St Barbara's $110 Million Capital Raise to Fast-Track Simberi Sulphide Expansion
SBM (SBM) Share Update November 2024 Monday 4th
St Barbara Accelerates Simberi Sulphide Expansion with $110 Million Capital Raise
St Barbara Limited (ASX: SBM) has announced a significant capital raising initiative to accelerate the expansion of its Simberi Sulphide project, aiming to bring forward production by up to five months.
Instant Summary:
- St Barbara plans a $100 million placement and a $10 million share purchase plan.
- The funds will accelerate the Simberi Sulphide Expansion by up to five months.
- The expansion aims to increase annual gold production to over 200,000 ounces from FY28.
- The capital raise is fully underwritten by Petra Capital Pty Limited.
Capital Raising Details
St Barbara has launched a fully underwritten two-tranche placement to raise A$100 million, alongside a share purchase plan (SPP) to raise an additional A$10 million. This initiative is part of the company's strategy to expedite the development of the Simberi Sulphide Expansion Project.
The placement will be conducted in two tranches, with the first tranche utilizing the company's existing placement capacity and the second tranche subject to shareholder approval. The offer price is set at A$0.38 per share, representing a discount to recent trading prices.
Use of Funds
The capital raised will be directed towards several key areas, including the procurement and installation of a new ball mill, construction of a new wharf, and the development of a new ROM pad and sizer installation. These developments are expected to bring forward the first production from the Simberi Sulphides by up to five months, targeting early Q1 September FY28.
Project Impact
The Simberi Sulphide Expansion is set to transition the Simberi open pit mine from processing remnant oxides to a high annual production, low-cost sulphide operation. The project aims to produce over 200,000 ounces of gold annually, with a head grade of over 2g/t Au and high recoveries.
St Barbara's strong balance sheet and liquidity position, with unrestricted cash and bullion of A$84 million and no debt, support this ambitious expansion plan.
The capital raise and accelerated expansion timeline are likely to be viewed positively by investors, as they demonstrate St Barbara's commitment to enhancing production and reducing costs. The move could improve the company's competitive position in the gold mining sector and potentially boost its stock price as production increases.
Investor Reaction:
Analysts may react positively to the news, given the potential for increased production and reduced costs. However, some investors might express caution due to the inherent risks associated with large-scale capital projects and market volatility.
Conclusion:
Investors should consider the long-term benefits of the Simberi Sulphide Expansion and monitor St Barbara's progress in meeting its accelerated timeline. The company's strategic use of capital and strong financial position are key factors in its potential success.