Northern Star continues production growth, tripling cashflow

Northern Star Resources’ cashflow has surged in the June quarter as the company’s organic growth strategy in Western Australia’s Goldfields has come to fruition.

The gold miner almost tripled its cashflow to $93 million in the three months (from $32 million in the March quarter) after delivering record gold sales of 182,856oz at an all-in sustaining cost (AISC) of $982/oz.

Northern Star achieved this result despite investing $46 million on expansion and exploration works.

The company produced 183,949oz (at $982/oz) of gold for the quarter at the Jundee (91,923oz) and Kalgoorlie (91,920oz) operations, putting it ahead of a targeted 600,000oz/y run rate.

Its output for the 2018 financial year was 575,121oz, which exceeded a 540,000oz–560,000oz production guidance.

Northern Star chairman Bill Beament said the quarter’s results provided an insight into the substantial cash-generating capacity that was direct result of the company’s organic growth strategy.

“The hugely successful exploration program is the cornerstone of our growth and ultimately our exceptional financial returns,” Beament said.

“The vast expansion in our gold inventory, which in financial year 2017 came at a cost of just $24/oz, has underpinned mine life visibility of more than 10 years and the growth in annual production to our targeted rate of 600,000oz.”

Northern Star plans to capitalise on additional growth opportunities and has increased its exploration budget by 33 per cent to a record $60 million for the 2019 financial year.

It has also budgeted $74 million for expansionary capital, including $34 million on dual purpose drill drives, $20 million on ancillary projects for future production growth, and $11 million on a 10-year capacity tailings facility for the Kanowna Belle processing plant.

“Our focus is now on achieving further growth in our inventory and production, which will in turn drive our free cashflow and overall financial returns,” Beament added.

Northern Star’s production guidance for the 2019 financial year has been set at 600,000oz–640,000oz at costs of $1025–1125/oz.

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