An Australian gold miner has sold off its operations in Papua New Guinea to a Chinese state-owned company.
Western Australia-based St Barbara is offloading its ownership of the New Simberi gold project to the Lingbao Gold Group for $410 million.
The announcement caused St Barbara's stock to spike by more than 20 per cent to 88 cents before midday on Thursday, before falling back slightly to 86 cents.
The deal ensures St Barbara receives a 2.75 per cent royalty on all future gold and silver production dug out of the PNG mine, executive director Andrew Strelein said.
The miner estimates that the royalties will produce cash flows of $286 million for the duration of the project's lifespan.
"St Barbara recognises that New Simberi is an outstanding development project and looks forward to participating in the future benefits via the royalties over New Simberi's production," Mr Strelein said.
Given that, its board is considering paying shareholders a further special dividend of about 13 cents per share, on top of a five cent dividend announced at its annual results in August, once the transaction is completed.
The Simberi operations are located on a small island in an archipelago roughly 300km off the PNG mainland.
St Barbara will also receive a 1.5 per cent royalty from any future mineral exploration the Chinese group conducts in the surrounding archipelago.
The deal will also include a $43 million repayment for capital expenditure St Barbara had invested in the project before the deal was done.
The total sale gets close to doubling the company's cash position.
In August, the company reported a 2025/26 net profit just shy of $490 million, a figure that will rise to about $880 million.
St Barbara said it will use the funds to invest in further exploration of its other gold mine in Nova Scotia, Canada.
For Lingbao, it will add to China's surge in buying gold.
The People's Bank of China purchased about 20 tonnes of gold in August, its largest monthly purchase since 2023.
