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St Barbara mulls Simberi sale

St Barbara

St Barbara is feeling the pinch of soaring inflation, with a strategic review of its Simberi gold operation in Papua New Guinea underway.

The gold miner said project scope changes and inflationary pressures in the global project construction market were resulting in a “significant increase” in the capital cost estimates of Simberi’s sulphide expansion project, which has the potential to extend Simberi’s mine life by at least 10 years.

Released in April 2021, the feasibility study for the Simberi sulphide expansion project suggested an initial capital expenditure of $US170 million ($245 million), with a life-of-mine sustaining capital expenditure of $US120 million ($173 million).

St Barbara said it will defer the final investment decision of the sulphide expansion project and commence a strategic review of its investment in the Simberi operation. The ASX-200 miner holds a 100 per cent indirect interest in Simberi through its wholly owned subsidiary, Simberi Gold Company.

“St Barbara faces capital investments at each of its three operations in the next two years,” the company said in a statement. “This strategic review will assess the best allocation of capital for risk and return compared with the company’s other projects.

“(The company) 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 Perth- and Melbourne-based company will also shed its Victorian office as part of a corporate restructure, which it said would result in the “rationalisation of the corporate workforce”. As part of this, St Barbara suggested it would be re-designing its operating model.

The gold miner also announced its Atlantic gold operations in Nova Scotia, Canada, have hit operational hurdles, with a near-term disruption to the Touqouy open pit expected due to potential permitting delays for the site’s tailings management facility (TMF).

In 2020, St Barbara commenced a provincial permitting process to convert the Touqouy open pit to a TMF upon the completion of open pit mining.

Shares in St Barbara were down nine per cent on the day (June 22).

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