Outages pressure Northern Star at the costs level

Company News

by Glenn Dyer

Northern Star Resources (ASX:NST) has lifted its cost guidance following unplanned mill outages which impacted the company’s operations in Kalgoorlie (the SuperPit) and Alaska (Pogo).

The miner told the ASX in its quarterly report that it sold 362,750 ounces of gold in the three months to March – down from the 380,075 ounces sold in the March, 2022 quarter – at All-in Sustaining Cost (AISC) of $1,813 an ounce ($A1,656 an ounce in the year ago period).

The company said group production was “slightly lower than expected primarily because of extended mill downtime at KCGM and Pogo, which are now largely resolved; with the Pogo mill motor repaired and production resumed in April”.

But had an impact on forecast AISC for the year to June 30 which is now up to $A1,730 to $A1,760 an ounce (from $A1,630 – $A1,690 an ounce previously).

Despite the weakness, Northern Star said it has maintained its 2022-23 production guidance of 1.560 million to 1.680 million ounces. (1.561 million in 2021-22) as it expects production to improve in the current June quarter.

That’s despite a mixed quarter for the company’s three gold mining operations.

The key SuperPit at Kalgoorlie sold 191,031 ounces in the three months to last March at an AISC of $A1,781 an ounce, compared with 212,820 ounces a year ago at $A1,659 an ounce. The Yandal mine reported sales of 125,0722 ounces at $A1,627 an ounce against 109,766 ounces a year at $A1,444 an ounce.

And the Pogo mine in Alaska saw sales slip to 46,978 ounces at $A1,688 from 57,489 ounces at $A1,483 an ounce due to the mill outage late in the quarter which has been rectified.

The company said its $A300 million on-market share buy-back program was 42% complete while it had net cash of $A102 million at March 31 and total cash and gold on hand of $452 million after paying the $124 million interim dividend at the end of March.

Northern Star CEO Stuart Tonkin described the three months to March as “a challenging one for Northern Star but we have emerged with positive momentum, and the prospect of improved production across the Group, to remain on track for a strong finish to FY23. Unplanned mill outages at KCGM and Pogo have been addressed and the team is now focused on delivering our full-year production guidance.”

“Northern Star was able to improve the AISC performance across most of our assets with total costs, in dollar terms, lower than in the previous quarter. Unit costs will reflect this effort on increasing production.

“Navigating the current cost environment remains challenging despite the benefits of our size and scale as well as our internal contracting business – Northern Star Mining Services,” he said.

The shares rose nearly 0.6% to $13.87.

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