St Barbara Limited (ASX:SBM) has unveiled positive results from a Feasibility Study of its Simberi Sulphide project in Papua New Guinea which highlights a robust project with strong financial returns.
The company’s Board has approved pre-investment work of US$13 million, with a final investment decision targeted for March 2022. Key changes from the 2020 Pre-Feasibility Study (PFS) include an increase in nameplate capacity, with an option to expand to 3.7 Mtpa supported by an improved All-in Sustaining Cost (AISC) of ~3%.
The pre-investment work will enable a ramp-up in mining, ongoing drilling to further increase ore body knowledge and studies to de-risk the project. Early construction activities will commence upon approval of the Social and Environmental Impact Statement (SEIS) which has been submitted this month.
Study Highlights:
- Life of mine average All-in Sustaining Costs (AISC) of US$896 per ounce
- Life of mine average sulphide gold production of 160 koz per annum
- Initial capital expenditure of US$170 million, including expansion capital
- Life of mine sustaining capital expenditure of US$120 million
- Net Present Value of US$220 million (post-tax) at a real discount rate of 8% per annum
- Internal Rate of Return of approximately 40% (post-tax)
- Mine life of ~11 years 2
- The work completed during the FS identified additional oxide ore that will maintain the current operation to Q3 March FY24
- Payback period of ~3 years
- First ore ~2 years from environmental permitting and Mineral Resource Authority (MRA) amendment approval.
Key Changes from 2020 Pre-Feasibility Study
- Nameplate capacity of Sulphide plant increased from 2.7 to 3.0 Mtpa, with the option to expand to 3.7 Mtpa. Key pieces of process equipment have been selected to enable the expansion
- Improved AISC of ~3%
- Extensive marketing studies have been completed to establish net smelter returns with draft contracts already negotiated with a number of third parties
- Life of Mine capital expenditure has increased to include a power upgrade, closure costs and a full asset maintenance strategy
- • A new wharf will be constructed to enable 11 kt concentrate shipments to Asian markets, resulting in significant operating cost savings.
Next steps
- Following the submission of the SEIS in April 2021, supporting site trials will be completed and submitted to Conservation & Environmental Protection Authority (CEPA)
- Updating Mineral Reserves for end of financial year reporting
- Complete reserve definition drilling program anticipated over the next three to six months
- Complete pre-investment activities prior to final Board investment approval (expected in March 2022).
The future of the Simberi Sulphide Project has been endorsed by the Board, with a commitment to pre- investment work that will take place as we update mineral reserves, complete reserve definition with drilling and finalise all pre-investment activities,” Managing Director and CEO, Craig Jetson, said.
“This vote of confidence in the Simberi Operations comes as we work closely with the PNG government, agencies and community as part of our ongoing consultation and engagement. This work is continuing despite the current challenges that COVID-19 presents in PNG and is a testament to the relationships we hold in PNG and the vision we have for the Simberi Operations.”
“The key changes from the Pre-Feasibility Study include an increase in nameplate capacity of the sulphide plant to 3.0Mtpa, with an option to expand. Extensive marketing studies have allowed us to establish net smelter returns, while we’ve negotiated draft contracts giving us confidence in the concentrate market.
“A new wharf will be constructed to enable 11 Kt concentrate shipments to Asian markets, which will result in significant cost savings. The fundamentals of this project are robust, with an anticipated mine life of around 11 years and a payback period of three years.”
