St Barbara’s Simberi exit clears the runway for a bigger Nova Scotia bet

A$453m Simberi exit funds Nova Scotia pivot

St Barbara Limited (ASX:SBM) is preparing to turn the proceeds from its New Simberi exit into a concentrated Nova Scotia growth strategy. The binding agreement with Lingbao Gold Group comprises A$410 million in cash on completion and a further A$43 million repayment of capital contributions made since April 2026, taking the stated cash consideration to A$453 million.

The transaction covers St Barbara’s remaining 40% economic interest in New Simberi and associated Tabar Islands exposure. Completion is targeted for the March 2027 quarter and remains subject to regulatory and shareholder approvals where required, Lingbao shareholder approval and other conditions including no material adverse event. St Barbara will retain a 2.75% net smelter return royalty over 100% of future New Simberi gold and silver production, plus a 1.5% royalty over future minerals production from the Tabar Island exploration licences.

The proposed exit was first outlined in the September Simberi sale agreement, which would leave St Barbara with about A$880 million in cash, gold and investments on a pro forma basis. The latest quarterly report puts cash at A$416 million at 30 September, excluding A$33 million attributable to New Simberi, with another A$14 million in listed investments. The company says it has no debt and no hedging.

15-Mile reserve growth sharpens the investment case

Nova Scotia is not merely the destination for the cash. St Barbara’s updated 15-Mile Processing Hub study lifted Ore Reserves by 17% to about 1.44 million ounces and extended the planned mine life to 13 years, based solely on Proved and Probable Reserves. Average production is forecast at 106,000 ounces a year, with output above 120,000 ounces in FY31 and FY32, while average life-of-mine AISC is estimated at US$1,098 an ounce.

The presentation puts the project’s initial capital at C$289 million, or about A$315 million, and gives a post-tax NPV5 of A$1.705 billion and an 81.6% IRR at a US$3,000 gold price. Those figures are study outputs rather than operating results, and depend on permitting, construction, gold-price and exchange-rate assumptions. The feasibility study has been brought forward for completion in the March 2027 quarter, with a final investment decision still targeted for June 2027.

The company has already started the feasibility work and is awaiting a federal Section 16 determination on whether a separate impact assessment is required. It expects the 15-Mile project to be funded from cash on hand, Simberi sale proceeds and operating cash flow from Touquoy. The earlier 15-Mile study update also highlighted the larger reserve and longer mine life, making the next study the point at which the headline economics must be tested in greater detail.

Touquoy restart provides the near-term test

Before the larger hub can be built, St Barbara needs to demonstrate that Touquoy can restart as planned. Mill refurbishment has advanced through installation of new liners, a mill motor, conveyor systems and a covered crushed-ore stockpile, while ore movement and tailings-management work are under way. Commissioning is now expected to begin in November, with stockpile processing targeted by the end of the December 2026 quarter.

At New Simberi, meanwhile, the expansion remains under construction, with first sulphide ore processing still targeted for mid-calendar 2028 despite a modest delay to commissioning of the crushing and grinding circuit. The operation produced 10,746 ounces on a 100% basis in the September quarter at an AISC of A$6,011 an ounce, while growth capital spending reached A$67 million. That production remains part of the transition story until the sale completes, rather than a continuing operating asset for St Barbara thereafter.

Shareholder returns remain proposals, not promises

St Barbara has already paid a fully franked A$0.05 per share dividend for FY26. Following completion of the Simberi transaction, the board will consider a further fully franked dividend of approximately A$0.13 per share and an on-market buy-back of up to 100 million shares. Neither proposal has been committed: the company says timing and parameters will depend on market conditions, its share price, future capital needs and other considerations.

That qualification matters because the same cash pool is expected to carry the 15-Mile development through feasibility, permitting and a potential construction decision. The transaction may create room for distributions, but the more consequential test is whether St Barbara can convert a balance-sheet reset and an attractive study into a producing Nova Scotia portfolio without allowing approvals, capital costs or schedules to erode the thesis.