SBM -21.35%: the small-cap gold miner saw its shares tumble today after a disappointing production update. 2Q production was down ~5% on the previous quarter to 61koz, while costs rose 7% to $2,666/oz. While the company said most assets were performing in line with expectations, their main WA asset in Leonora saw lower grades than expected, causing both production to fall and costs to climb. As a result of the poor 2Q, St Barbara now expects production to come in at the low end of previous guidance and costs at the high end. St Barbara are currently in negotiations with Genesis (GMD) to merge their WA assets into a new entity, and spin out the remaining ‘non-core’ gold assets in Canada & PNG. We like the deal, however, the disappointing production numbers raise concerns around the economics.
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