How Will St Barbara Navigate $52M Loss and $38M Atlantic Impairment in FY25?
St Barbara Limited reported a $52 million underlying loss for FY25, driven by investments in its Simberi Expansion Project and operational challenges. The company classified its Atlantic operations as discontinued, recognizing a $38 million impairment, while completing a $100 million capital raise to support growth.
- Underlying loss after tax of $52 million for FY25
- Simberi gold production at 51,168 ounces with elevated costs
- Atlantic operations classified as discontinued with $38 million impairment
- Completed $100 million capital raise to fund Simberi Expansion
- Material uncertainty noted over going concern due to funding and operational risks
Financial Overview and Operational Context
St Barbara Limited (ASX – SBM) closed FY25 with a net asset position of $374 million, including $67 million in unrestricted cash and $25 million in listed investments. Despite these resources, the company reported an underlying loss after tax of $52 million, reflecting the financial strain of advancing its growth projects and managing ongoing operational challenges.
The company’s EBITDA, excluding significant items, was negative $32 million, influenced by modest gross operating profits from its Simberi and Atlantic operations, offset by care and maintenance costs, corporate overheads, and exploration expenses. Simberi produced 51,168 ounces of gold at an all-in sustaining cost (AISC) of A$4,582 per ounce, higher than the previous year, driven by increased maintenance and mining contractor costs.
Strategic Focus on Simberi Expansion and Atlantic Divestment
St Barbara’s strategic priority remains the Simberi Expansion Project in Papua New Guinea (PNG), aiming to extend mine life and increase production beyond FY26. The company completed a pre-feasibility study confirming a life of mine plan exceeding 200,000 ounces per annum, supported by a 40% increase in proved and probable ore reserves to 2.8 million ounces. Early works, including plant upgrades and infrastructure expansion, are underway, supported by a successful $100 million institutional capital raise in late 2024.
Meanwhile, the Atlantic Gold operations in Nova Scotia, Canada, were classified as discontinued following the company’s announcement to separate these assets. This led to the recognition of a $38 million impairment charge, primarily related to updated valuations of land and exploration tenements. The divestment process is expected to complete in the first half of FY26, allowing St Barbara to concentrate capital and management efforts on Simberi.
Regulatory and Financial Risks
St Barbara faces ongoing regulatory challenges, notably a significant tax assessment from the PNG Internal Revenue Commission totaling approximately A$210 million. The company has formally objected to the assessment and has not recognised a liability pending resolution. This dispute, alongside permitting and environmental compliance complexities, particularly with the Touquoy mine closure in Nova Scotia, underscores the operational risks inherent in St Barbara’s international footprint.
The Board acknowledges a material uncertainty regarding the company’s ability to continue as a going concern, citing funding requirements for the Simberi Expansion and operational performance risks. However, directors remain confident that existing cash reserves, liquid assets, and flexibility in expenditure management will sustain operations for at least the next 12 months.
Executive Remuneration Aligned with Long-Term Value Creation
Executive remuneration for FY25 reflects the company’s transition to a project developer with a smaller production base. Remuneration packages are weighted towards at-risk incentives, including short-term incentives tied to project milestones and safety, and long-term incentives linked to absolute total shareholder return (ATSR). The FY23 long-term incentive plan saw only 10% vesting, reflecting challenges in meeting relative TSR and return on capital employed targets, though reserves replenishment exceeded expectations.
Looking ahead, the FY26 remuneration framework maintains this alignment, with modest increases in fixed remuneration and continued emphasis on performance-based rewards linked to project delivery and shareholder returns.
Bottom Line?
As St Barbara pushes forward with its Simberi Expansion and navigates regulatory and financial headwinds, investors will watch closely for progress on funding, project milestones, and the Atlantic divestment outcome.
Questions in the middle?
- How will the PNG tax dispute resolution impact St Barbara’s financial outlook and project timelines?
- What is the expected timeline and valuation outcome for the Atlantic operations divestment?
- Can Simberi Expansion achieve its production and cost targets amid operational and geopolitical risks?
