Northern Star expects cost rise

Northern Star Resources’ full-year production guidance remains unchanged at a healthy 850,000-900,000 ounces, but its shares slumped today after it flagged a lift in all-in sustaining cost guidance.

The company announced costs would rise to between $1,125 and $1,225 an ounce from $1,050-1,150/oz.

This followed a rise in the Australian-dollar gold price in recent months, which the company said allowed it to mine lower-grade ore at its Kalgoorlie operations.

This resulted in development ore tonnes rising 41 per cent from the previous quarter, leading to higher costs.

Shares in Northern Star fell 5.7 per cent to trade at $8.68 by the close of trade.

However, earlier this month the company’s share price reached a record of $9.71, with its share price currently 41 per cent higher than a year ago.

Gold sold by the company in the December quarter amounted to 210,561oz at all-in sustaining cost of $1,365/oz, and it posted a positive operating cash flow increase of 73 per cent to $110 million.

Northern Star executive chairman Bill Beament said higher costs were consistent with the company’s long-standing policy of mining to a margin.

“The higher gold price in the December quarter allowed us to extract lower-grade ore, which reduces production and in turn increase our per-unit costs, without damaging our margins,” he said.

Northern Star is the fourth largest Western Australian gold miner, based on projects in the state, according to BNIQ data.