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St Barbara slumps on production downgrade, Gwalia trucking announcement

St Barbara slumps on production downgrade, Gwalia trucking announcement

Photo by Bloomberg

22nd March 2019

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – The share price of ASX-listed St Barbara fell by nearly 30% on Friday after the company lowered its production forecast and announced plans to continue trucking at its Gwalia gold mine, in Western Australia.

A feasibility study into the Gwalia mass extraction (GMX) project identified an optimised trucking case as the preferred option to haul ore from the mine, despite having evaluated other haulage methods, including hydraulic hoisting using positive displacement pumping, and hydraulic hoisting using three chamber pipe feeder.

St Barbara on Friday said that in both the hydraulic hoisting alternatives, the feasibility study identified significant capital expenditure (capex), interruption to operations and operational risk.

The hydraulic hoisting options were estimated to require nearly twice the A$100-million in capex anticipated in the previously completed prefeasibility study, owing to design changes and additional development, as well as additional ventilation for underground processing circuits.

The life-of-mine for the preferred trucking option would extend the project life until the 2031 financial year, at mining rates of up to 1.1-million tonnes a year down to 2 300 m below the surface, using the existing Gwalia resources and reserves.

The trucking option would require capex of about A$100-million for additional ventilation and cooling over the life of the project, including some A$30-million for additional ventilation within the GMX, which would also have been required for the hydraulic hoisting alternatives.

“The feasibility study outcome favouring the trucking option is clear. Trucking at further depths is the superior way forward. It consumes significantly less capital while delivering greater operational certainty over the same life-of-mine,” said St Barbara MD and CEO Bob Vassie.

“We vigorously pursued slurry pumping technology as a potentially innovative solution to the depth of the Gwalia orebody. The feasibility study, however, identified that the geometry of the orebody does not support the necessary throughput to sustain pumping at sufficient scale, and the prefeasibility study had not anticipated some of the ventilation issues associated with the pumping options that contribute to significantly higher capital costs required for the pumping alternatives.”

Vassie said that continued trucking achieved the primary objective of the GMX, which is to extend the mine life and secure the future of Gwalia.

“Our challenge now is to optimise all aspects of trucking to maximise the value of Gwalia,” he said.

The company on Friday downwardly revised gold production targets for the full 2019, from between 245 000 oz and 255 000 oz, to between 235 000 oz and 240 000 oz, while all-in sustaining costs estimated have increased from the previous estimate of between A$930/oz and A$970/oz, to between A$980/oz and A$1 000/oz.

The miner said that the lower production target for 2019 resulted from a delay in the paste aggregate fill circuit, which had initially been scheduled to become operational by the second quarter of 2019, but would now only be operational by the fourth quarter of the financial year.

For the 2020 financial year, production will remain ventilation constrained until the additional ventilation from the GMX is available in the second half of the year. Production from the second half of 2020 will compete with development associated with the GMX, with the outlook for 2020 expected to be between 200 000 oz and 220 000 oz.

Past 2020, the production profile would be subject to the optimisation of the continued trucking option, with production rates of some 230 000 oz/y expected in 2021 and 2022.

St Barbara shares were trading at a low of A$3.15 a share on Friday, down from a high of A$3.86 a share.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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