PERTH (miningweekly.com) – Ongoing issues at the Leonora operations, in Western Australia, and truck availability at the Simberi operation, in Papua New Guinea, have seen gold miner St Barbara report a 4% reduction in gold production for the quarter ended March.
The miner this week reported that gold production for the third quarter had reached 58 567 oz, with group all-in sustaining costs (AISC) reaching A$2 553/oz, a 4% improvement on the previous quarter, driven by lower corporate costs and improved cost performance from the Atlantic operation as it transitioned to stockpile-only processing.
“As previously announced, Leonora had another disappointing quarter which has resulted in production and cash generation being below our expectations. Despite the lower production, the cost and productivity improvement initiatives implemented over the last two quarters are starting to deliver tangible benefits. Pleasingly, Simberi and Atlantic generated substantial operational cash flows this quarter, offsetting the lower cash flow generation at Leonora,” said St Barbara MD and CEO Dan Lougher.
Leonora production during the third quarter ended March reached 30 942 oz, down from the 32 175 oz produced in the previous quarter.
Ore mined at Leonora was impacted by ineffective blasting of key stopes that required substantial rework to recover the ore. The rework reduced the mining rates from these stopes and delayed the mining sequence.
Additional development ore was mined to partially offset the lower stoping tonnes. Development during the quarter focused on accelerating access to additional stopes, which is anticipated to increase stoping tonnes in early 2024.
At Simberi, gold production declined from 18 747 oz in the December quarter to 16 254 oz, with gold production impacted by lower volumes of mill feed owing to low mining rates. Mining rates were impacted by increased cycle times driven by the lack of short-haul waste dumping options and lower truck availability.
St Barbara told shareholders that the filling of waste dumps proximate to mining areas in the second quarter resulted in cycle times in the current quarter increasing by 10% compared to the prior quarter and 35% compared to the first quarter, as trucks had longer distances to travel to dispose of waste. Cycle times are expected to return to the first-quarter levels in the fourth quarter with new short haul dumping options being re-established.
Truck availability was impacted by high turnover of maintenance staff driven by increased competition for maintenance labour in the region. Truck availability was further impacted by delays in getting critical parts delivered to site owing to supplier stock levels. Alternative suppliers for these critical parts have been sourced with delivery expected in early May.
Meanwhile, gold production at Atlantic, in Nova Scotia, increased from 10 054 oz to 11 371 oz, as gold production in the quarter benefitted from higher ex-pit grades from the final benches of the pit. Atlantic in early February completed in-pit mining at Touquoy and is now exclusively processing stockpiles at the Touquoy processing plant.
St Barbara earlier this month struck a A$600-million alternative proposal with fellow-listed Genesis Minerals, which would see it divest of the Leonora assets, in lieu of a previously agreed merger.
The new asset purchase agreement would give Genesis control of St Barbara’s Leonora assets for an up-front cash payment of A$370-million, the issue of 147.8-million shares in Genesis, valued at A$170-million, and an additional 52.2-million shares in Genesis, valued at A$60-million, contingent on Tower Hill achieving first production.
"The announcement of the sale of our Leonora assets to Genesis marks a pivotal point for St Barbara. Going forward, the company will focus its efforts on realising the inherent value of Atlantic, Simberi and its other non-Leonora assets, in a vehicle with a debt-free balance sheet appropriately sized for success,” Lougher said this week.
“I believe that the transaction in its current format delivers the best pathway forward for our shareholders by helping to unlock the market value of Atlantic and Simberi, while providing shareholders exposure to consolidation of the Leonora region through the Genesis equity distribution.”
The transaction is subject to a number of conditions, including shareholder approval on both sides, regulatory approvals and consent from St Barbara’s lenders.