St Barbara Raises A$100M to Fast-Track Simberi Sulphides; Q2 Gold Output Misses Targets

Capital Raise and Project Acceleration

St Barbara has successfully completed a A$100 million institutional placement aimed at expediting the first production from its Simberi Sulphides Expansion project by up to five months. This capital injection is being deployed to procure long lead-time equipment, including a new 5.8MW ball mill and infrastructure upgrades such as an expanded wharf and a new Run-of-Mine pad. The company is currently tendering for these critical components, with orders expected imminently.

The Mining Lease early renewal application for Simberi has been accepted by Papua New Guinea’s Mineral Resources Authority, with government backing confirmed and a Warden Court hearing scheduled for April 2025. Additionally, St Barbara has signed a Memorandum of Understanding with Kumul Mineral Holdings Limited to negotiate a joint venture sale of up to 20% in the Simberi Mining Lease and exploration licenses, reflecting strategic partnerships to advance the project.

Operational Challenges and Production Outlook

Despite these positive developments, St Barbara’s Q2 FY25 gold production totaled 10,262 ounces, falling short of the 14,000 to 16,000-ounce guidance range. The shortfall was attributed to several operational factors: intermittent throughput restrictions in the SAG mill caused by oversize, more competent ore; ore dilution linked to dewatering challenges amid higher rainfall; and limited truck fleet availability due to chassis cracks requiring repairs.

Management has initiated an operational reset focused on reliability improvements and has invested in new equipment, including two excavators and an MMD Sizer crusher expected to be commissioned in early February 2025. These enhancements, combined with access to higher-grade ore in the second half of the year, underpin expectations for a significant production uplift and margin improvement in H2 FY25.

Exploration and Resource Development

Exploration efforts remain robust, with a 9,000-meter drilling program progressing ahead of schedule at Simberi. Notably, a new oxide gold discovery has been made between Pigibo North and Southwest Sorowar pits, with trench and diamond drill intercepts confirming near-surface mineralization. This discovery is being fast-tracked with grade control drilling underway, potentially adding valuable resources to the mine plan.

In Nova Scotia, Canada, St Barbara is advancing the Atlantic Projects, integrating the Cochrane Hill deposit with the 15-Mile and Beaver Dam projects. An updated pre-feasibility study indicates an 11-year mine life with average annual production of 74,000 ounces at a competitive cost. Renewable energy initiatives at the Touquoy mine site, including pumped hydro storage and solar power studies, are progressing, reflecting the company’s commitment to sustainable operations.

Financial Position and Outlook

St Barbara’s financial position remains strong, with total cash, bullion, and listed investments of A$249 million as of December 31, 2024, including A$90 million in restricted cash for reclamation bonds. The company carries no bank debt and has no hedging in place, providing flexibility to fund growth projects. Gold sales for the quarter amounted to 11,712 ounces at an average realised price of A$4,116 per ounce.

However, the company faces a significant tax assessment from the Papua New Guinea Internal Revenue Commission, asserting additional taxes and penalties totaling approximately A$210 million. St Barbara disputes this assessment and plans to appeal, highlighting a potential regulatory risk that investors will be watching closely.

Looking ahead, St Barbara maintains its FY25 gold production guidance of 65,000 to 75,000 ounces, albeit likely at the lower end, while focusing on delivering the Simberi Sulphides Expansion and operational improvements to drive future growth.