St Barbara (SBM) pre-reported September production and guidance downgrades earlier this month. Group production finished the September Q with 88koz at an all-in sustaining cost of $1,421/oz (vs June Q 109koz @ $1,175/oz, -20% on production, +21% on costs). The weaker result came after revisions to Gwalia FY20 guidance due to production constraints as a result of the Gwalia Extension Project taking priority to complete. The Atlantic assets were interrupted by Hurricane Dorian which saw processing plant downtime of 1 week. At Simberi, lower grades and higher stripping resulted in lower output, but against record throughput rates. Overall it was a disappointing quarter at Gwalia, but with guidance for Atlantic (95-105koz) and Simberi (110-125koz) unchanged, this results in an incremental drop in our NPV for SBM to $3.09. We move to a BUY recommendation (prior HOLD) after recent share price weakness.
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