Covid continues to take a toll on mining company operations – especially in PNG.
Covid disruptions were a feature of the half year reports from many miners with operations in that country, Canada, the US and parts of South America and Africa.
Miners in Australia were not immune – Newmont’s Tanami gold mine was impacted for a while by a Covid outbreak and other mines in Queensland and NSW reported infections.
Yesterday gold producer St Barbara warned that an outbreak of Covid at its Simberi mine on a remote north-east island of Papua New Guinea had seen output slammed.
The company told the ASX that nearly a third of its workforce was in isolation earlier this year at the peak of the infection and that had caused a shortage of truck drivers expatriate maintenance specialists.
That has seen third quarter gold production at Simberi halved compared to last financial year and group production down nearly 20%. St Barbara doesn’t see any improvement until late in the June (4th) quarter, meaning full year production will be hit.
The company expects Simberi will now produce close to 30,000 ounces of gold in the full year at an all-in-sustaining-cost (AISC) of between $A3,200 and $A3,600 per ounce. This is down from 73,723 ounces at an AISC of $A1,912 in 2020-21.
This will see St Barbara’s full-year group production falling to between 275,000 and 290,000 ounces, from 327,662 in 2020-21. Higher gold prices will soften the blow, but that in turn will be offset by much higher costs, as the estimates for Simberi mine show.
St Barbara withdrew guidance in mid-February due to a COVID outbreak across the Tabar Island Group “exacerbating the difficulties in ramping up operations after six months in care and maintenance.”
“At its peak the outbreak caused 270 people at the Simberi operation to be in isolation of its circa 600 regular daily workforce,” the company told the ASX.
“Currently there are 12 employees in isolation and the outbreak is considered to be under control.”
Simberi was only beginning to ramp up operations following a restart in early 2022. The mine was shut down in May 2021 following the onsite death of a worker, while the failure of its deep-sea tailings pipeline hampered proceedings even further.
The virus’ outbreak is now expected to have a flow-on effect, with ramp-up impeded and availability of specialist personnel continuing issue.
“Notwithstanding the restoration of national workforce numbers, the company has determined that ramp-up rates will be slower than previously anticipated,” St Barbara said.
“The ongoing difficulties with securing expatriate maintenance specialists and operations management is expected to impact Q4 FY22 and the new guidance range reflects that assessment.”
St Barbara said the outbreak led to a truck shortage, which reduced how much materials could be hauled out of the mine. Third quarter production was now expected to be about 11,000 ounces.
“The face positions in the pits are significantly behind schedule leading to reduced oxide being available in the fourth quarter,” the company said.
St Barbara shares fell 3.3% to $1.47. They were as high as $1.60 in the first days of March.
