SBM - St Barbara Limited

[noirua]

Re: SBM - St. Barbara Mines

"June 2009 half production achieved forecast": http://www.asx.com.au/asxpdf/20090710/pdf/31jhp4yhl92763.pdf

 

[explod]

Re: SBM - St. Barbara Mines

I think that the latest report is very reasonable and that good reductions to production costs are going to be achieved with the direction now. Certainly a lift in the gold price is needed. I will be again looking at this one at this level.

Folowers obviously a bit spooked by the current drop.

 

[Uncle Festivus]

Re: SBM - St. Barbara Mines

The notes payback is the issue, as they currently don't have enough funds to pay it back when due, unless they start selling things and/or another capital raising of some sort. The second problem is equity dilution, which is negating any upside from any production efficiencies and gold price appreciation.

The next 12 months is critical for SBM, so unless & until a satisfactory outcome for the notes is achieved in the meantime, and if the general market comes under pressure also, then 4.5% in the bank might give a better return. For me it's outside of my risk/return channel.

 

[noirua]

Re: SBM - St. Barbara Mines

The notes payback is the issue, as they currently don't have enough funds to pay it back when due, unless they start selling things and/or another capital raising of some sort. The second problem is equity dilution, which is negating any upside from any production efficiencies and gold price appreciation.

The next 12 months is critical for SBM, so unless & until a satisfactory outcome for the notes is achieved in the meantime, and if the general market comes under pressure also, then 4.5% in the bank might give a better return. For me it's outside of my risk/return channel.

Yes, all this borrowing and ultimate reliance on Gwalia Deeps coming out great increases the risk factor. Stock seems very cheap if all goes well but the downside on a future low gold price, doesn't seem likely at the moment, is cause for weighing up the risk factor.

Possibly a useful stock to spice up a heavier low risk portfolio.

 

[Sean K]

Re: SBM - St. Barbara Mines

Possibly a useful stock to spice up a heavier low risk portfolio.

HUH?

Nice idea. I'm going to go out and purposefully buy a stock to make my portfolio more risky. Sounds useful! LOL

They tried to paint a fluffy picture in the strategic review but had to admit:

• Forecast cash for June 2010 not sufficient to cover potential full redemption of the convertible notes (currently A$77.1m) on 4 June 2010
• June 2010 cash position is challenging and made more difficult by
– Inability to arrange normal working capital and environmental bond guarantee facilities in the current economic climate
– Potential for WA Government to lift moratorium on environmental bond rate increases from Dec 09
– Gold price volatility risk

So more dilution to come.

What's the go with the issue of option to the CEO?

18 May 2009
Following shareholder approval at an Extraordinary General Meeting held on 5 May 2009, the Company has issued Mr Tim Lehany, Managing Director & CEO with 1,508,099 employee options.

For what? Taking the company to a fresh lows?

Those 200m shares issued at 41c were a good pick up.

Cash costs still around $1000 is the killer.

The only way to play this is to trade it. And the only way to make any money that way would have been shorting it.

Continues to set low targets and fails to achieve them.

 

[noirua]

Re: SBM - St. Barbara Mines

A wild and woolly stock is SBM the former Endeavour Resources. Always a survivor despite extreme problems at times and has always come good in the end for patient investors.
A great ride in the bucking bronco stile, just hold on.

Boomed in the 1970's and right up to the 1987 crash. Well published for its mid 1990's rocket to around $3.00 in the Atkins boom days and its slide to 2 cents in the early 1990's.

Never give up on SBM, that's my view anyway, my blog1 shows the reason why it remains my best friend.

 

[Sean K]

Re: SBM - St. Barbara Mines

A wild and woolly stock is SBM the former Endeavour Resources. Always a survivor despite extreme problems at times and has always come good in the end for patient investors.
A great ride in the bucking bronco stile, just hold on.

Boomed in the 1970's and right up to the 1987 crash. Well published for its mid 1990's rocket to around $3.00 in the Atkins boom days and its slide to 2 cents in the early 1990's.

