PERTH (miningweekly.com) – Gold miner St Barbara has swung into a loss for the half-year ended December, after reporting significant impairments on its Atlantic and Simberi operations. 

The miner on Wednesday reported an underlying loss of A$9-million for the half-year under review, down from a profit of A$15-million in the previous corresponding period, as well as a statutory loss of A$407-million, down from a statutory profit of A$14-million.

St Barbara has reported a non-cash impairment of A$420-million relating to its Atlantic operations and a further A$74.2-million relating to its Simberi operations.

The impairment at Atlantic comprised numerous impacts arising from delays in Beaver Dam development timing, including revision of valuation basis, but also the need to allow for care-and-maintenance costs for Touquoy post the processing of available stockpiles by December 2024, an upwards revision to anticipated development capital cost and operating costs for Fifteen Mile Stream, an upwards revision to the estimated rehabilitation and closure costs for Touquoy, revision of exploration tenure valuation to current market multiples, and the incorporation of higher discount rates for future cashflows.

At Simberi, the impairment was driven by the delayed development timing for the Simberi Sulphides project. St Barbara noted that while the impact of the deferral of the Simberi Sulphides project development had been partly offset by the success with extension of oxide production outlook through 2025, the carrying value had been revised downward to reflect additional discounting of future revenues.

While revenue remained consistent at A$325-million for the period under review, gold production was down by 5.9% on the previous corresponding period, to 124 676 oz, on the back of lower mined grades at the Leonora and Atlantic operations, which was partially offset by production from Simberi, which had been offline in the first half of the previous financial year owinf to the Deep Sea Tailings Placement pipeline replacement.

The group’s all-in sustaining cost for the half-year reached A$2 576/oz, up from the A$1 539/oz reported in the previous corresponding period. Group mine operating costs were higher at A$255-million in the period, compared with the A$180-million reported in the previous corresponding period, principally owing to increased diesel and reagent costs at Leonora and the recommencement of operations at Simberi.

“Our financial results reflect the operational difficulties we have endured during the first half of the financial year, exacerbated by the non-cash impairment of Atlantic and Simberi. However, there is plenty to look forward to in the second half of 2023 and beyond,” said MD and CEO Dan Lougher.

“We have started to make progress in positioning Leonora for improved performance over the next six months, led by our new management at site. Atlantic has transitioned well into its stockpile processing phase and is poised to deliver on its guidance with an appropriately sized workforce. Simberi recovered to breakeven cash flow for the half-year.

“In December, the company announced the proposed merger of our Leonora operations with Genesis to form the new Hoover House, together with the demerger of Atlantic and Simberi to create Phoenician Metals. I believe that this will deliver value for our shareholders.

“St Barbara has held preliminary integration planning discussions with Genesis as we commence preparations for what could be an exciting future of the Leonora Province,” Lougher said.

Under the Hoover House agreement, Genesis shareholders are to receive 2.0338 new fully paid ordinary shares in St Barbara for each Genesis share held at the scheme record date, representing a nil premium to the 30-day volume weighted average price.

Genesis is to raise A$275-million to fund the merged entity and facilitate the transaction, conditional on the scheme and demerger becoming effective.

Hoover House will have a production target of 300 000 oz/y, compared to St Barbara’s standalone 2023 production guidance of 145 000 oz to 160 000 oz for Leonora with year-to-date actual production of 56 000 oz.

Meanwhile, St Barbara will undertake demerger of its Atlantic, Simberi and other assets, including its shares in various ASX-listed entities, to St Barbara shareholders in conjunction with the scheme, to be held in a company to be known as Phoenician Metals, which will apply for an ASX listing.