Shares in gold producer St Barbara (SBM) jumped 6.3% higher to $2.35 after the company released its quarterly production update.
This, combined with the stronger gold price which pushed back over $US1,200 an ounce, helped drag investors back to the stock.
In the December quarter St Barbara lifted its production quarter-on-quarter by 7% to 98,982 ounce.
At the same time the company managed to reduce all-in sustaining costs to just $A876 an ounce.
Although the average realised gold price fell nearly 6% quarter-on-quarter to $A1,636 an ounce, the company still boasts an extremely healthy margin which helped free cash flow rise $A76 million during the quarter. In light of this strong quarter management has upgraded its full year production guidance by around 10,000 ounces and reduced its cost forecast for its key Gwalia mine.
The company forecast Gwalia (Leonora) gold production of between 255,000 and 265,000 ounces (previously 245,000 to 265,000 ounces) at a sustaining cost of between A$815 and A$850 per ounce (previously A$850 to A$910 per ounce), with sustaining capex of between A$32 and A$35 million (previously A$30 to A$35 million), plus growth capex of between A$12 to A$15 million (previously A$10 to A$12 million).
It also forecast Simberi gold production is unchanged at between 95,000 and 105,000 ounces at an AISC of between A$1,330 and A$1,490 per ounce (derived from an all in sustaining cost in Simberi’s functional currency of between US$1,000 to US$1,120 per ounce), with capex of between A$4 and A$5 million (previously A$5 to A$6 million).
The Company said it moved to a net-cash position during the quarter, and finished the quarter at $A31 million net-cash (not including gold inventory).
After debt repayments and interest of $A130 million during the quarter, total cash at bank at 31 December 2016 was $A87 million (30 September 2016: $A154 million). In addition, there was 14,538 ounces of gold inventory on hand at December 31, 2016.
A further $US20 million principal of US Notes will be repurchased on January20, 2017. The remaining $US20 million of US Notes is anticipated to be repurchased later in the March quarter.
As announced on January 4, 2017, Standard and Poor’s lifted the company’s financial rating from B to B+ with a stable outlook.
