Simberi Expansion Targets 220koz Annual Gold from FY28 with US$235M Capital Spend

Simberi Expansion Project Overview

St Barbara Limited (ASX: SBM) has released a comprehensive update on its Simberi Expansion Project, confirming a 13-year Life of Mine Plan (LOMP) that forecasts total gold production of 2.2 million ounces from FY26 through FY38. The project anticipates a significant ramp-up in annual production, reaching approximately 90,000 ounces in FY27 and exceeding 220,000 ounces per annum from FY28 onwards.

The expansion involves a transition from processing oxide ore to fresh sulphide ore, necessitating a major upgrade to the processing plant. Key infrastructure developments include the installation of a new flotation circuit to produce saleable gold concentrates, a new 5.8MW ball mill, additional power generation capacity, a new wharf to accommodate larger concentrate shipment vessels, and an expanded camp to support increased workforce requirements.

Capital and Operating Cost Framework

The initial project capital expenditure is estimated at US$235 million (±20% accuracy), spread over FY26 to FY28, with an additional US$40-60 million allocated for pre-expansion growth capital covering early works such as camp upgrades, haul road construction, and installation of a reverse osmosis plant to improve water quality for processing reliability.

Operating costs are projected to decrease over the life of the project, with All-in Sustaining Costs (AISC) expected to fall to between US$1,200 and US$1,300 per ounce from FY29 to FY36, inclusive of an enhanced royalty package to landowners and communities. Mining rates are planned to increase to a maximum of 20.5 million tonnes per annum by FY28, supporting the higher throughput of sulphide ore.

Robust Project Economics Amid Market Assumptions

At a conservative gold price assumption of US$2,500 per ounce, the project delivers a post-tax Net Present Value (NPV) at an 8% discount rate of US$717 million and an Internal Rate of Return (IRR) of 62%, with a payback period of just 3.6 years. Sensitivity analyses indicate the project remains economically viable across a range of gold prices and cost variations, underscoring its resilience.

The updated Mineral Resource and Ore Reserve estimates underpinning the LOMP include 2.61 million ounces of gold in Ore Reserves (42% proved and 58% probable) and a first-ever Ore Reserve estimate for silver at 4.7 million ounces. These estimates exclude any exploration targets, highlighting the project's solid foundation based solely on current reserves.

Regulatory and Developmental Milestones

The Final Investment Decision (FID) is targeted for late Q2 or early Q3 FY26, a timeline now extended due to ongoing resolution of amended income tax and withholding tax assessments by Papua New Guinea authorities. While St Barbara maintains confidence in its tax position, the uncertainty complicates funding proposals and project scheduling.

Additionally, the company has lodged an early renewal application for the Mining Lease, currently expiring in 2028 but required to extend through the projected mine life to 2038. The recent Warden’s hearing was well attended and supported, with a recommendation expected soon from the Mining Advisory Council to the Mining Minister.

Operational and Technical Progress

Early works are advancing, including procurement of the new ball mill with shipment expected in January 2026, camp expansion with phased room handovers underway, and detailed design of the new haul road and sulphide processing circuit. Metallurgical testwork has improved sulphide gold recovery rates to 88.8%, enhancing revenue potential.

The project’s flotation circuit design and concentrate handling infrastructure are tailored to produce a high-quality gold concentrate averaging 19.3 grams per tonne, expected to be attractive in the Asian market. Power generation capacity will increase to 24MW to meet the higher energy demands of sulphide processing.

Risks and Considerations

St Barbara acknowledges several risks, notably sovereign and regulatory risks inherent in Papua New Guinea, including potential changes to mining legislation, royalty regimes, and foreign exchange controls. The timing and outcome of the tax assessment dispute and Mining Lease renewal are critical near-term uncertainties that could impact project financing and schedule.

Capital cost estimates carry a ±20% accuracy margin, with geotechnical uncertainties typical of island-based projects. Market conditions for concentrate sales, including refining charges and transport logistics, also present variable factors that require ongoing monitoring.