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- Perth-based gold explorer St Barbara (SBM) is trading strong today despite half-year profits being slashed in half
- Compared to the year before, statutory net profit after tax was 53 per cent lower during the last half-year at $39 million
- The profit dive comes from some heavily lowered production from the company’s two main projects, Gwalia in W.A. and Simberi in Papua New Guinea
- However, St Barbara’s latest Canadian asset, Atlantic Gold, helped offset the worst of the losses
- Both shareholders and company management seem confident Atlantic will help bring St Barbara out of its 2019 slump
- Today, shares are up just less than three per cent and trading for $2.80 each
Despite slashing profits by more than half for the first half of the 2020 financial year, Perth-based gold explorer St Barabara (SBM) is trading strong today.
The company pulled in statutory net profit after tax (NPAT) of $39 million for the half-year — 53 per cent lower than the $88 million during the same period in 2018. Ignoring one-off costs, things are not much better; on an underlying level, NPAT was $35 million over the past half-year compared to 2018’s $77 million.
Underpinning the losses was some heavily lowered production from the company’s two main projects. At St Barbara’s Gwalia mine in Leonora, W.A., the company produced just over 80,000 ounces of gold in the half-year compared to the 116,000 the year before. Similarly, the Simberi project in Papua New Guinea produced 50,000 ounces compared to 2018’s 72,000.
Though today’s results are certainly soft compared to years gone by, they come as no surprise to anyone following the St Barbara story.
2019 was a year plagued with guidance downgrades, particularly for the Gwalia mine, as feasibility studies and subsequent extension projects increased costs and hindered production.
Further, St Barbara’s Managing Director and CEO Bob Vassie announced his retirement in early December, with Newcrest’s Craig Jetson taking company reins just three weeks ago.
St Barbara’s shares have already taken their punishment for the tough year, declining over 42 per cent since the start of 2019.
Today, shares are up almost three per cent despite the soft results, with bolstered half-year revenue partly to blame for the increase. Though profits and production slipped so heavily, rising gold prices meant St Barbara was able to pull in 9 per cent more revenue than the same period in 2018, ending the half-year at $361.9 million.
The main contributor to the share price rise, however, is St Barbara’s Atlantic Gold business in Nova Scotia, Canada, which the company bought for $768 million back in May 2019. Atlantic helped offset the worst of the profit dive, with $34.8 million of a total $97.8 million in operational profit hitting St Barbara’s books purely from Atlantic.
Without any previous years to compare this result to, investors seem hopeful that an extra gold project will help get St Barbara out of its slump.
Fresh-faced CEO and Managing Director Craig Jetson said Atlantic made a “significant contribution” to St Barbara’s operations.
“With the three operations, St Barbara has a solid platform on which to build. In coming months we will complete the Gwalia Extension Project, provide an update on the sulphide study work at Simberi, and work continues on the Atlantic Gold growth assets,” Craig said.
Further, despite the slashed net profits, St Barbara is still paying out the same interim dividend as the year before. Shareholders will be paid four cents per share, fully franked, to thank them for their support.
St Barbara shares are sitting 2.76 per cent green in early afternoon trade, currently worth $2.80 each.
