St Barbara loses its shine

The junior miner is the latest to cut the value of gold deposits, falling into loss after $309 million in writedowns.

Junior producer St Barbara has joined a long list of gold miners in writing down the value of deposits. St Barbara, which has mines in Western Australia, Papua New Guinea and the Solomon Islands, today revealed a $309 million writedown on its assets that resulted in a $192 million loss for the company in 2013.

St Barbara says its cash operating costs in 2014 will be between $880 an ounce and $940 an ounce, though the company does not disclose its total cost to mine an ounce of gold. 

An Australian gold mining executive hinted to Markets Spectator the gold price would have to rise to $US1600 an ounce for his company to resume mining at one of its Western Australian mines. The last time spot gold prices hit those heights was in March. At 1022 AEST spot gold was at $US1358.57.

High fixed costs at its Pacific operations are a concern for St Barbara says these operations do not meet planned performance targets. The company’s Simberi mine in PNG and its Gold Ridge mine in the Solomon Islands have high fixed costs. St Barbara has 42 per cent of its ore reserves in PNG, 17 per cent at Gold Ridge and 41 per cent in Western Australia.  

Cash outflows from operating activities less payment for things such as exploration were $64 million in 2013. Capital expenditure actually rose in 2013 to $135 million from $100 million in 2012. St Barbara had $328 million in interest bearing liabilities as of June 30 and $129 million in cash.

Such figures are not likely to halt St Barbara’s share price fall. The stock is down 49 per cent so far this year. At 1022 AEST the company’s share price was down 2.5 cents, or 3.3 per cent, to 73.5 cents.