Shares in Northern Star Resources slumped today following the release of a quarterly update for its Pogo mine in Alaska, but the gold miner has assured investors that the weak results from the highly-touted operation were expected.
In the September quarter, Northern Star sold 28,962 ounces of gold from its Pogo operations at an all-in sustaining cost (AISC) of $US1,919/oz.
The current spot gold price is currently hovering around $US1,495 mark.
Last quarter, its AISC at the mine was $US1,207/oz and it sold 48,009oz.
The poor quarterly results from Pogo stemmed from grade issues, with the average grade at mine for the quarter sitting at 5.7 grams of gold per tonne, compared to 7.8gpt in the June quarter.
The average grade fell as it mined lower grade ore to supplement a production shortfall, while it seeks to open up new higher grade areas.
Northern Star executive chairman Bill Beament said the lower grades from Pogo had affected overall production and costs, but the underlying performances were strong for the company’s transition plan.
“We have no doubt that the grade will improve as we assess new mining zones and increase the stoping tonnes,” he said.
However, investors were concerned following the release of the results, as its shares tumbled as low as $10.11 at 1.30pm AEST, a 9.2 per cent decrease from its previous closing price of $11.14 each.
It recovered slightly at 2.30pm AEST to trade at $10.38 each.
During the September quarter, Northern Star committed to expanding the Pogo processing plant from 1mpta to 1.3mpta at a cost of $US30 million.
The miner bought the Pogo operation for $US260 million in August last year, and it was heralded by many in the industry as a positive purchase for its global ambitions.
It is the company's first mine outside of Australia.
For the September quarter, Northern Star's Australian operations sold 155,043oz in September quarter at an AISC of $US1,250/oz, which was in line with expectations.
