Northern Star Resources said it was on track to meet production guidance of around 1 million ounces of gold this year, helped by its recent acquisition of a 50 per cent stake in the Kalgoorlie Super Pit and strong performance across its Australian operations, but also disclosed today an increase in its operating costs.
Northern Star Resources said it was on track to meet production guidance of around 1 million ounces of gold this year, helped by its recent acquisition of a 50 per cent stake in the Kalgoorlie Super Pit and strong performance across its Australian operations, but also disclosed today an increase in its operating costs.
The company reported strong growth in gold sales from its Australian operations in the December quarter to 169,584oz.
Northern Star said the recent acquisition of its stake in the Super Pit, which took financial effect at the start of the year, along with strong performance at its Jundee mine in Western Australia has put the company on track to meet production guidance for the 2020 financial year of between 920,000oz and 1.04 million ounces of gold.
However, all-in sustaining costs (AISC) are expected to increase to between $1,240 and $1,340/oz, an increase of approximately $117/oz on historical levels.
Northern Star attributed the higher costs to $60/oz in mine development and capital to establish new targets at its Pogo mine site in Alaska, along with $42/oz in non-cash ore stockpile movements and $15/oz in extra royalty costs associated with higher gold prices.
Despite this, the company reported progress at the Pogo mine, which achieved a 56 per cent rise in production over the quarter to 46,146oz of gold.
Northern Star chairman Bill Beament said the company had strengthened its financial returns and long-life assets.
“We are delighted with the performance of our Australian operations, our strategy at Pogo delivered substantial improvements and we acquired a half-share in one of the most significant gold systems in the world through the KCGM Super Pit deal,” he said.
“We now have four tier-one assets in tier-one locations delivering well over a million ounces a year, underpinned by long mine lives and generating vast amounts of free cash flow.”
Northern Star said it had $1.4 billion in cash, bullion and investments as at December 31, up from $372 million in September, which the company said was a reflection of the funding proceeds used to complete the $US800 million Super Pit acquisition earlier this month.
Its share price closed 3.9 per cent lower today to $12.49 per share.
Meanwhile, Saracen Mineral Holdings, which holds the remaining 50 per cent stake in the Kalgoorlie Super Pit, had a closing share price of $3.96 today, up 2.33 per cent.
The company released its quarterly report yesterday, citing record gold production for the September quarter of 120,127oz at an AISC of $1,098/oz.
Saracen said gold sales for the quarter of 117,575oz at an average price of $2,034/oz had generated quarterly revenue of $239 million for the company.
Its net mine operating cash flow was $91 million for the quarter, up from $82 million in September.
Saracen managing director Raleigh Finlayson said strong performance at its Carosue Dam and Thunderbox operations in WA was complemented by the first-up contribution from the Kalgoorlie Super Pit.
“Saracen now has annualised production exceeding 600,000oz, long mine lives underpinned by established inventories and extensive scope for ongoing organic growth,” Mr Finlayson said in an ASX announcement released yesterday.
“This combination of scale, longevity and growth ensures we are extremely well-placed to deliver strong, sustainable returns across the cycle.”
