Growth strategy pays off for Northern Star

Northern Star Resources is on track to reach its goal of becoming a 600,000oz a year gold producer after executing its expansion plans in the March quarter.

The Perth-based miner, which committed to an organic growth strategy through exploration and development more than two years ago, expects to produce 150,000oz in the June quarter.

Northern Star will reach its desired quarterly production rate after completing the investments associated with the 600,000oz/y strategy this year. It now expects to experience a surge in cashflow from the June quarter onwards as a result of the production increase.

In the March quarter, Northern Star spent $33 million on the expansion, including exploration, to increase the company’s production and mineral inventory.

Northern Star chairman Bill Beament said the strategy began with the acquisition of Tier 1 assets an opportune time in the mining cycle.

“We then invested prudently in exploration at and around these centres. This resulted in the company establishing mine life visibility of 10-plus years,” Beament said.

“In the latest quarter, we completed the expansionary capital expenditure program stemming from this exploration success, paving the way for us to hit the 600,000oz/y production in the current quarter.”

Northern Star sold 119,976oz at an all-in sustaining cost (AISC) of $1075/oz in the March quarter, taking its total for the first nine months of the financial year to 387,254oz at $1053/oz.

The Jundee mine in Western Australia produced 67,505oz for Northern Star during the three months, while output at the Kalgoorlie Gold Operations was 66,916oz.

With Northern Star’s expansion plans coming to fruition, the company has narrowed its production guidance for the 2018 financial year to between 540,000oz–560,000oz from the previous forecast of 525,000oz–575,000oz. Its AISC forecast for fiscal 2018 remains at $1000–$1050/oz.

Beament said the combination of increased production, low operating costs and completion of the capital investment program would drive free cashflow significantly higher.

“This means our organic growth strategy will have met the ultimate objective of everything we do – maximising returns,”Beament said.

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