Mill Downtime Reflects in Northern Star Q1 2023
Australian gold miner Northern Star Resources (ASX: NST) has released its latest quarterly report, revealing mixed results for the March 2023 quarter.
The company sold 363koz of gold at an all-in sustaining cost (AISC) of A$1,813/oz, but faced challenges due to extended mill downtime at its Kalgoorlie consolidated gold mines (KCGM) and Pogo, leading to lower production and impacting the company’s financial outlook.
Production
Northern Star sold 191,031oz of gold at an AISC of A$1,781/oz from its Kalgoorlie production centre, but revised its AISC guidance for Kalgoorlie due to the extended mill downtime from 1,560-1,660 up to 1,700-1,735. The Yandal production center sold 125,072oz of gold at an AISC of A$1,627/oz, meeting its yearly targets.
At Pogo, Northern Star sold 46,978oz of gold at an AISC of US$1,668/oz, but revised down its 2023 gold production targets from 260-290 to 225-240 and raised the AISC due to extended mill downtime.
Despite lower than expected production due to the mill downtime at KCGM and Pogo, the company maintained its FY23 production guidance and expects to recover production in the June quarter.
The operational impacts led the company to revise its FY23 AISC guidance to A$1,730-1,760/oz, up from previous guidance of A$1,630-1,690/oz.
Discovery and Growth
Northern Star is advancing its five-year profitable growth pathway, including investing in organic profitable growth and maintaining a strong balance sheet.
During the March quarter, the company spent A$191 million on growth capital and A$34 million on exploration. The growth capital budget has been revised to approximately A$700 million due to increased waste volumes at KCGM.
Financial
Northern Star has a strong balance sheet with net cash of A$102 million at March 31. The company had the best year-to-date quarter for cash generated at operations, after capex and exploration spend.
Additionally, Northern Star is in the process of completing its A$300 million on-market share buy-back program, having completed 42% of the program which expires in September 2023.
Northern Star also issued US$600 million senior guaranteed notes at an interest rate of 6.125% per annum, due April 2033, demonstrating its strong financial position.
Mill Downtime
Northern Star’s managing director Stuart Tonkin acknowledged the challenges faced by the company during the March quarter due to extended mill downtime at KCGM and Pogo.
Despite the setbacks, Mr Tonkin emphasised the positive momentum and the prospect of improved production across the group, remaining on track for a strong finish to the 2023 financial year.
He expressed gratitude to the Pogo Operations Team for their hard work in repairing the damaged mill motor in a safe, cost-efficient, and timely manner.
Outlook
Northern Star maintains FY23 production guidance, expecting to recover production in Q2 despite the impacts of the mill downtime. The company’s exploration budget for FY23 remains at A$125 million, while growth capital expenditure guidance has been revised to A$700 million due to increased waste movement at KCGM.
FY23 AISC guidance has also been revised to A$1,730-1,760/oz. The managing director remains confident in the company’s future growth, citing its strong balance sheet, experienced management team, and high-quality assets.