Never give up on SBM, that's my view anyway, my blog1 shows the reason why it remains my best friend.

Surely this is not anything that Endeavor ever was?

Just checking their past anns and presentations to check what they've been promising to deliver.

Interesting slides from an Aug 07 Diggers and Dealers piss up:

Objectives - 2007/08
Produce 175k oz pa @ A$505/oz cash cost at Southern Cross
Expand open pit reserves at Southern Cross and Leonora
Hoover Decline to reach reserves by March 08
Recommence Gwalia gold production by Sept 08
Discover nickel and copper/zinc at Leonora
In preparation for 450,000 oz annual production

Longer Term Objectives by 2010…
Expand Southern Cross & Leonora production to
600,000 oz pa
Moving from 3rd to 2nd quartile of Australian cost curve
Pursue growth through acquisitions
Convert exploration successes into shareholder wealth
Cash flow funds aggressive growth


600K oz au by next year! Whoohoo!!



Lets see if their targeted gold production of 295,000 – 315,000 ounces in FY09 is met.

The Sep 08 was 36k, Dec 08 was 67k, Mar 09 was 60k, so the June Qtr will need about 150k oz. Hmmmm

 

[refined silver]

Re: SBM - St. Barbara Mines

I only skim read the news release but thought it said closing down for the moment one of the mines which is producing about 50% of its gold.

Big problems with convertible note in 12 months too.

Could be close to support or could still halve from here.

Like I said, a very highly leveraged play on the price of gold.

 

[Sean K]

Re: SBM - St. Barbara Mines

Like I said, a very highly leveraged play on the price of gold.

Yep, for better, or worse. Huge risk if POG doesn't go verticle like we expect. Lets just imagine for a moment that POG corrects back down to the $600s and the AUD strengthens. SBM cash costs remain about $900-1000, AND they limit production. Debts, no cash flow, market in depression, can't raise money ....

Or, everything is rosey!

 

[jman2007]

Re: SBM - St. Barbara Mines

The notes payback is the issue, as they currently don't have enough funds to pay it back when due, unless they start selling things and/or another capital raising of some sort. The second problem is equity dilution, which is negating any upside from any production efficiencies and gold price appreciation.

Yeah I agree,

Perhaps their best option may be to try and negotiate an early conversion of the notes with the major holders, at a discounted rate (I'm not sure what the notes are currently worth). Despite the understandable and predictable reaction from the smaller investors, this would still clearly be a better outcome than sending SBM to the wall.

 

[noirua]

Re: SBM - St. Barbara Mines

Yep, for better, or worse. Huge risk if POG doesn't go verticle like we expect. Lets just imagine for a moment that POG corrects back down to the $600s and the AUD strengthens. SBM cash costs remain about $900-1000, AND they limit production. Debts, no cash flow, market in depression, can't raise money ....

Or, everything is rosey!

This guessing game could go many ways and gold could go to $1200 oz quite easily and the Aussie back to AU$1.50 to the greenback.
That's the risk factor and it's a matter of accepting risk and of course managing it.

 

[Sean K]

Re: SBM - St. Barbara Mines

I can't even see why anyone would look at the depressed price and consider them a takeover option. It's a bit like CTO. 10m oz au (somewhere) in the ground, but just can't get it out. Too deep, too complex, too hard.

I hope POG does go verticle, and they can turn it around for buy and holders.

 

[Sean K]

Re: SBM - St. Barbara Mines

LOL

And how about this slide from a presentation last year.

1m oz au by 2010?

LMAO

Have they even got a mill that can do that?

 

[noirua]

Re: SBM - St. Barbara Mines

LOL

And how about this slide from a presentation last year.

1m oz au by 2010?

LMAO

Have they even got a mill that can do that?

These things do go wrong at times. One of my coal stocks that went into pig iron production forecast 2.5 million tonnes per annum by 2004. Result in 2004 was zero production.
They forecast $78 million profit in 2006, when we got there it was less than $30 million.
This year profits are around $400 million.

Patience is a virtue, and just like SBM a gutsy hold.

