Northern Star Resources : Quarterly Activities Report – December 2016

December 2016 Quarterly Activities Report

Northern Star on track to hit both guidance and growth targets A$303m in cash after paying A$42m in dividends and investing A$36m in strategy to grow production to 600,000ozpa next year

ASX ANNOUNCEMENT

25 January 2017

Australian Securities Exchange Code: NST

Board of Directors

Mr Bill Beament

Executive Chairman

Mr Chris Rowe

Non-Executive Director

Mr Peter O'Connor

Non-Executive Director

Mr John Fitzgerald

Non-Executive Director

Ms Shirley In'tVeld

Non-Executive Director

Mr David Flanagan

Non-Executive Director

Issued Capital

Shares 600.5 million

Options 2.9 million Performance Rights 9.5 million

Current Share Price A$4.07

Market Capitalisation A$2.4 billion

Cash, Bullion & Investments 31 Dec 2016 - A$303 million

KEY POINTS

 124,871oz of gold produced in the December Quarter; on track to meet FY17 guidance of 485,000-515,000oz

 All-in sustaining costs (AISC) for December Quarter of A$1,063/oz; in line with budget and putting Northern Star on track to meet FY17 guidance of A$1,000- A$1,050/oz

 Cash and equivalents of A$303m at 31 December after paying A$42m in dividends, A$34m in FY16 tax and investing A$36m in organic production growth and exploration; Northern Star has no bank debt

 Production increase from September Quarter (110,000oz) reflects in part the substantial improvements in Jundee mill throughput

 Total gold inventory (gold in circuit and on stockpiles awaiting processing) of

~105,000oz and continuing to grow; options for accelerating processing of this ore are under consideration

 December Quarter production:

• Jundee Gold Operations:

  • 59,527oz mined and 51,528oz sold at an AISC A$965/oz

• Kalgoorlie Gold Operations:

  • 62,169oz mined and 53,531oz sold at an AISC A$1,045/oz

• Paulsens Gold Operations:

  • 15,335oz mined and 15,031oz sold at an AISC A$1,462/oz

 Further strong progress made on strategy to grow production to 600,000ozpa in 2018 from organic sources, with substantial exploration success at Jundee and Kalgoorlie operations

 Construction of the new 50,000ozpa Millennium underground mine is ahead of schedule and under budget; first development ore expected in September 2017 Quarter

 Capital Development to access the Armada and Revelation discoveries at Jundee has commenced

 Board and Management restructure successfully implemented, paving way for Northern Star's next chapter of growth while maintaining its strong emphasis on maximising financial returns

 Northern Star will host a quarterly conference call today at 9:00am AWST (12:00pm AEDT), Wednesday, 25 January 2017. The call can be accessed at http://boardroom.media/broadcast/?refid=&eid=588682f61aa7170e402f3ba1

Northern Star Resources Limited (ASX: NST) is pleased to advise that it is on track to meet its FY17 production and cost guidance following a solid performance in the December Quarter.

Northern Star also recorded strong exploration success during the quarter, ensuring it is poised to meet its goal of growing production to 600,000ozpa next year.

Projects

Paulsens Mine Kanowna Belle Mine Kundana Mines (51% of EKJV) Jundee Mine Central Tanami (25% of JV)

Listed Investments VXR, DAU, RND, TBR, ALY

The Company produced 124,871oz in the December Quarter, putting it on track to meet its FY17 guidance of 485,000-515,000oz.

The result reflected in part the improved performance of the Jundee mill. Ongoing improvements in both grades and throughput are expected to generate further production increases at Jundee in the second half of this financial year.

AISC for the quarter were A$1,063/oz, which was in line with budget. Northern Star remains on track to meet its FY17 AISC guidance of A$1,000-A$1,050/oz.

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Cash and equivalents totalled A$303 million at 31 December 2016 despite the Company paying A$42m in dividends, A$34m for the remaining FY16 tax instalment and investing A$36m in organic production growth and exploration.

Northern Star continued to enjoy outstanding exploration success during the quarter, particularly at Jundee and Kalgoorlie, as part of its strategy to grow production to 600,000ozpa next year from organic sources.

