PERTH (miningweekly.com) – Gold miner St Barbara has announced a strategic review of its Simberi operations, in Papua New Guinea, and has decided to defer a final investment decision on the sulphide expansion project as project costs balloon.
The company has also announced a corporate restructure that will see its Melbourne office close in the coming months.
St Barbara on Wednesday told shareholders that the company was awaiting the formal approval for the Simberi sulphide project, which was in its final stages, and that front-end engineering design (FEED) work has continued, including finalising the mine design for the preferred pit development and seeking to confirm a reliable capital cost estimate in the current pricing environment.
The miner said that the significant cost inflationary pressures currently being experienced in the global project construction market, together with some project scope changes, are resulting in a significant increase in the capital cost estimate relative to that calculated in the feasibility study.
“St Barbara faces capital investments at each of its three operations in the next two years. This strategic review will assess the best allocation of capital for risk and return compared with the company’s other projects,” the company said in a statement.
“St Barbara has received unsolicited enquiries from potential investors in Simberi and anticipates the sulphide expansion project to proceed either under St Barbara or different ownership.”
The 2021 feasibility study into the sulphide project estimated that the project would require a capital investment of $170-million, and based on a nameplate capacity of 3.7-million tonnes a year, the project would produce 160 000 oz/y of sulphide gold from 2024 to 2032.
Meanwhile, St Barbara has also flagged near-term risk of disruption to its Touquoy operations, in Canada, owing to potential permitting delays for tailings management facilities.
The company in 2022 started the provincial permitting process to convert the Touquoy openpit into a tailings management facility (TMF) upon completion of openpit mining, as a critical path for business continuity as the Touquoy mine approaches end of life.
St Barbara said that late in the process the Nova Scotia Department of Environment and Climate Change (NSECC) has sought further clarification on aspects of the in-pit tailings deposition application to which the company is promptly responding. This request for further information has impacted the implementation timeframes for the in-pit tailings solution, placing business continuity at risk.
The current TMF has capacity only until mid-September 2022 and construction work on the in-pit tailings infrastructure will be unable to be completed in time.
St Barbara has elected to make an application to raise the existing TMF wall as an interim solution while the in-pit deposition matter is progressed to conclusion. A permit application to lift the wall has been submitted and the company is working closely with provincial regulators, with the timeframe for a decision on this permit expected to be early August 2022. The capital cost for the tailings lift is A$6-million and will extend the life of the Touquoy operation until the end of 2023.
The miner told shareholders that should the TMF lift permit not be approved in early August, there would be insufficient time to allow for the construction of the raise before the current tailings capacity is exhausted in mid-September 2022. This would lead to the operation being suspended and placed in care and maintenance.
Additionally, St Barbara is also working with the provincial government to resolve NSECC’s outstanding queries on the permit for the in-pit tailings deposition.
The company noted that once the in-pit tailings deposition permit was issued the Touquoy site would have sufficient tailings capacity to support the longer-term Atlantic Province Plan, including Beaver Dam and Fifteen Mile Stream. If the in-pit tailings deposition permit was not issued by the third quarter of 2023 then the operations would have to be suspended from the first quarter of 2024 and placed in care and maintenance.
Furthermore, discussions with Fisheries and Oceans Canada and First Nations groups regarding permitting of the Beaver Dam operation are also expected to delay approvals by at least six months and St Barbara is now targeting the fourth quarter of 2023 for the issuing of final permits.
The miner said that there were sufficient stockpiles in place at Touquoy to ensure continued production from the Atlantic Operations if such a delay to Beaver Dam was to occur, provided in-pit tailings deposition at Touquoy had been approved.
Meanwhile, St Barbara on Wednesday also announced that it would undertake a redesign of its operating model, including for the provision of corporate support across the group, and that this would result in a rationalisation of the corporate workforce including a consolidation of the company’s two corporate offices into one, in Perth, Western Australia which will lead to the closure of the Melbourne office in due course.