St Barbara Limited recently announced revisions on their FY24 Guidance in relation to its Simberi operations updates.
"St Barbara Limited (“St Barbara” or the “Company”) (ASX: SBM) is pleased to advise the outcomes of its Simberi Expansion Concept Study (“Concept Study”) and inclusion of the projections in this 10 Year Plus Mine Plan Outlook."
"The Concept Study considered six different cases comprising two flowsheet options with three different processing rates. Investment in the 3.7 Mtpa options provide the most compelling development pathway – lifting Simberi’s production from its current range of 70-75 koz across FY25 to FY27 to an average of 230 koz from FY28 at an AISC in the range of US$1,000 to US$1,200/oz."
Andrew Strelein, Managing Director and CEO of St Barbara Limited stated, “The Concept Study provides a strong case for St Barbara to push forward with the larger 3.7 Mtpa throughput options at Simberi."
He mentioned that they now have a road map that will lead to increased and more profitable production at Simberi into the middle part of 2030s.
“Our strategy with Simberi has been to extend the production of oxides into 2026, which we are now executing; increase the Sulphide Resource and Reserve through extension drilling, which is underway; and revisit the sulphide expansion development plan."
He further noted that The Concept Study is a major milestone in progressing that development plan. "...We are excited about the potential of this project.”
"Given the opportunity at Simberi and the unreasonable treatment of the Company by Nova Scotia Department of Environment and Climate Change, the Company does not intend to allocate significant growth capital to the Company’s Nova Scotia Projects while advancing Simberi. We can review that position if there is change there.”
St Barbara Limited has revised its full-year production guidance because of some challenges with equipment, fuel supplies, and air transport services resulting from inadequate availability of foreign currency affecting Simberi’s in-country supply chain.
At the start, Simberi’s gold production for Q4 June FY24 was envisioned to exceed 20,000 ounces. This is due to the anticipated access to a higher-than-average grade ore zone in the Sorowar pit. However, the critical Sorowar ore zone will only be accessible by Q1 September FY25. As an effect, the processing plant will be limited to more typical ore grades of approximately 1.0 g/t AU for June. This is less than the expected production to around 14,000 ounces for Q4 June FY24.
Such loss is caused by the lower-than-targeted total mining movement volumes which is attributed to poor excavator availability. In turn, these issues resulted in a delay on the targeted face position for accessing the higher-grade Sorowar ore zone.
Due to the operational challenges, the Company adjusted its cost guidance for FY24.
Thus, the new production target is now at 52,000 to 56,000 ounces. This is down from the previous range of 60,000 to 70,000 ounces. The All-In Sustaining Cost (AISC) was changed to A$3,700 to A$3,900 per ounce, compared to the earlier estimate of A$3,200 to A$3,400 per ounce.
Simberi Overview
St Barbara Limited’s Simberi Operations started in 2008. The current mining operations is located on the eastern half of the island, spanning a 2,560-hectare mining lease (ML136). The site is around 900 kilometers away from Port Moresby, Papua New Guinea.
Ore from the pit is delivered to the Run of Mine (ROM) pad in front of the process plant through an energy-efficient 2.7 kilometer aerial rope conveyor, and also transported by mining trucks.
Sulphide study to extend life of mine
Simberi’s production outlook is positive with the prospect of an investment in additional sulphide processing capability of the sulphide mineralization contained below the oxide pits. According to the 2022 Strategic review at Simberi, there is potential that oxide life can be extended through 2025 and even 2026, and confirmed the potential for the sulphide project to extend the life of mine by at least 10 years.
Simberi 10 Year Plus Mine Plan Outlook
The Concept Study covered six different cases consist of two flowsheet options with three different processing rates (2.0 Mtpa, 3.0 Mtpa and 3.7 Mtpa).
The two flowsheet options:
a) production of a gold concentrate for sale (referred to as the Saleable Concentrate flowsheet)
b) production of gold doré from ultrafine grinding (UFG) and cyanide leaching of the concentrate (referred to as the Concentrate UFG / Cyanidation flowsheet)
Mine planning work and compilation of the study report was undertaken by Australian Mining Consultants Pty Ltd (AMC). The process options work was undertaken by Chemech Consulting (Chemech) and the capital estimation by Professional Cost Consultants (PCC).
