SIMBERI has continued to be a strong performer for St Barbara, with the company announcing overall statutory profit after tax of A$77 million for the half year to 31 December 2015.
This result was primarily due to improved operating performance at Simberi in Papua New Guinea, which resulted in a segment profit of A$21 million, compared to a A$14 million segment loss in 2014.
The announcement was made ahead of St Barbara’s strategic review of its Simberi operations as the company considers the future of the project, including development of the Simberi Sulphide project.
A pre-feasibility study (PFS) for the Simberi Sulphide project is expected to be completed in April this year, ahead of a final decision before the end of the calendar year.
The study will need to include the independent review of the resource, which is expected to take around six months to complete and will explore a range of options.
A recent progress report on the PFS indicates that the sulphide project would extend the exiting oxide mine life at Simberi by producing up to an additional one million ounces of gold in concentrate over a further seven years, well above the three years currently predicted.
St Barbara said an optimised mine plan for the project will require a phased cut-over from current oxide mining, as some parts of the existing oxide reserve are contained within the Sulphide project pit shell and would continue to be processed to generate gold dore.
The company proposes the Sulphide project would utilise existing infrastructure on Simberi Island, including the airport, power station, village and wharf.
The existing semi-autogenous grinding (SAG) mill and ball mill would be used in a new plant flowsheet, which maintains the ability to process both oxide and sulphide ores.
St Barbara said the progress report on the PFS indicates that the production and sale of a concentrate is the preferred option, which will avoid needing to establish downstream processing on the island.
It is estimated the Sulphide project will require capital investment of about US$100 million, according to the PFS progress report.
This figure includes US$42 million for a new mining fleet and contract mining will be assessed as part of ongoing study, it said.
Other options being considered for the project include a change of ownership, exploration and development, joint ventures and divestment of some or all of the assets.
St Barbara appointed Cutfield Freeman & Co as its financial advisor to assist in conducting this review of the company’s PNG assets.
The review aims to evaluate various options regarding the company’s PNG assets which include the Sulphide project, the existing oxide operation, and the EL609 exploration licence across the Tabar Island Group.
St Barbara managing director Bob Vassie said the half year results are strong and reflect the quality of the company’s operations and repositioning of the business.
“With continued strong cash generation we have significantly strengthened our balance sheet and we are now seeking to realise the longer term potential of our assets.”
In the December quarter, Simberi gold production was 28,379 ounces.
All in sustaining cost for the quarter was A$1,319 per ounce.
An increase in all in sustaining cost was primarily due to higher capital expenditure during the quarter, relating to the investment of US$2 million in two low hour excavators.
St Barbara said the excavators match two existing excavators and will allow older and smaller equipment to be stood down which will create a more productive, lower cost loading fleet.
The excavators were due to arrive in February along with four low hour mining trucks which were purchased in the March quarter.
Total volume of material and ore mined at Simberi decreased slightly to 2.4 metric tonnes in the quarter, which was due to longer hauls from the pits in use.
During the December quarter additional haul trucks were purchased and are expected to arrive onsite in the March quarter.
These are expected to increase mining rates at Simberi.
Simberi results are expected to improve further with a number of operational enhancements which are planned for implementation in the March quarter.
These include improvements to the ore delivery system, including installation of redesigned chutes and air-blades, St Barbara said.
During the December quarter exploration continued on Simberi ML136 and EL609 at Western Simberi Island and Big Tabar Island.
The exploration program continued to focus on identifying additional near mine higher grade oxide resources as potential ore feed sources to extend oxide mine life.
Overall company cash and cash equivalents on hand at 31 December 2015 was A$100 million, with total interest bearing debt of A$293 million.
Simberi is the northern most island in the Tabar group of islands in the province of New Ireland – the easternmost province of PNG, some 900 kilometres from Port Moresby.