Why is ASX 200 gold share St Barbara sliding 10% today?

The St Barbara Limited (ASX: SBM) share price is heavily into the red in early afternoon trade on Wednesday.

This follows the ASX gold miner issuing its FY23 guidance and postponing its full-year results presentation by a week.

The St Barbara share price is currently the worst performer among the S&P/ASX 200 Index (ASX: XJO) today.

What did St Barbara announce?

St Barbara has issued its FY23 guidance after receiving final approval conditions for a tailings lift at its Atlantic Operations. This provided “certainty of business continuity” for the financial year.

The company is guiding consolidated gold production of between 280,000 and 315,000 ounces in FY23. This range represents an increase on St Barbara’s FY22 production of 280,746 ounces (guidance achieved).

However, costs are going to be higher in FY23, the company says.

It forecasts an all-in sustaining cost (AISC) of between $2,050 and $2,150 per ounce in FY23. This is an increase on its FY22 AISC of $1,848 per ounce as reported in its Q4 FY22 results on 27 July.

Why are costs increasing?

St Barbara explained that increased costs at Leonora were related to “rising energy, labour and consumables costs, coupled with a 23% increase in material mined”.

According to the statement:

In the second half [of] the year the [Touquoy] plant will process stockpiled material which results in an elevated AISC forecast as the cost of building the stockpiles was incurred in prior years and accounted for on the balance sheet.

From a cashflow perspective, Atlantic is forecast to be positive, as the cash cost of moving stockpiles to the processing plant is significantly less than the current cost of open pit mining.

Simberi returns to full production in FY23 which has resulted in higher production and lower AISC.

What’s next for St Barbara?

The $6 million tailings lift will enable construction to extend the life of the Touquoy mine until June 2023.

Touquoy will cease open pit mining at the end of December 2023.

The company says it has sufficient stockpiles at Touquoy to ensure continued gold production from the Atlantic Operations until December 2024.

The company said it “will continue to deploy the ‘Province Plan Thinking’ used at Leonora to the Atlantic Operations”. It said this “will focus the Company on value add growth in two provinces”.

The longer-term Atlantic Province Plan will include Beaver Dam and Fifteen Mile Stream. St Barbara expects final permits for Beaver Dam prior to December 2024.

St Barbara is expecting some regulatory determinations in relation to the Beaver Dam and Fifteen Mile Stream this month. The gold miner says they will have “an implication on the non-cash impairment charge in the FY22 Financial Results due to the impact on project timelines”.

St Barbara has therefore decided to postpone its full-year results presentation from 25 August to 31 August.

This will “ensure that the best opportunity is provided for all relevant information to be available and considered, assuming that this assessment is made known before 31 August”.

The post Why is ASX 200 gold share St Barbara sliding 10% today? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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