ASX: NST
ASX Announcement
20 July 2022
QUARTERLY REPORT
JUNE 2022
KEY POINTS
Environment, Social and Safety (ESS)
- LTIFR at 0.5 per million man hours
- Completed installation of solar power plant at Carosue Dam, network integration progressing
Production
- Strong June quarter delivered FY22 production and cost guidance, showcasing Northern Star's operational resilience to current challenges
- For the June quarter, gold sold totalled 402koz at an AISC of A$1,650/oz (US$1,180/oz) and AIC of A$2,204/oz; all three production centres operated at combined production rate of 1.6Mozpa
- For FY22, gold sold totalled 1,561koz at an AISC of A$1,633/oz (guidance of 1,550-1,650koz at an AISC of A$1,600-1,640/oz)
- Australian Operations delivered FY22 production and cost guidance; Pogo delivered above 2H expectations with annual run rate of 250koz
Discovery and Growth
-
First year of five-year profitable growth pathway delivered significant progress: o Kalgoorlie: Material movement of 66Mtpa (vs FY26 target of 80-100Mtpa)
o Yandal: Thunderbox mill expansion remains on track and within budget, ramp up expected 1H23
o Pogo: Mill expansion completed, mine ramp-up progressing with additional mining fronts - For the June quarter, A$201 million spent on growth capital and A$37 million on exploration
- For FY22, A$674 million spent on growth capital and A$121 million on exploration, below guidance
-
Delivered KCGM Mill Optimisation Pre-Feasibility Study (steady state plus three expansion options)
Financial - Strong balance sheet with net cash1 of A$528 million at June 30; cash and bullion of A$628 million
- FY22e Cash Earnings2 of A$1,020-1,040 million (1H22a: A$430 million; 2H22e: A$590-610 million)
Corporate - Completed sale of Paulsens and Western Tanami non-core assets for A$44.5 million
Outlook
- FY23 guidance of 1,560-1,680koz gold sold at an AISC of A$1,630-1,690/oz (2H weighted)
- FY23 growth capital budget of A$650 million; exploration budget of A$125 million
- Net cash is defined as cash and bullion less corporate bank debt (A$100M)
- Cash Earnings is defined as Underlying EBITDA less sustaining capital, net interest and corporate tax paid
OVERVIEW
Northern Star Resources Limited (ASX: NST) is pleased to report operational and financial results for the June 2022 quarter, with gold sold of 402,069oz at an all-in sustaining cost (AISC) of A$1,650/oz.
The June quarter performance by production centre:
- Kalgoorlie: 213,310oz gold sold at an AISC of A$1,791/oz
- Yandal: 121,601oz gold sold at an AISC of A$1,403/oz
- Pogo: 67,158oz gold sold at an AISC of US$1,184/oz
Figure 1: FY22 Group Gold Sales and AISC
koz | Yandal | Kalgoorlie | Pogo | AISC (A$/oz) | A$/oz | |||||
600 | 1,593 | 1,631 | 1,656 | 1,650 | 1,800 | |||||
1,600 | ||||||||||
500 | ||||||||||
1,400 | ||||||||||
400 | 44 | 46 | 67 | 1,200 | ||||||
57 | 1,000 | |||||||||
300 | ||||||||||
800 | ||||||||||
232 | 245 | 213 | ||||||||
200 | 213 | 600 | ||||||||
100 | 400 | |||||||||
122 | 200 | |||||||||
110 | 102 | 110 | ||||||||
0 | 0 | |||||||||
Sep Q 2021 | Dec Q 2021 | Mar Q 2022 | Jun Q 2022 | |||||||
MANAGEMENT COMMENTARY
The June quarter performance enabled Northern Star to meet its FY22 production and cost guidance, which was achieved despite a challenging environment over the past 12 months that elevated during the last quarter. Pleasingly, FY22 capital expenditure and exploration were lower than forecast.
The strong fourth-quarter performance showcased the quality of the Company's assets to adapt to all environments. All three production centres achieved production guidance and demonstrated the capability for the Group to operate at 1.6Mozpa.
Commenting on the June quarter and FY22 performance, Northern Star Managing Director Stuart Tonkin said:
"I am extremely proud of our team for delivering our FY22 guidance in a year that has seen extraordinary challenges. Further, we have maintained reliable operations over the past year and protected the health and wellbeing of our team.
"The first full year of operating as the enlarged Northern Star has provided us a true understanding of the opportunities and requirements of our assets, particularly in this inflationary environment, and resulted in us increasing our FY23 capital budget. Our responsible approach to growth means we will be disciplined in how and when we spend the budget, at all times focused on maximising returns.
"I am very pleased with how Northern Star is performing and executing our profitable growth strategy to create value for shareholders. We continue our focus on producing profitable ounces from world-class gold assets in tier-1 locations. Combined with our differentiated operating capability - the NSMS internal mining services business - that enables industry leading underground productivity rates, Northern Star is in a strong position to deliver a successful FY23."