According to the Company’s statement, “The Concept Study has demonstrated that the investment to achieve the higher throughput options is compelling under both flowsheet options. The 3.7 Mtpa Saleable Concentrate flowsheet is estimated to only require an additional US$16 million compared to the 3.0 Mtpa option.”
“Furthermore, the Concept Study revealed that that the Concentrate UFG / Cyanidation flowsheet has potential to improve investment returns over the Saleable Concentrate flowsheet options for any given throughput rate, particularly if metallurgical test work program confirms lower mass pull to concentrate than presently calculated.”
“The 2.0 Mtpa option for both flowsheets was confirmed by the Concept Study to offer a lower capital alternative if capital were constrained. The Expansion Capital estimate for the Saleable Concentrate flowsheet at 2.0 Mtpa in the Concept Study falls to US$156 million compared to US$213 million for the 3.7 Mtpa version. The 2.0 Mtpa option for the Concentrate UFG / Cyanidation flowsheet is lower still at an estimated US$141 million.”
In summary, here is St Barbara’s 10 Year Plus Outlook for Simberi:
- Total gold production of 2.0 Moz
- Average annual gold production rising from 70 to 75 koz in FY25 to FY27 to 230 koz through to FY34
- All-in Sustaining Cost (AISC) decreasing to US$1,000 to US$1,200/oz from FY28 to FY34
- Expansion Growth Capital estimated at US$213 million (-20/+30% Class 5 Estimate) across FY26 to FY28 o Assuming 3.7 Mtpa Saleable Concentrate Flowsheet option o Additions to existing circuit: new Ball Mill, Flotation Circuit, Concentrate Shed and Wharf upgrade
- Pre-Expansion Growth Capital of between US$40 million to US$55 million across FY25 to FY27 o Studies and Designs, New Sizer, Camp upgrade, RO Plant and miscellaneous improvements
- Simberi Mine Plan exceeds 10 years o 81% Measured and Indicated Mineral Resource (less than 19% Inferred Mineral Resource) o No Exploration Targets included o Management proposing 8,000 plus metre diamond drilling campaign in FY25
- Minimal commitment of growth capital to Nova Scotia Projects before Simberi Expansion completed o pending signs of an improved outlook for permitting and regulation from Nova Scotia Department of Environment and Climate Change (NSECC)
Risk Considerations
The St Barbara’s 2023 Annual Report (15 September 2023) outlined that gold mine exploration, development, and operations are subject to many risks.
The Company noted that the execution of the Simberi 10 Year Plus Mine Plan Outlook in particular faces risks related to the political and economic uncertainties in Papua New Guinea (PNG).
“The formulation and implementation of government policies in PNG may be unpredictable. In PNG there is political focus on potential future policy changes that could involve changes to the existing Mining Act, including in relation to the structure and level of local equity participation in projects, royalty and taxation regimes, proposition of in-country precious metals refining, changes to banking and foreign exchange controls and changes in controls pertaining to the holding of cash and remittance of profits and capital to the parent company.”
Moreover, the renewal of the Mining Lease covering the Simberi Project area by December 2028 might eventually lead to discussions on equity participation and economic benefit agreements.
Regarding operating conditions, these are affected by the disruptions to fuel supplies, equipment parts and consumables, because of difficulties with availability of foreign currency for supplies in PNG.
“Conversely, there continues to be speculation about depreciation of the PNG Kina against the US dollar, whereas St Barbara has assumed an exchange ratio of approximately 3.8 which may or may not prove to be correct over the period.”
For more information:
St Barbara’s 2023 Annual Report (15 September 2023) -
https://stbarbara.com.au/wp-content/uploads/2023/09/2023.09.15-2023-annual-report.pdf
Reference:
St Barbara’s 10 Year Plus Outlook for Simber (10 May 2024) -
https://stbarbara.com.au/wp-content/uploads/2024/05/2024.05.10-asx-release-st-barbaras-10-year-plus-outlook-for-simberi_final.pdf
Photo credit:
https://stbarbara.com.au/our-operations/our-simberi-operations/
