drilling and finalise all pre-investment activities. This vote of confidence in the Simberi Operations comes as we work closely with the PNG Government, agencies and community as part of our ongoing consultation and engagement.
This work is continuing despite the current challenges that COVID-19 presents in PNG and is a testament to the relationships we hold in PNG and the vision we have for the Simberi Operations.
St Barbara share price snapshot
The St Barbara share price has fallen by around 21% over the past 12 months and has lost almost half its value since late July 2020. It's also down 2.4% this week and 17.8% in 2021 so far. Based on the current share price, the company has a market capitalisation of around $1.45 billion.
