To enable the latest estimates to be incorporated into the Scheme Booklet for Bardoc Gold (ASX: BDC), gold miner St Barbara (ASX: SBM) has chosen to release its Ore Reserve and Mineral Resources Statements ahead of its half year financial results due out 23 February.
Primarily as a consequence of adopting an open pit mining approach to Tower Hill and the subsequent removal of Tower Hill Underground Reserves, the company’s ore reserve estimates have decreased by 460koz since June 30, 2021, to 5.8m ounces.
Today’s decision by St Barbara to disclose decreased ore reserves follows revelations mid-December 2021 of the gold miner’s plans to acquire Bardoc Gold for $157m.
Through the Bardoc Gold strategic review process, St Barbara was identified as the logical owner of the Bardoc Gold Project, especially given the rail and highway directly connecting Bardoc’s key assets with St Barbara’s Leonora processing plant.
During the company’s second quarter update, management noted that the [Bardoc] acquisition uniquely positions St Barbara to add value to the high quality Bardoc ore bodies by processing the ore at the Leonora processing plant.
Overall, St Barbara group gold production for the December quarter was in line with the prior quarter.
Today’s announcement is not regarded by the market as having a material impact on the company, with the share price up 2.73% in early trade on the back of slight upward movement in the gold price.
Bardoc was also up around 2% at the open.
Based on the brokers that cover St Barbara (as reported by FN Arena), the stock is currently trading with 18.4% upside to the current price.
After correcting its calculation of St. Barbara's hedge book last week, Credit Suisse's profit after tax forecast increased to $46m from -$24m in FY22 and to $62m from $17m in FY23.
However, the broker is not overly expectant of an interim dividend, given that the company may choose to conserve capital ahead of increased capital spend in the coming financial year.
Consensus on St Barbara is Moderate Buy.
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