Burnt fingers in Guadalcanal gold mine battle

Australian gold mining firm pushed off GuadalcanalThe value of bonds issued by St Barbara Limited could be as little as 30c on the dollar as the Australian company struggles to exit from its Gold Ridge mine on located on the island of Guadalcanal, part of the Solomon Islands.

In August St Barbara evacuated all its staff from the mine after reporting a ‘serious escalation’ in security concerns, after the latest in a series of natural and man-made disasters at Gold Ridge this year.

In April, operations at the mine which produced 46,000 ounces of gold in 2013, were halted following torrential rains that caused extensive damage and led to the evacuation of expat workers.

St Barbara’s staff were subsequently ordered by authorities not to return to the site. When that dispute was settled In June St Barbara found a large number of illegal miners had set up camp at the Gold Ridge open pit.

Bloomberg reports St Barbara has seen the value of its $250 million of notes, the bulk due only in 2018, tumble last week:

More pain may loom: Standard & Poor’s pegs their value at just 30 cents to 50 cents on the dollar in the event of default.

The odds of that happening are rising after defaults by compatriot miners Mirabela Nickel Ltd. and Midwest Vanadium Pty. in the past year.

Chief Executive Officer Bob Vassie told Bloomberg “There’s a possibility, which is well advanced, of a win-win where the government can secure the future of the asset and we can leave with a clean exit with limited liabilities. That’s what we are shooting for.”

Australian gold mining firm pushed off Guadalcanal
The Gold Ridge mine commenced operations in 1998. After a period of being dormant, in 2010 a $150 million refurbishment and expansion project to around 100,000 ounces per year was started. St Barbara acquired the Gold Ridge mine in 2012 for over $500 million, according to the company website.

Gold Ridge is situated approximately 40 km by road from the Solomon Island capital city Honiara. Honiara is approximately three hours flight from Brisbane, Australia.

St Barbara last year produced 365,000 ounces of gold, with the bulk coming from its Gwalia mine in Western Australia.

Image courtesy of St Barbara.

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