Northern Star's June quarter conference call will be held today at 9:00am AEST (7:00am AWST). The call can be accessed at: https://webcast1.boardroom.media/watch_broadcast.php?id=62bba4ba1aa0c
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Figure 2: FY22 Guidance achieved for Group production, costs, capital expenditure and exploration | |||||
FY22 ACTUAL vs GUIDANCE | UNITS | KALGOORLIE | YANDAL | POGO | TOTAL* |
Gold Sold (actual) | koz | 903 | 443 | 214 | 1,561 |
Guidance | 900 - 950 | 430 - 450 | 205 - 220 | 1, 550 - 1,650 | |
AISC (actual) | A$/oz | 1,624 | 1,430 | 2,068 (US$1,498) | 1,633 |
Guidance | 1,500 - 1,600 | 1,375 - 1,475 | 2,150 - 2,230 | 1,600 - 1,640 | |
(US$1,570 - 1,625) |
Total Growth Capital Expenditure | A$M | 263 | 335 | 76 | 674 | |||||||
Guidance | 261 | 351 | 70 | 682 | ||||||||
Development Receipts** | (15) | (58) | - | (73) | ||||||||
Guidance | (5) | (57) | - | (62) | ||||||||
Net Growth Capital Expenditure | 248 | 277 | 76 (US$55) | 601 | ||||||||
Guidance | 256 | 294 | 70 (~US$55) | 620 | ||||||||
Exploration | A$M | 121 | ||||||||||
Guidance | 140 | |||||||||||
*FY22 Group guidance excluded Kundana Assets and EKJV Interests divested as per ASX release dated 18 August 2021.
**FY22 Development Receipts are from pre-commercial gold sales (~29,945 ounces), in line with the relevant Accounting Standard. Actual AISC and Capital Expenditure converted at a currency using AUS:USD = 0.72.
Guidance AISC converted at a currency using AUD:USD = 0.73. Guidance Capital Expenditure converted at a currency using AUD:USD = 0.75.
Figure 3: Five-year growth pathway
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Focus for FY23
Northern Star is adding to its growth pipeline while responsibly advancing its strategic aspirations and purpose to deliver superior returns to shareholders. The Company is closely managing its costs in this inflationary environment and will continue to adopt an agile and prudent approach to portfolio optimisation and capital growth expenditure.
Northern Star's financial position remains strong, with net cash of A$528 million. The Company's FY23 growth program is fully funded and aligns with our capital management framework of allocating capital to those projects that deliver superior returns.
The Company is well positioned to deliver 1,560koz - 1,680koz gold at an AISC of A$1,630-1,690/oz in FY23. Gold sold is expected to be weighted towards 2H as a result of the scheduled ramp up of the Thunderbox mill expansion.
Northern Star's Group capital expenditure (sustaining, growth, exploration) for FY23 is forecast to be at similar levels to FY22.
Figure 4: FY23 Group Guidance
FY23 GUIDANCE | UNITS | KALGOORLIE | YANDAL | POGO | TOTAL | ||
Gold Sales | koz | 820 | - 870 | 480 | - 520 | 260 - 290 | 1,560 - 1,680 |
AISC | A$/oz | 1,560 | - 1,660 | 1,525 | - 1,625 | 1,857 - 2,000 | 1,630 - 1,690 |
(US$1,300 - 1,400) |
Growth Capital Expenditure | A$M | 355 | 217 | 65 | 650* | |||||||
Exploration | A$M | 125 | ||||||||||
*Includes A$13M of corporate investment.
AISC and Capital Expenditure converted at a currency using AUD:USD = 0.70.
In FY23, Northern Star is committed to safely delivering our operational targets and advancing organic growth options across our portfolio. Major growth areas, which accounts for ~90% of FY23 growth capital expenditure, include:
% OF GROUP | PRODUCTION | MAJOR GROWTH OPTION |
CAPEX | CENTRE | |
43% | Kalgoorlie | Progressing waste material movement at KCGM, which unlocks high grade Golden Pike North |
and Fimiston South ore for processing in the subsequent years; new tailings dam | ||
12% | Yandal | Completion of the Thunderbox mill expansion which is on track and on budget for |
commissioning and ramp up in 1H23; establishment of Otto Bore mine; new tailings dam | ||
12% | Yandal | Development of Orelia open pit as a feed source for the expanded Thunderbox mill |
10% | Kalgoorlie | Development of Carosue Dam Porphyry underground, scheduled to start in 1H23 |
10% | Pogo | Pogo UG mine development, additional camp, UG capital drilling and assays |
FY24-26 Outlook
Northern Star's assets are well placed to deliver our profitable growth strategy to 2Mozpa by FY26. The Company is focused on the disciplined and transparent allocation of capital and will not grow for growth's sake. Uncertainty in the operating and inflationary environment, particularly over the past quarter when industry wide cost escalation accelerated, has prompted the Company to take the prudent decision to withdraw the FY24 cost and capex guidance it provided a year ago.
