Gold miner Northern Star Minerals has forecast a 30 per cent production increase over the next two years following positive exploration results and recent acquisitions.
Excluding the company’s Kalgoorlie Consolidated Gold Mines (KCGM) joint venture with Saracen Mineral Holdings, the company’s annual production guidance is expected to grow to one million ounces by the 2023 financial year with AISC driven down by 10 per cent.
The company’s 2021 financial year production guidances (excluding KCGM) is between 720,000 ounces and 820,000 ounces.
Northern Star executive chair Bill Beament said the company was venturing into the next chapter of its production and cashflow.
“We are entering the next chapter of growth on all levels of our business,” he said. “The cornerstone of this strong outlook is our exploration success, which has seen Resources increase by 3.2 million ounces in the past year to 22.3 million ounces and reserves rise by 12 per cent to 6 million ounces (excluding KCGM).
“Over the next two years, our annual production rate will rise by 30 per cent to one million ounces (excluding KCGM).
“All of this production will be in Tier 1 locations, all the growth will come from existing assets and leverage existing infrastructure and the increased output will drive down all-in sustaining costs.”
During the 2020 financial year, Northern Star acquired the 1.6 million ounce Bronzewing project in Western Australia, which it has since combined with its Jundee operation into one project, and divested the 1.6 million ounce Mt Olympus project.
“By combining Jundee and Bronzewing into the unified Yandal Operations, we will unlock substantial synergies and growth opportunities, paving the way for this to become a 400,000 ounces per annum production centre in the next two to three years,” Beament said.
The company noted its resources per share have grown by upwards of 120 per cent in the past five years, with the increased inventory underpinning production growth, longer mine lives and cashflow.
Beament said to achieve its one million ounce target, it would only require $175 million in the 2022 financial year.
“In FY22, the additional capital expenditure required to deliver this growth is just $175 million,” he said.
“This is the recipe which has enabled Northern Star to generate some of the highest returns on capital on the ASX over the past 10 years and it will enable us to maintain these superior returns into the future.”