“Stunning” quarter for Northern Star, says Miningnews.net

14th July 2017
Resources Rising Stars

Northern Star’s record June quarter gold production performance was achieved with one less operation than a year ago, according to the company’s Executive Chairman Bill Beament (reports Miningnews.net editor Kristie Batten).

Northern Star’s operations produced 154,116 ounces of gold in the June quarter, up 22% over March, and sold 147,728oz of gold at an all-in sustaining cost of A$938 an ounce, which Beament described as a stunning result.

The company reached the record with one less operation than this time last year, after selling its Plutonic operation in October 2016.

Beament said the achievement highlighted the strength of Northern Star’s tier one assets.

“The benefits of applying an organic growth strategy to our tier one asset base is clear,” he said on a teleconference.

The company also achieved record normalised free cash-flow of $108 million for the quarter before investing $47 million in organic growth projects.

Cash and cash equivalents increased by $54 million to $447 million after Northern Star paid $18 million in dividends during the quarter.

Output for the 2017 financial year reached 514,735oz of gold, at the top end of guidance of 485,000-515,000oz, while AISC of $1013/oz was at the lower end of $1000-1050/oz.

Gold production for the 2018 financial year is set to increase to 525,000-575,000oz at AISC of $1000-1050/oz.

Production at Paulsens is set to fall to just 35,000-45,000oz from 55,490oz.

After spending much of its time and effort in the past three years on Jundee and Kalgoorlie, the reduced guidance at Paulsens will allow for a similar effort there.

Beament said the company still saw a strong future at Paulsens.

“We need to invest the time and money in the geology to unlock the underlying value,” he said.

Kalgoorlie is set to produce 245,000-265,000oz, up from 225,688oz, while Jundee output will rise to 245,000-265,000oz from 233,556oz.

Northern Star will spend $65 million on expansionary capital in FY18, as well as $35 million on exploration.

The bulk of the expansionary capital and exploration spend – $250 million in the past three years – has been invested, and will underpin a major resource and reserve upgrade and strategy update to be released next month ahead of Diggers & Dealers.

“It will take into account the significant exploration success we’ve enjoyed at these operations,” Beament said.

Argonaut Securities analyst James Wilson maintained a buy rating for Northern Star, but placed his target price of $4.89 under review.


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