 

[Sean K]

Re: SBM - St. Barbara Mines

These things do go wrong at times. One of my coal stocks that went into pig iron production forecast 2.5 million tonnes per annum by 2004. Result in 2004 was zero production.
They forecast $78 million profit in 2006, when we got there it was less than $30 million.
This year profits are around $400 million.

Patience is a virtue, and just like SBM a gutsy hold.

Well, this isn't just 'go wrong' imo, but spectacularly poor communication, management, and real knowledge of your people and resources. During a time when POG is at all time highs. Maybe Ed was the issue and hence the sudden change in CEO. Keeping him on as a 'consultant' because he knows the projects so well is a bit of a joke.

I would actually be interested to know the details of the processing facility capacity. On a range of 5-10 g/t to produce 1m oz au pa would require a 5-10m tpa mill. If Chicken was still about he would know of course. He believed everything Ed said too. lol

 

[noirua]

Re: SBM - St. Barbara Mines

Well, this isn't just 'go wrong' imo, but spectacularly poor communication, management, and real knowledge of your people and resources. During a time when POG is at all time highs. Maybe Ed was the issue and hence the sudden change in CEO. Keeping him on as a 'consultant' because he knows the projects so well is a bit of a joke.

I would actually be interested to know the details of the processing facility capacity. On a range of 5-10 g/t to produce 1m oz au pa would require a 5-10m tpa mill. If Chicken was still about he would know of course. He believed everything Ed said too. lol

I bought my first shares in the 1970's, can't check the date as the files in a loft over 19,000Km away.

SBM has a hope and dreams factor than can become extreme. Sure you can say I once bought at 4c to 8c and sold from $1.80 up to $3 - basically it was a dream and the major holder Mr Atkins (he bought from the ONCE infamous Mr Bond - back in mining as a successful director and investor again), who became one of the richest directors in Australia, was bankrupted not many years after. I only sold because I was desperate at the time.

Am I suggesting that all the goings on of the past could happen ...

 

[Trembling Hand]

Re: SBM - St. Barbara Mines

What a classic example of hope and fundie "value" getting smashed on the sea of reality,

Price.

Its been a pig to holders long before any of the outsiders started to see the fundamental flaws in this mangey dog.

 

[noirua]

Re: SBM - St. Barbara Mines

What a classic example of hope and fundie "value" getting smashed on the sea of reality,
Price.
Its been a pig to holders long before any of the outsiders started to see the fundamental flaws in this mangey dog.

High risk stock. Only invest what you can afford to lose.
So many young people do research and think this is the way to make a fortune. Along comes a bear market in mining stocks and you've seen nothing yet, believe me. That feeling of being all but dead in the water is something that remains for the rest of our lives - get a life belt, a safe investment policy that still allows risk, we can learn from it.

 

[Sean K]

Re: SBM - St. Barbara Mines

I bought my first shares in the 1970's,

But noirua, this is not that company.

Some emotional baggage to be defending them now, I feel.


On the positive side, you can not argue with a JORC 10m oz au at 10g/t. No matter how deep. AND are building up a 2m + @ 15g/t deposit in Patagonia (almost) at 500m ++ and their mc is off the planet. Overpriced imo, but nonetheless, off the planet. Perhaps their troubles will come when the true Capex and realistic Opex is announced, or proved underdone.

For SBM, I say again, they continued to dramatically fail to achieve. And have so for 2 years.

What were they thinking with claiming 400-600k oz au about now, and 1m oz au next year.

High potential for this to go completely belly up in this environment and shareholders to receive whatever the administrators can salvage from the sale of assets.

I hope I am wrong. Maybe that 10m @ 10 g/t is just around the corner, and they learn how to get cash costs back to $500 which would be reasonable.

 

[refined silver]

Re: SBM - St. Barbara Mines

Nouria's blog tells his story in SBM.

If POG goes thru $1000 and keeps going, SBM will do very well, if POG drops further or stays rangebound in the 800s and 900s, or even 700s, SBM could lose 50% or more from here. That is a bummer if you are holding now, but if you are not, sets up the sort of entry that made Nouria.