Nate
Overall I expect the cashflow in the next 3 quarters to be similar to what was achieved over the average in the last 3 quarters, details of which can be seen in the September quarterly report -
http://www.aspectfinancial.com.au/d...Jyb3JwYWdlcy9wZGZkZWxheWVkLmpzcA==&popup=true
There was a possibility mentioned in some webcast that during some portion of the work to be undertaken in respect of the new Gwalia mine shaft there could be some disruption to production, but the impact of that is not scheduled for this financial year.
For around the next 5 years they are supposed to be able to maintain production at Gwalia because they will continue to be mining through a significant area of high grade ore body, and this should mean they can maintain production at around current levels. I am not sure how costs will look as they mine deeper - they have plans to contain costs so perhaps it will be much the same, giving them a very high operating margin.
As for Simberi, we have been told that they have extended the mine life by another year into 2020, before they need to put the mine on C&M - unless they can find more oxide ore. I think the share price will take a hit if that were to happen - Gwalia alone does not justify a $1.6 billion market valuation.
I expect SBM to keep adding to its cash hoard and at some stage in the next few years to buy another miner in order to continue its existence beyond the life of Gwalia. It is likely that Gwalia's LOM will be extended through exploration by at least another 4 years beyond the current 7 years, and that they will proceed with some sort of development at Simberi to mine the sulphide ore deposit - note that its grade/tonne has been significantly revised upwards which I assume should improve the economics of this project.
At the current AUD POG I think the share price can be maintained over $3.00 over the next 3 quarters, especially since they are in strong position to add to their dividend in February and continue to grow their cash balance. The USD POG usually picks up after the FOMC announces an interest rate hike (expected in December) and the gold price is buoyant from mid January into late Feb/early March.
Obviously market sentiment is important to the share price, and if we do see a significant hit in the US POG then we could see overseas fundies selling down Oz goldies, including SBM.
You may want to check what analysts think of SBM, I understand Macquarie Bank is pretty positive on them (as mentioned on Hotcopper). Here is one site with some targets
http://www.4-traders.com/ST-BARBARA-LTD-6494279/consensus/
Personally I am hoping the share price retreats under $2.80 so that I can top up. So far I have been wrong about a major end of year gold price pullback.
Good Luck.
loki
(20min delay)