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Table 1: June quarter 2022 performance summary - by production centre
3 MONTHS ENDING 30 JUN 2022 | Units | Kalgoorlie | Yandal | Pogo | Total |
Underground Mining | |||||
Ore Mined | Tonnes | 1,558,335 | 950,587 | 320,258 | 2,829,180 |
Mined Grade | g/t Au | 2.2 | 3.5 | 7.7 | 3.3 |
Ounces Mined | oz | 108,955 | 108,294 | 79,106 | 296,355 |
Open Pit Mining | |||||
Open Pit Material Moved | BCM | 7,883,649 | 2,236,904 | - | 10,120,553 |
Open Pit Ore Mined | Tonnes | 2,741,730 | 1,401,173 | - | 4,142,903 |
Mined Grade | g/t Au | 1.4 | 1.4 | - | 1.4 |
Ounces Mined | oz | 122,621 | 62,156 | - | 184,777 |
Milled Tonnes | Tonnes | 4,897,262 | 1,344,423 | 322,290 | 6,563,975 |
Head Grade | g/t Au | 1.6 | 3.2 | 7.7 | 2.2 |
Recovery | % | 86 | 91 | 89 | 88 |
Gold Recovered | oz | 214,206 | 125,841 | 70,792 | 410,839 |
Gold Sold - Pre-Production | oz | 4,640 | 138 | - | 4,778 |
Gold Sold - Production | oz | 208,670 | 121,463 | 67,158 | 397,291 |
Gold Sold | oz | 213,310 | 121,601 | 67,158 | 402,069 |
Average Price | A$/oz | 2,482 | 2,481 | 2,477 | 2,484 |
Revenue - Gold (2) | A$M | 518 | 301 | 166 | 985 |
Total Stockpiles Contained Gold | oz | 2,975,748 | 154,992 | 1,638 | 3,132,378 |
Gold in Circuit (GIC) | oz | 41,067 | 11,281 | 10,726 | 63,074 |
Gold in Transit | oz | 30 | 550 | - | 580 |
Total Gold Inventories | oz | 3,016,845 | 166,823 | 12,364 | 3,196,032 |
Underground Mining | A$M | 111 | 76 | 51 | 238 |
Open Pit Mining | A$M | 45 | 24 | - | 69 |
Processing | A$M | 118 | 39 | 37 | 194 |
Site Services | A$M | 15 | 7 | 9 | 31 |
Ore Stock & GIC Movements | A$M | (11) | (15) | (3) | (29) |
Royalties | A$M | 16 | 9 | - | 25 |
By-Product Credits | A$M | (3) | - | - | (3) |
Cash Operating Cost | A$M | 291 | 140 | 94 | 525 |
Rehabilitation | A$M | 3 | 1 | 1 | 5 |
Corporate Overheads (3) | A$M | 11 | 6 | - | 17 |
Sustaining Capital (5) | A$M | 70 | 25 | 16 | 111 |
All-in Sustaining Cost | A$M | 375 | 172 | 111 | 658 |
Exploration (4) | A$M | 18 | 5 | 8 | 31 |
Growth Capital (gross) (5) | A$M | 70 | 94 | 37 | 201 |
Development Receipts | A$M | (12) | - | - | (12) |
All-in Costs | A$M | 451 | 271 | 156 | 878 |
Mine Operating Cash Flow (1) | A$M | 146 | 121 | 53 | 320 |
Net Mine Cash Flow (1) | A$M | 88 | 27 | 16 | 131 |
Cash Operating Cost | A$/oz | 1,393 | 1,144 | 1,408 | 1,320 |
All-in Sustaining Cost | A$/oz | 1,791 | 1,403 | 1,661 | 1,650 |
All-in Costs | A$/oz | 2,156 | 2,215 | 2,336 | 2,204 |
Depreciation & Amortisation | A$/oz | 883 | 663 | 596 | 769 |
Non-Cash Inventory Movements | A$/oz | 51 | (146) | (13) | (20) |
- Mine Operating Cash Flow is calculated as Revenue, less Cash Operating Costs (excluding inventory movements) and Sustaining Capital. Net Mine Cash Flow is calculated as Mine Operating Cash Flow less Net Growth Capital.
- Excludes the impact of unwinding the hedge book fair value assumed as part of the initial acquisition accounting required in relation to the merger with Saracen. Revenue - Gold does not include Development Receipts.
- Includes non-cashshare-based payment expenses in corporate overheads.
- Excludes exploration spend at non-producing projects and regional sites (A$6M).
- A$38M of finance lease repayments are included in Sustaining Capex (A$28M) and Growth Capex ($10M). Finance leases repayments are included in cash flows from financing activities in the Consolidated Statement of Cash Flows included in the Company's financial statements.
Pogo Operations costs are presented in AUD which is the Group's presentation currency. USD cost disclosure is presented in Table 11.
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Northern Star Resources Ltd. published this content on 20 July 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 August 2022 14:13:02 UTC.