St Barbara (SBM) announced March Q production of 86koz (-14% vs Dec Q) at an all-in sustaining cost (AISC) of $982/oz (+8% on Dec Q). Lower throughput at Gwalia was impacted by mine sequencing and was partly offset by high head-grades running at 15g/t (92% above reserve grades). Cash at bank increased by $50m to $262m after dividend payments of $16m and investments of $4m. Simberi FY18 guidance was updated to 125-132koz (from 115-125koz) to reflect improved operational performance, however costs have rose by 14% on lower grades and work stoppages. Full year group guidance now stands at 375-392koz (prior 365-385koz) at an AISC of $920-970/oz. We view SBM as a high-quality gold miner with significant free cash generation. We move to a HOLD recommendation (from SELL) following revisions to our model to push Gwalia mine life out to 10 years and increase our target price to $3.84 (prior $3.23ps).
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