SBM

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38.5¢ st barbara limited

Ann: December 2019 Half Year Report and ASX Appendix 4D, page-106

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BobbyKennedy

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26/02/20

16:46

Post #: 43168702
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Originally posted by loki01 ↑

Fangk

Vassie has said (and I think its also confirmed in some past reports/presentations) that they will be able to truck 1.1mtpa once GEP is completed.

If we assume that the average ore grade is 7 g/t over the next 3-4 years and the gold recovery rate is 97% then annual gold production from Gwalia should be around 240k. If the grade is only 6.5 g/t then annual production would be around 223k ounces. Until recently they have been able to produce at above the average official reserve grade by accessing high grade ore shoots that were not included in their conservatively based reserve estimates. I think that for the next few years this could once again become a feature of their operations, and provide upside surprises to our operating profit estimates.

SSP is what it sounds - gold complexed with sulphide ore reserves which means it needs to undergo extra processing to liberate the gold - this is via some heating process (roaster such as RSG or autoclave such as AQG) or can be done by a biological process (there was once such an operation in WA but it closed down). There is a very significant extra cost both in plant and operational costs with this type of ore. A few years ago SBM released a study on processing the sulphide ore into a high concentrate ore and shipping it to a processor (which could be Lihir gold mine). From memory this was not considered economic back then. Gold in concentrate was at around 140k ounces pa production (I think) and of course SBM would have to share the profits from these gold sales with the gold processor.

The gold price is now much higher and the exploration at Simberi is hopefully going to extend the mine life, thereby increasing the NPV of the SSP. The first step will be the release of the new ore reserves next month, I believe.

loki

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Yep and Gwalia cashflow should improve dramatically as ounces increase, waste and therefore costs fall, gold rises and importantly the CAPEX drops off as GEP is completed. The Mar qtr report in April should be a cracker.

SBM Price at posting: $2.51 Sentiment: Buy Disclosure: Held
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Ann: December 2019 Half Year Report and ASX Appendix 4D, page-106

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Ann: December 2019 Half Year Report and ASX Appendix 4D, page-106

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