21/01/2021 - 12:00

Super Pit owners enjoy positive quarter

21/01/2021 - 12:00

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Goldminer Northern Star Resources has enjoyed a spike in quarterly sales and significantly reduced its debt, while Saracen Mineral Holdings achieved record production at its WA mines.

Super Pit owners enjoy positive quarter
Bill Beament says Northern Star is on track to meet its production and financial targets for FY21.

Goldminer Northern Star Resources has enjoyed a spike in quarterly sales and significantly reduced its debt, while Saracen Mineral Holdings achieved record production at its mines in Western Australia.

Northern Star, which plans to merge its assets with fellow Kalgoorlie Super Pit owner Saracen next month, sold 252,899 ounces of gold at an average all-in sustaining cost (AISC) of $1,825/oz in the three months to December 31.

That met the upper end of Northern Star’s guidance and represented an 11 per cent spike in quarterly sales and a 17 per cent climb over the full year.

The group mined 244,310oz, down 2.3 per cent on the September quarter but up 1.4 per cent over the year.

That included 48,460oz mined from Northern Star’s 50 per cent share in the Super Pit, which it purchased in January last year from US-owned Newmont Corporation for $US800 million.

Production at the pit was up 5.3 per cent on the September quarter.

Northern Star also signalled a “standout performance” at its Pogo goldmine in Alaska, given the team had reported more than 100 coronavirus cases.

Pogo produced 58,744oz, down 2 per cent on September and up 10 per cent on 2019.

Northern Star said strong quarterly production and cash flow across the group enabled it to significantly reduce its debt by $125 million, to $375 million.

The group strengthened its balance sheet in the process, chairman Bill Beament said, with $372 million in cash, bullion, and investments reported at December 31.

“I am very confident that the combined group is on track to meet the production and financial targets we have outlined,” he said.

“The potential productivity gains and growth opportunities are immense and are particularly valuable to investors, given the lack of growth in so much of the global gold industry.”

Northern Star expects to produce 1.6 million ounces of gold in FY21.

Saracen said it also remained on track to meet its full-year guidance (between 600,000oz and 640,000oz) after reporting solid production during the December quarter, including record output at its Carosue Dam operations, south of Laverton.

Quarterly production totalled 155,122oz, up slightly on the September quarter and surging nearly 30 per cent on December 2019.

That was helped by the Saracen's recent Super Pit purchase, with its share in the mine contributing 59,446oz to production.

The group sold 150,163oz of gold over the quarter at an average AISC of $2,322/oz, while reporting $466 million in cash, bullion, and investments and $283 million in debt.

Saracen plans to pay a 3.8-cent, fully-franked dividend to shareholders prior to merging with Northern Star.

Its shares were up nearly 2 per cent at 3:32pm AEDT to trade at $5.14, while Northern Star shares were up 1.5 per cent to $13.62.

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