As well as identifying new mineralisation at and around its existing operations, the Company continues to make strong progress developing new sources of production.

This includes the ongoing construction of its 50,000ozpa Millennium underground mine in Kalgoorlie, which is ahead of schedule and under budget. The first development ore is expected in the September 2017 Quarter.

Northern Star Executive Chairman Bill Beament said the Company was meeting each of its key performance targets.

"We are achieving our goal of generating exceptionally high financial returns for Shareholders by keeping costs down and meeting production targets," Mr Beament said.

"At the same time, we are laying the foundations for growth in both production and financial returns with our highly successful exploration and development program."

Northern Star	Units	Mar-16 Qtr	Jun-16 Qtr	Sep-16 Qtr	Dec-16 Qtr	FYTD
Ore Hoisted	Tonnes	881,029	907,396	742,983	802,342	1,545,325
Mined Grade	gpt Au	5.6	4.9	4.8	5.3	5.1
Gold in Ore Hoisted	Oz	158,671	143,599	114,294	137,031	251,325
Milled Tonnes	Tonnes	891,068	1,094,571	745,425	856,398	1,601,823
Head Grade	gpt Au	5.4	4.1	5.0	5.0	5.0
Ounces Produced	Oz	155,848	143,580	118,759	136,755	255,511
Recovery	%	92	91	93	91	92
Gold Recovered	Oz	142,630	130,020	109,995	124,871	234,866
Ounces Sold	Oz	143,469	134,110	106,519	120,089	226,608
Average Gold Price	A$/oz	1,640	1,684	1,720	1,645	1,680
Revenue	A$M	235.2	225.9	183.2	197.5	380.7
Cash Operating Cost	A$/oz	737	843	796	780	788
All in Sustaining Cost	A$/oz	985	1,056	1,091	1,063	1,076
Total Stockpiles Contained Gold	Oz	73,977	80,342	81,540	84,121	84,121
Gold in Circuit (GIC)	Oz	19,409	15,136	16,065	20,715	20,715
Gold in Transit (GIT)	Oz	-	585	-	-	-

Table 1: Key Group Performance Figures (Quarterly) from Continuing Operations

Northern Star	Units	Mar-16 Qtr	Jun-16 Qtr	Sep-16 Qtr	Dec-16 Qtr	FYTD
Mining	A$/oz	470	557	508	487	497
Processing	A$/oz	176	214	283	194	236
Site Services	A$/oz	48	58	59	51	55
Ore Stock & GIC Movements	A$/oz	5	(26)	(87)	11	(35)
Royalties	A$/oz	41	43	38	40	39
By Product Credits	A$/oz	(3)	(4)	(5)	(4)	(4)
Rehabilitation-Accretion & Amortisation	A$/oz	7	1	5	5	5
Corporate Overheads	A$/oz	43	46	54	37	45
Mine Development/Sustaining CAPEX	A$/oz	171	152	209	208	208
Mine Exploration	A$/oz	27	14	27	34	30
All in Sustaining Costs	A$/oz	985	1,056	1,091	1,063	1,076
Depreciation & Amortisation	A$/oz	337	303	316	302	284

Table 2: Key Group Cost per Ounce Measures from Continuing Operations

Production KPIs Dec Quarter	Units	Paulsens	Kalgoorlie Operations	Jundee	Total
Total Ore Hoisted	Tonnes	82,754	328,013	391,574	802,342
Mine Grade	gpt Au	5.8	5.9	4.7	5.3
Gold in Ore Hoisted	Oz	15,335	62,169	59,527	137,031
Milled Tonnes	Tonnes	109,661	355,144	391,593	856,398
Head Grade	gpt Au	5.0	5.2	4.7	5.0
Recovery	%	89	93	90	91
Gold Recovered	Oz	15,657	55,660	53,554	124,871
Gold Sold	Oz	15,031	53,531	51,528	120,089
Cash Operating Costs	A$/oz	992	772	727	780
All In Sustaining Costs	A$/oz	1,462	1,045	965	1,063
Depreciation & Amortisation	A$/oz	429	249	319	302

