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St Barbara shares tank nearly 30% on Gwalia's lower guidance, expansion study

St Barbara Ltd.'s shares dropped nearly 30% in March 22 trading on the ASX after the company cut its fiscal 2019 gold output guidance for the Gwalia mine in Western Australia to between 235,000 and 240,000 ounces, from 245,000 to 255,000 ounces.

The company attributed the output reduction to a delay in the operations start of the mine's paste aggregate fill circuit from the December 2018 quarter to the June 2019 quarter.

All-in sustaining cost is now projected to come in higher, at between A$980 per ounce and A$1,000/oz, from a previous estimate ranging from A$930/oz to A$970/oz.

The Australia-listed miner reduced gold production guidance for Gwalia for 2020 to between 200,000 and 220,000 ounces as output will be constrained until the additional ventilation from the Gwalia extension project is available.

Results from an updated feasibility study for the Gwalia mass extraction project indicate that an optimized trucking case is the preferred option over hydraulic hoisting options. However, higher development requirements and revisions of the orebody geometry compared with the previous study resulted in a lower throughput rate of up to 1.1 million tonnes per annum, down from 1.4 mtpa.

The optimized trucking case presented the highest net present value but requires capital expenditure of about A$100 million over the life of mine, including about A$30 million for additional ventilation within the extension project. This would also have been required for the hydraulic hoisting options.

A revised mine plan will be implemented under the extension project, with a move to an island pillar method to suit the deepening underground mine and the nature of the unmined lodes.

The miner will continue investigating the option on multiple fronts, including optimizing the truck fleet, as well as the ventilation design.

Due to continued outperformance at the Simberi gold mine in Papua New Guinea, St Barbara has raised full-year 2019 production guidance to between 130,000 and 135,000 ounces, from 120,000 to 130,000 ounces, at reduced all-in sustaining costs of between A$1,245/oz and A$1,300/oz, compared with between A$1,275/oz and A$1,375/oz.