The St Barbara Ltd (ASX: SBM) share price has crept out of the money in early trade. St Barbara shares are now exchanging hands at $1.63 apiece, a 4.66% drop on the day.
Although there is no market sensitive news today, we examine what's behind St Barbara shares of late.
Image source: Getty Images
A bit more on St Barbara
St Barbara is a gold mining company with interests in Australia and Papua New Guinea.
The bulk of St Barbara's revenue is obtained from its Leonora site in WA, through the Gwalia underground mine.
At the time of writing, St Barbara has a market capitalisation of $1.21 billion.
Broker downgrades
St Barbara shares have faced downward pressures since investment bank Citigroup revised its recommendation on the St Barbara share price.
Citi revised its recommendation from "buy/high risk" to "neutral/high risk" in a note to investors, citing headwinds to St Barbara's production forecasts.
For instance, Citi estimates its Gwalia site must "consistently replicate June quarter to achieve bottom guidance of 180koz".
In addition, costs will "remain high" for the company, implying "$1,710 – $1,880/oz vs FY21 (actual) $1,616/oz" as per Citi.
Moreover, the broker's stance on gold also folds into its narrative on St Barbara. As such, it has cut its price target to $1.75 per share, implying a 6.3% upside potential at the time of writing.
St Barbara's quarterly results
St Barbara reported a 24% year-on-year decrease in fourth-quarter gold production to 82,698 ounces.
However, the company also halted operations at its Simberi site after the death of a worker. Issues were also found with a waste disposal pipeline throughout the quarter, which also contributed to the shut-down at Simberi.
In addition, St Barbara acquired an approximate 20% stake in Kin Mining NL (ASX: KIN), and announced its Leonara Province plan. This plan adds around 1.4 million ounces on top of the 5 million ounces of gold in mineral resources, as per the company.
Moreover, St Barbara estimates "lower than expected" ore grades at its Atlantic site in FY22, and that forecasts are "marginally weighted to H2 FY22". Note this coincides with Simberi's restart in December, as per the company.
Investors have punished the St Barbara share price over the past few weeks after these two events in the final week of July.
To illustrate, St Barbara shares have slipped around 12% into the red over the past week. Even in the last month, the St Barbara share price is down 12.7%.
St Barbara share price snapshot
The St Barbara share price has posted a loss of 30% this year to date, extending the last 12 month's loss of 54%.
These results have lagged the S&P/ASX 200 Index (ASX: XJO)'s return of around 25% over the past year.
