Northern Star Resources has reported big growth in its resource and reserve base on the back of increased exploration activity, but the market seemed to focus instead on a relatively small downgrade in its production guidance, with the gold miner's shares closing 5.6 per cent lower today.
Managing director Bill Beament said the company had increased its total resource by 44 per cent to 8.9 million ounces, and had made eight discoveries over the past year.
The company’s reserves were up by 26 per cent to 1.5 million ounces, and it vowed to continue investing in exploration.
It said the new estimates were a direct result of its $50 million exploration campaign over the past financial year.
Mr Beament said the results demonstrated that all its projects were set to enjoy ongoing growth in mine life.
“These figures more than justify our decision to invest $50 million in exploration over the past year,” Mr Beament said in a statement.
“They also underpin our commitment to spend another $35 million on exploration this financial year.
“We have always said that the major gold systems at each of our projects would be shown to host significantly more gold. These results prove that to be the case.
“They also provide us with further confidence that we will continue to identify more gold and continue to grow mine lives.”
The company said the additional resources had come at a cost of just $19/oz, highlighting the extremely attractive economics of the exploration and growth strategy.
“The simple fact is we would never be able to acquire resources or reserves at anywhere near that price,” Mr Beament said.
“Growth through exploration unquestionably delivers shareholders superior returns. The economics of this strategy are even more attractive when it is remembered that each new ounce allows us to further leverage our existing infrastructure.”
Northern Star also announced today that it expects to produce 535,000-570,000oz at an all-in sustaining cost of $1,050-$1,100/oz in the current financial year.
That is down from guidance of 550,000-600,000oz previously.
The company said this reflected mine schedules designed to optimise its asset base to sustain production rates over the long term.
Northern Star said beyond 2015-16, scheduling would be altered to reflect the start of production at the Central Tanami project and additions due to its exploration success.
Mr Beament told reporters on the sidelines of the Diggers and Dealers mining conference in Kalgoorlie today that Central Tanami could make a big addition to the company’s production.
"It's potentially an up to a 150,000-ounce producer," he said.
Northern Star shares closed 12 cents lower today at $2.03.
