Shares in St Barbara have tumbled more than 30 per cent after the gold miner said it would have to keep using trucking to extract gold from its 123-year-old Gwalia mine in Leonora, Western Australia.
St Barbara said on Friday it had explored using two other methods to extend the life of the mine but determined they were infeasible.
"We vigorously pursued slurry pumping technology as a potentially innovative solution to the depth of the Gwalia orebody," St Barbara chief executive Bob Vassie said.
But the geometry of the gold ore didn't support pumping at scale, and there were also ventilation issues, he said.
The gold miner will instead spend $100 million to install additional ventilation and cooling to eventually extend mining to 2.3 km down.
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Production for this fiscal year and next is expected to be constrained until the ventilation is installed, St Barbara said.
It now expects to produce 235,000 to 240,000 ounces of gold this fiscal year, rather than the 245,000 to 250,000 previously estimated.
St Barbara said it expects to be able to keep extracting 1.1 million tonnes of ore per year through 2031 under this plan.
Australia's deepest gold mine, Gwalia was opened in 1896 and managed in its early days by a young Herbert Hoover, who later became the 31st president of the United States.
At 1145 AEDT, shares in St Barbara were down 31.61 per cent to $3.18, a 14-month low.
Royal Bank of Canada analyst Paul Hissey said shares in the company would likely underperform going forward.
"Our negative view is predicated on the notion that SBM is operating at its peak, and production and costs are likely to move in an unfavourable direction over the coming years," he wrote in a note to investors.
While the company is currently running well and has healthy cash projections, what matters is what will happen next, he wrote.
