St Barbara opts for ‘strategic review’ of Simberi mine in Papua New Guinea


Australian miner St Barbara has deferred an expected final investment decision on expanding the Simberi mine in Papua New Guinea and has announced a strategic review into the mine that could see it sold.

The Simberi gold mine. Credit: St Barbara

The long-term future of the Simberi open pit mine in Papua New Guinea’s New Ireland Province is in doubt following the decision by operator St Barbara to put off a final investment decision on expanding the mine.

Simberi, which has been operational since 2008, produced 74,000 ounces of gold in St Barbara’s 2021 financial year but its future beyond 2024 is dependent on an expansion project which would increase the mine’s production of sulphide ore.

This project, which aims to extend the life of the mine by 11 years, has been the subject of a feasibility study and a final investment decision had been expected in the first half of this year.

Rising costs blamed

St Barbara’s Craig Jetson

However, rising costs associated with the expansion, previously flagged to cost US$170 million (K598 million), have led the miner to defer a decision.

‘The well-publicised significant cost inflationary pressures currently being experienced in the global project construction market, together with some project scope changes are resulting in a significant increase in the capital cost estimate relative to that calculated in the Feasibility Study,’ said a statement issued last week by St Barbara’s Managing Director and CEO, Craig Jetson.

‘The company has decided to commence a strategic review of St Barbara’s investment in the Simberi Operation and defer the Final Investment Decision in the Sulphide Expansion project.’

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‘St Barbara has received unsolicited enquiries from potential investors in Simberi’

With costs rising, St Barbara has a choice to make about whether it spends limited funds on Simberi, or on its other assets in Australia and Canada.

‘St Barbara faces capital investments at each of its three operations in the next two years. This strategic review will assess the best allocation of capital for risk and return compared with the company’s other projects.’

For sale?

One consequence of the review could be that St Barbara gets out of PNG completely. The company acquired Simberi as a result of its acquisition of Allied Gold in 2012, but has flagged a sale of the mine is a possibility.

‘St Barbara has received unsolicited enquiries from potential investors in Simberi and anticipates the Sulphide Expansion project to proceed either under St Barbara or different ownership.’

St Barbara is also cutting costs at home, announcing a ‘rationalisation’ of its workforce and the closure of its Melbourne office.

St Barbara’s announcement follows the recent announcement by Geopacific Resources of a review into its PNG mining project, Woodlark, also partly due to rising costs.

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