St Barbara (ASX:SBM) Receives $32m Deposit From Lingbao- Is This Gold Stock a Buy?

Simberi Expansion: The Real Catalyst Ahead

St Barbara (ASX: SBM) rose 3.4% to 60 cents last week after confirming that Lingbao Gold has deposited A$32 million into escrow. This deposit is part of the A$370 million deal announced two weeks ago, where the Chinese gold producer will buy 50% of St Barbara Mining. For investors watching this turnaround story, the big question is whether there’s still upside after the stock has tripled from its 52-week low of 19 cents.

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Lingbao’s Deposit Shows Real Commitment to the Simberi Deal

The A$32 million will sit in escrow until Lingbao completes its A$370 million investment to acquire half of St Barbara Mining. This subsidiary holds 80% of the Simberi gold project in Papua New Guinea. The deal values 100% of Simberi at A$800 million, which represented a 31% premium to St Barbara’s market cap at the time of announcement. With the share price rising towards 60 cents, that valuation gap is narrowing as the market re-rates the company.

Why does this premium matter? Lingbao, a major Chinese gold producer worth US$2.8 billion, sees value that the market has missed. When a big international player puts real money on the table at above-market prices, it’s a strong vote of confidence.

Kumul Minerals is also buying 20% of Simberi for A$100 million, bringing the total investment to A$470 million. The transaction still needs regulatory approval, but Lingbao locking up A$32 million shows this is more than just talk.

St Barbara Is Now Fully Funded With Gold at Record Highs

The biggest shift in St Barbara’s story is straightforward: funding risk has largely been removed. The company now has enough cash to cover its share of the Simberi expansion, which is expected to cost about US$275 million between FY26 and FY28. On top of that, it can fund another US$50 million to US$70 million in early growth spending across FY26 and FY27.

What does the expansion deliver? The feasibility study shows 2.1 million ounces of gold produced over 13 years, from Q2 FY26 to FY39. Annual output will rise above 200,000 ounces from FY29. All-in sustaining costs are forecast between US$1,100 and US$1,400 per ounce during peak production years.

Here’s where it gets interesting. With gold trading at all-time highs near US$4,520 per ounce, these cost projections suggest exceptional operating margins of up to US$3,400 per ounce during peak production years. That’s exceptional profitability by any standard.

The funding also frees up St Barbara to advance its Atlantic projects in Nova Scotia, Canada. The company no longer needs to raise money by issuing new shares, which would have diluted existing shareholders.

The Investor’s Takeaway

After tripling from its lows, is there still value in St Barbara?

The bull case: The premium valuation paid by Lingbao supports the view that Simberi is a high-quality asset. Gold prices are at record levels, which underpins strong profit margins. Funding risk has largely been removed, and if the expansion is delivered as planned, there is further upside as production ramps up to around 200,000 ounces a year.

The bear case: The stock has already run hard. PNG comes with political and tax risks, though the IRC’s agreement in September 2025 to revoke and reissue prior assessments has cleared the path for the mining lease extension. The deal isn’t fully closed yet, and any delays could disappoint. At 60 cents, a lot of good news is already priced in.

Our view: For investors with a 12-24-month view, the risk-reward still looks reasonable. The Lingbao partnership is transformational, and gold prices provide a strong tailwind. But if you want a safer entry point, waiting for a pullback towards 50 cents would give you more margin for error. Current holders might consider trimming some shares into strength while keeping core exposure to the expansion story.