Gold Producers, St Barbara and Perseus Mining in Action

  • Oct 29, 2019 AEDT
  • Team Kalkine
Gold Producers, St Barbara and Perseus Mining in Action

A commodity and a monetary asset, gold has always been treasured due to its beauty and permanence. According to estimates, Australia has the largest gold reserves and is the second largest gold producer in the globe.

Let us discuss two stocks from the metals & mining sector, trading on the Australian Securities Exchange and operating as gold producers - St Barbara Limited and Perseus Mining Limited

St Barbara Limited (ASX: SBM)

St Barbara Limited is an Australia based gold producer and explorer. The company’s assets are located in different regions such as the Simberi operation in Papua New Guinea, Leonora operation in Western Australia and Atlantic Gold operation in Nova Scotia, Canada. The company had mineral resources of nearly twelve million ounces of contained gold including ore reserves of roughly six million ounces of contained gold, at the end of June 2019.

Q1 Gwalia Production at 38,153 ounces

On 21 October 2019, the company released the first-quarter report for the period ended 30 September 2019.

  • First quarter FY 2020 consolidated production was 87,569 ounces at AISC (All-In Sustaining Cost) of $1,421 per ounce.
  • Gwalia gold production during the reported period stood at 38,153 ounces at AISC of $1,559 per ounce.
  • Simberi gold production stood at 27,061 ounces at AISC of $1,603 per ounce, down from the last quarter. The project reported lower production in Q1 FY 2020 due to lower milled grade of 1.19 g / t Au.
  • Atlantic gold production was 22,355 ounces at AISC of $970 per ounce, against 22,948 ounces in Q4 FY 2019.
  • The company had $112 million of debt and $76 million cash at bank at the end of 30 September 2019.
  • Operating cash flow will fund all the anticipated growth projects.
  • Total recordable injury frequency rate was 5.0 at the end of Q1 FY 2020.

Outlook for FY 2020

The company recently completed the regular quarterly operational reforecast at Gwalia. The guidance report for the Gwalia operation was revised.

  • Gwalia gold production was in the range of 175,000-190,000 ounces at an AISC from $1,390 to $1,450/ounce.
  • Sustaining capex to come in range of $60 million to $65 million plus growth capex of $32 million to $38 million.
  • Simberi gold production to remain unaffected at 110,000 to 125,000 ounces at AISC ranging from $1,285 to $1,450/ounce.
  • The company’s Atlantic gold production to range from 95,000 to 105,000 ounces at AISC of $900 - $955/ounce.

Recently, under a joint venture between SBM and Alice Queen Limited (ASX: AQX), a soil and rock chip geochemical sampling program was completed across the Madagascan project, Horn Island. More on this update can be read HERE.

Stock Performance

The stock of SBM was trading at $2.680 on ASX on 29 October 2019 (AEST 12:42 PM), down by 0.741 per cent from its previous closing price. The company has a market cap of $1.89 billion and approx. 699.16 million outstanding shares. The 52-week high and low value of the stock is at $5.152 and $2.470, respectively. The stock has generated a negative return of 14.21 per cent in the last six months and a negative return of 40.17 per cent on a year-to-date basis.

Perseus Mining Limited (ASX: PRU)

West African gold producer Perseus Mining Limited is involved in mining and exploration activities. Its operations are spread across Ghana and Cote d'Ivoire. Recently, the company announced that the annual general meeting would be held on 29 November 2019.

The company also shared its annual report for the year FY 2019, during which PRU strengthen its position as a multi-mine, multi-jurisdiction gold producer and moved towards bringing its third gold mine into operation. PRU is expecting FY 2020 as another busy year, as it continues to work towards its long-term gold production goals.

Drilling Resumes at Napié Project

On 29 October 2019, Mako Gold Limited announced to have resumed drilling activities at the Napié Project in Côte d’Ivoire. Under a farm-in and JV agreement with Perseus’ subsidiary Occidental Gold SARL, Mako Gold is earning a maximum interest of 75% in the project. Mako, which is the project operator, currently holds an interest of 51 per cent in the permit.

The program is focused on the more advanced Tchaga Prospect in the endeavour to better understand the gold mineralisation and to help the company move towards outlining a JORC compliant gold resource.

Board Changes

On 21 October 2019, the company announced to have proposed a new appointment to the board of directors, boosting the number of board members to six including five independent-non-executive directors. During the annual general meeting (AGM), the company will have a resolution and ask the shareholders to cast their vote on electing Mr David Ransom as a non-executive director of PRU.

Additionally, the company advised that a founding director of PRU, Mr Colin Carson, decided to retire from the position of executive director at the AGM.

Quarterly Activities Report

On 21 October 2019, the company released the quarterly activities report for the period ended 30 September 2019.

  • Operations at Perseus’ Edikan and Sissingue gold mines continued to produce on plan.
  • Continuous improvement at the operations resulted in a 2.7 per cent increase in gold production.
  • The company’s all-in site costs (AISC) decreased by 6.8 per cent and notional cash flow increased by 55.2 per cent relative to the June quarter. The company has generated US$29.8 million of notional cash flow by operations.
  • Cash and bullion on hand stood at US$120.6 million.

Stock Performance

The stock of PRU was trading at $0.830 on ASX on 29 October 2019 (AEST 12:42 PM), down by 1.775 per cent from its previous closing price. The company has a market cap of $986.94 million and approx. 1.17 billion outstanding shares. The 52-week high and low value of the stock is at $0.895 and $0.340, respectively. The stock has generated a positive return of 87.78 per cent in the last six months and a positive return of 94.25 per cent on a year-to-date basis.


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