St Barbara renews focus on Leonora

While it was a great pick-up, St Barbara has never got close to 500,000oz. The closest it got was 403,000oz in 2018, and its latest guidance downgrade, all these years later, has group production for 2021 weighing in at between 330,000-360,000oz.A 500,000oz-a-year producer commands market attention and the attendant premium such attention can deliver. So there is nothing wrong with having it as a goal as St Barbara has had, year after year.But still no cigar, even with the group having returned the Gwalia mine at Leonora to mainstay production status following its 2008 restart, and a whole bunch of wheeling and dealing in assets in between.The wheeling and dealing included assets sales in WA, including King of the Hills to Saracen in 2015. A former ore supplier to Gwalia, KOTH is now being developed as a 150,000oz annual producer by its new owner, Red 5, after it notched up major exploration success at the historical operation.But the main feature of St Barbara's push to become a 500,000oz annual producer has been its aggressive overseas moves by previous CEOs.First up there was the 2011 acquisition of Allied Gold which delivered Simberi in PNG, and the disastrous Gold Ridge operation in the Solomon Islands.Then came the Atlantic Gold acquisition in 2019 which delivered gold production in Nova Scotia.All up, the price tag on the overseas acquisitions was $1.41 billion. But still no 500,000oz-a-year for St Barbara, which is kind of interesting given the company's market cap is all of $1.24 billion this week.The target remains, and its latest champion is St Barbara's newest CEO, Craig Jetson. His plans came together in December with the release of a two-stage uplift manifesto to get to more than 500,000oz in 2025.The first uplift - called Building Brilliance - has production rising from 382,000oz in FY20 to 390,000-430,000oz in FY23.Its focus is on maintaining production at Atlantic and Simberi under declining grades, and steadily increasing production at Gwalia.The second uplift is meant to carry gold production to 520,000-570,000oz in FY25.Its focus is on delivering near-term expansions at Gwalia so it's producing 215,000-240,000 in 2025, and subject to permitting, expansions at Simberi (the switch to a sulphide operation) and at Atlantic (development of satellite pits to replace ore from a depleted Touquoy pit).That's all well and good. St Barbara could well get there. But in a progress report on the uplift plans for Gwalia earlier this week, a big question was left hanging - could St Babs have got to the long cherished 500,000oz rate earlier had it just stayed in its backyard of Leonora?Hindsight says yes. That's because the update disclosed an additional 1.4Moz of gold had been added to the mineral resources at Leonora - 800,000oz from an open cut position at Gwalia which would be mined at the end of the underground operations, and 600,000oz at Harbour Lights, 1.5km from Leonora.The 1.4Moz is in addition to another nearby deposit, the 600,000oz Tower Hill.Tower Hill and Harbour Lights have now been wrapped into a preliminary feasibility study, the idea being that their development can feed an expansion of the Leonora mill from 1.2Mtpa to 1.7Mpta, or underpin the building of a new 2-4Mtpa mill.It really is the sort of stuff St Barbara should have been working on back in 2018/2019 when the gold price in Aussie dollars broke out to more than $2,000 an ounce, a level close to industry nirvana.And that is not including what might have come from the Jasper region, 25km north of Gwalia, had St Barbara got cracking with the drill bit there when the gold price took off. The region includes a number of historical open cuts crying out to be tested as potential supply sources for an expanded Gwalia mill. That's what is happening now.The same can be said about the 39 regional targets identified along the 60km of prospective strike on the Keith-Kilkenny shear zone in what St Barbara itself said is one of the "most prolific gold producing regions in the Goldfields of WA".Again with hindsight, St Barbara would be in a better position had it put more focus on the near mine and regional potential of its Leonora ground when $2,000 gold arrived. Now it is doing just that is an acknowledgement that the deep and ageing Gwalia mine is not up to the task of filling the current mill, let alone a bigger one.For a time it looked like it could. That was when grades were elevated, feeding the boldness for St Barbara to head off overseas in an effort to achieve its 500,000oz-a-year ambition.Now that Leonora is getting the love it deserves, the ambition might just finally be achieved. Not before time.

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