St Barbara s Gold Ridge operation in the Solomon Islands.
St Barbara's Gold Ridge operation in the Solomon Islands.

Embattled gold miner St Barbara has flagged the potential sale of its Gold Ridge operation in the Solomon Islands.

Production at Gold Ridge has been suspended since April 3 in the wake of Tropical Cyclone Ita which resulted in torrential rain and flooding.

St Barbara, which was already battling sky-high costs since acquiring the assets in its $556 million takeover of Allied Gold in 2012, does not expect to resume production this year.

St Barbara employees were prevented from entering the country until mid-June by an immigration ban imposed by the Solomon Islands Government.

The company has since cut workers to reflect scaled-back operations, which are focused on the care and maintenance of the processing plant and lowering the level of rainwater in the tailings storage facility. Dewatering has begun.

"Options for the future of the mine continue to be actively considered and evaluated in conjunction with the Solomon Islands Government," St Barbara said in its quarterly report released today.

"Options under active consideration include the possible sale of the operation, possible joint venture or reducing activities to care and maintenance."

The Gold Ridge crisis comes as St Barbara revealed today it has reported to Australian Federal Police a potential breach of its anti-bribery and anti-corruption policy.

The amount of the benefits in the alleged breach, by a foreign public official, were not disclosed by St Barbara or considered relevant to its financial results.

St Barbara has also flagged further cutbacks at its Perth office over coming months and the closure of its Brisbane office in the September quarter.

Meanwhile, St Barbara is set to extend the life of the King of the Hills underground mine near Leonora.

Drilling for extensions to the King of the Hills deposit has been completed and updated reserves should be released to the market at the end of August.

But St Barbara said the revised ore reserve estimate indicates the mine life will extend beyond this year and expects the operation to produce between 60,000 and 70,000 ounces for financial year 2015.

King of the Hills, which entered production in May 2011, exceeded guidance by 18 per cent with production of 70,711oz in the 12 months to June 30.

St Barbara's flagship Gwalia mine also beat guidance by 10 per cent, producing 214,319oz which was boosted by a strong June quarter when the grade increased to 9.1g/t as a result of improved blasting practices and higher-grade shoots.

Gwalia is expected to achieve production of between 180,000 and 200,000 ounces for financial year 2015.

Capital expenditure should range between $45 and $50 million with continuing decline development and $6 million for an upgrade to the refrigeration plant.

St Barbara increased its cash position by $23 million during the June quarter to $81 million.

Today's quarterly report was the first for Bob Vassie, who took the helm at St Barbara this month after Tim Lehany's resignation as managing director.

Shares in St Barbara were up 4.7 per cent at 11 cents at 10.30am.

The West Australian

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