Emerging gold producer Northern Star Resources has boosted its earnings by 30 per cent to post a record profit of $28.3 million on the back of a jump in gold production.
Owner of the Paulsens underground gold mine located in WA’s West Pilbara Mineral Fields, the miner has managed to lower its cash cost by 5 per cent to $680 an ounce and deliver 88,614 ounces of gold.
“We’ve got a very low cost base, we did our heavy lifting 12 to 18 months ago we changed out the contractors, we went to all of our suppliers, we put those disciplines in our business,” managing director Bill Beament said.
He noted employee expectations have changed remarkably in the last few months, moving from a focus on wage amounts to job security.
“Most people feel that it’s worse than during the GFC, people are getting hit pretty hard, some companies are cutting pays, we’ve done a pay freeze, we don’t think we need a pay cut at this point in time with the gold price,” Beament said.
“We’re not immune to the downturn but had to make a few people redundant a few months ago which is hard.”
Upbeat in his Diggers and Dealers address, Beament explained the record profit came despite racking up $44 million in capital expenditure, including $10 million on exploration activities, investments, and a plant upgrade.
“We have delivered a record profit and a strong dividend while expanding our plant, growing our mine life and making the significant Titan discovery,” he said.
“We’ve done a lot of work developing the mine and opening up new production capability.”
Beament also bucked the trend of downbeat gold miners, saying the gold price is “fantastic”.
“Two years ago we were jumping around in Kalgoorlie here singing its praises, and it’s the same price,” he said.
“At the end of the day it’s a very good gold price.”
Beament said an increasing gold price for over a decade has resulted in larger gold miners lowering their cut off grades, which is why many say grades have declined.
“Majors will start lifting cut off grades and all of a sudden they won’t be mining ounces that Barrick wanted to mine a couple of years ago, they’ll be mining more profitable ounces, they’ve got a few triggers they can pull,” he said.
Beament said political uncertainty is cutting at the core of business and investment confidence saying the resource sector needs “a stable government that doesn’t tinker with things which is what has been happening for the last five years”.
“It’s very hard to run a business in resources when you’ve got a commodity price jumping up and down like a yo-yo, the last thing you want is a government that changes its mind and changes its policy on the run, so if I can get some consistency in that it would be fantastic,” Beament said.
On his election policy wish list, Beament said support for the resource sector “would be nice”.
“To start supporting the resource sector and some exploration flowthrough schemes [from the incoming government] because what concerns me is we’ve found all the bulk of the ore bodies and unless we put that money back in we won’t have a resource sector in 25 or 30 years,” he said.
Beament said Northern Star’s future growth will come from further exploration efforts.