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St Barbara - Approaching the March Q inflection point

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St Barbara (SBM) announced in-line Dec Q production of 89koz (-10% vs Sept Q) at an all in sustaining cost (AISC) of $1,108/oz (+21% vs Sept Q). Gwalia production of 53koz (-15% QoQ) was largely anticipated as a result of lower mined grades (-16% QoQ) and activities related to the Gwalia Extension Project (GEP) which impacted costs. Cash at bank increased by $7m to $357m after tax and growth capital payments of $59m. Simberi production of 36koz was unchanged QoQ, albeit with a marginally higher AISC of $1,146/oz (+7% QoQ) as a result of unplanned outages and a weaker FX. Guidance has been tightened at Gwalia and upgraded at Simberi thanks to high grade throughput. Full year group guidance now stands at 365-385koz (prior 350-375koz) at an AISC of $1,045- $1,100/oz. We view SBM as a high-quality gold miner with significant free cash generation, however the stock continues to trade above our valuation. We await the outcome of the Gwalia Mass Extraction (GMX) and Simberi sulphide studies due in the March Q for direction on future growth, at which point we will revise our forecasts. HOLD recommendation maintained and target price to $4.15ps (prior $4.12ps).

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