St Barbara (SBM) reported December Q production of 94oz at an AISC of $1,364/oz (+7% on production, -4% on costs vs Sept Q). The improved result came after a strong boost to production at the Atlantic asset and improved output at Gwalia. Final pieces of the Gwalia Extension Project (GEP) are due for completion in April 2020 in line with the original estimates. Operational cash contribution was $66m on a realised price of $1,960/oz, however net cash contribution for the Dec Q was $3m after growth capex, tax and exploration of $49m. Simberi production and costs were down 14% and up 15% respectively, due to a 9% lower grade. Atlantic was the stand-out with 15% lower costs, 30% higher production and 19% higher grades QoQ. Overall the weaker segments at Simberi were netted out by improvements at Atlantic, albeit against trimmed group guidance and higher cost projections for the remainder of FY20. SBM trades on an undemanding FY20 EV/EBITDA of ~7x vs its peer group at >8x. We argue this is as a result if expansion delays and rising costs, which we think could be largely mitigated over the next 12 months. BUY maintained and target price of $3.12ps (prior $3.09ps).
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