Bigger Northern Star rolls with the punches after ‘one-off events’ dampen first quarter after Saracen merger

Northern Star Resources is on track to hit full-year guidance despite production being blunted by a series of “one-off events”, including a two-week planned shutdown of its mill at Kalgoorlie-Boulder’s Super Pit (reports The West Australian).
23rd April 2021
Resources Rising Stars

Northern Star Resources is on track to hit full-year guidance despite production being blunted by a series of “one-off events”, including a two-week planned shutdown of its mill at Kalgoorlie-Boulder’s Super Pit (reports The West Australian).

Northern Star’s first quarterly result since its $16 billion merger with Saracen Mineral Holdings was punctuated by fine-tuning and a minor hiccup at its Thunderbox mill near Leinster.

But that did not derail the new entity that boasts a global portfolio and is one of the world’s biggest goldminers.

Northern Star churned out 366,000 ounces of the precious metal for the three months to the end of March.

It rounded off the quarter with cash and bullion of $696 million against corporate bank debt of $658m.

That saw Northern Star move back into the black just six weeks after it absorbed Saracen on February 12.

It also came after it shelled out $153m in dividends, $61m in merger and acquisition costs and spent $167m in growth capital and exploration.

Across the group, Northern Star sold 368,273oz at all-in sustaining costs of $1598 an ounce.

That saw the company outlining 1.15 million ounces of gold sales for the nine months to end of March against full-year guidance of 1.5-1.7moz.

Speaking at a conference yesterday, Northern Star executive chair Bill Beament said the quarter had been a pivotal period for the merged entity.

“An enormous amount of planning had gone into this integration phase because we were extremely conscious that merging companies together requires the upmost diligence and concentration for success,” he said.

“I’m delighted to report this process has been smoother than we could have hoped for.

“The time and effort that has been put into this integration in the past two quarters has been substantial.”

But while hailing the merger a success, Mr Beament also conceded it had not all been plain sailing.

“In addition to the integration process, our teams have overcome several one-off events which have impacted the results to ensure that we have gone into the final quarter well placed to meet our FY21 targets,” he said.

The one-off events included a two-week shutdown at the Super Pit, which saw gold sales fall to 107,800oz from 117,00 quarter-on-quarter.

Gold sales also fell at Northern Star’s Yandal operations where unplanned maintenance on the Thunderbox mill motor stunted production at 30,100, compared to 36,600 the quarter prior.

Mr Beament also took the opportunity to talk up the Super Pit’s potential under the ownership of one company since gold was first discovered at the Golden Mile in 1893.

“It is simply easier, more efficient and far more effective to drive an extensive drilling and exploration campaign of this nature from one company rather than two,” Mr Beament said.

“We said at the merger the upside at KCGM was immense and everything we have seen so far says we were right and then some.

“This is truly a stunning world-class asset.”

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