Northern Star (ASX:NST) sticks to guidance despite lower gold output

Company News

by Lauren Evans

Northern Star Resources (ASX: NST) has reported a drop in gold production for the three months ending 30 September 2021, but remains on track to meet its FY22 guidance.

In the September quarter, the amount of gold sold totalled 386,160 ounces, compared to 444,000 ounces produced in the previous quarter. The company's three mines, Yandal, Kalgoolie and Pogo, all contributed to the weaker results.

The gold giant's all-in-sustaining cost increased by 9.3 per cent quarter-on-quarter to $1,594 an ounce on rising costs, while group all in cost came in at $1,933 an ounce. However, thanks to a higher gold price and the weak Australian dollar, Norther Star was still making a profit. The average price it received for its gold in the September quarter was $2,345 an ounce for sales revenue of $848 million.

Cash earnings were $165-$175 million for the quarter. Cash and bullion of $756 million, compared to $803 million in the prior June quarter, was a result of paying $110 million in dividends and investing $123 million in net growth capital and exploration.

“This is a solid start to the new financial year and puts us on track to meet our FY22 guidance. With solid production, and costs running slightly above guidance, cash earnings were strong," said managing director Stuart Tonkin.

Northern Star’s FY22 guidance of 1.55-1.65 million ounces at an all-in sustaining cost of $1,475-1,575 per ounce is unchanged. As previously foreshadowed, gold production is weighted towards the second half of FY22, driven by increasing grades at Yandal and increasing mining rates at Pogo. The all-in sustaining cost is expected to decrease over the year, according to Northern Star.

Northern Star’s FY22 net growth capital and exploration budget of $710 million is unchanged. The gold miner's five-year plan targets profitable production growth to a sustainable 2 million ounces per annum by FY26, with declining all-in costs.

“With production, costs and earnings planned to improve as FY22 progresses, we are very well positioned to continue to invest capital into those projects which generate the strongest returns.”

Shares in Northern Star Resources (ASX:NST) are trading 0.2 per cent higher at $9.42.

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