St Barbara Ltd (ASX:SBM) has been hit with a tax claim from Papua New Guinea (PNG) authorities seeking 523 million kina (A$206.8 million), alleging errors in tax filings dating back nearly two decades.
The claim, which includes a 200% penalty, accuses the gold miner of fraud and has prompted St Barbara to announce plans to vigorously defend its reputation.
The news shook investor confidence, sending St Barbara’s shares down 34% to 20 cents on Tuesday, erasing more than $100 million from its market capitalisation. Shares in the company have today regained 8.5% to 21.7 cents in morning trade.
This dispute centres on deductions for depreciation and a 2018 debt-for-equity recapitalisation of its Simberi Gold subsidiary, with PNG’s Internal Revenue Commission alleging violations of tax laws beyond the statutory five-year limitation period.
St Barbara CEO Andrew Strelein expressed disappointment over the timing of the IRC’s amended assessments, delivered on Christmas Eve just as the tax office was closing for the holidays.
Strelein criticised the alleged miscalculations and legal errors, stating, “Simberi Gold has utilised reputable tax advisors throughout the relevant periods, has made full and true disclosures of all material facts and strongly rejects any suggestion of dishonest conduct.”
The claim comes amid critical negotiations for the renewal of St Barbara’s Simberi mining lease and the company’s recent memorandum of understanding with PNG’s state-backed Kumul Minerals, which is poised to acquire a 20% stake in a joint venture for the Simberi project.
St Barbara plans to appeal the tax assessment, with a submission deadline of February 17, 2025.
Meanwhile, the company remains focused on advancing its Simberi Sulphides Project, targeting increased production to 230,000 ounces by 2034. It is forecast to produce 65,000-70,000 ounces in the current 2024-25 financial year.