Table 3: Key Quarterly Mine Production Performance from Continuing Operations

FINANCE

The following is a table of the cash, bullion and investments held at the end of each quarter:

Mar-16 Qtr	Jun-16 Qtr	Sep-16 Qtr	Dec-16 Qtr
Cash at bank	A$M	$262.3	$315.3	$311.3	$282.1
Bullion awaiting settlement (1)	A$M	$17.2	$1.9	$25.7	$12.5
Investments	A$M	$6.0	$8.8	$12.6	$8.4
Total	A$M	$285.5	$326.0	$349.6	$303.0

(1) Bullion awaiting settlement is dore which has been received by the refiner in the quarter and is awaiting settlement.

Table 4: Cash, Bullion and ASX equity investments

The below table sets out the total of surface gold inventories:

Gold Inventories	Mar-16 Qtr	Jun-16 Qtr	Sep-16 Qtr	Dec-16 Qtr
Stockpiles contained gold (oz)	73,977	80,342	81,540	84,121
Gold in circuit (oz)	19,409	15,136	16,065	20,715
Gold in transit (oz)	-	585	-	-
Total Gold Inventories (oz)	93,386	96,063	97,605	104,836

Table 5: Gold Inventories

The below waterfall chart highlights the December Quarter's operating cash flow together with movements in cash, bullion and investments (A$M):

The below waterfall chart highlights the underlying free cash flow for the December Quarter (A$M):

The below waterfall chart provides an overview of year to date underlying free cash flow (A$M):

Banking Facilities

Northern Star has in place an undrawn three year A$100 million revolving debt facility with a self-arranged syndicate of Australian and International banks.

Hedging

The below table outlines the Company's current hedging position:

Term	Jun-17 Half	Dec-17 Half	Jun-18 Half	Dec-18 Half	Jun-19 Half	Dec-19 Half	Total
Ounces	105,000	95,000	77,000	73,500	64,000	50,000	464,500
Gold Price	A$1,697	A$1,737	A$1,773	A$1,756	A$1,730	A$1,739	A$1,736

Table 6: Hedging commitments

During the quarter, 273,000oz of hedging was added for delivery across all the tenors outlined in the above table at an average of A$1,705/oz.

OPERATIONS Paulsens Gold Operations

Production Summary	Mar-16 Qtr	Jun-16 Qtr	Sep-16 Qtr	Dec-16 Qtr	FYTD
Paulsens
Ore Mined	Tonnes	94,755	105,453	88,467	82,754	171,222
Mined Grade	gpt Au	8.0	5.7	5.5	5.8	5.6
Ounces Mined	Oz	24,336	19,293	15,722	15,335	31,057
Milled Tonnes	Tonnes	92,502	96,805	96,759	109,661	206,420
Head Grade	gpt Au	8.2	5.6	5.5	5.0	5.2
Recovery	%	90	87	89	89	89
Gold Recovered	Oz	22,060	15,271	15,047	15,657	30,704
Gold Sold	Oz	22,963	15,418	15,111	15,031	30,141
Cost per Ounce
Mining	A$/oz	385	595	601	519	560
Processing	A$/oz	199	307	290	296	293
Site Services	A$/oz	67	121	83	94	88
Ore Stock Movements	A$/oz	27	(58)	(24)	45	11
Royalties	A$/oz	41	43	37	40	39
By Product Credits	A$/oz	(1)	(2)	(3)	(2)	(3)
Cash Operating Costs	A$/oz	718	1,006	984	992	988
Rehabilitation - Accretion & Amortisation	A$/oz	5	7	5	8	7
Corporate Overheads	A$/oz	44	50	53	37	45
Mine Development / Sustaining CAPEX	A$/oz	206	242	352	410	381
Paulsens Mine Exploration	A$/oz	26	9	12	15	13
All in Sustaining Costs	A$/oz	999	1,314	1,406	1,462	1,434
Depreciation & Amortisation	A$/oz	393	433	416	429	423

Table 7: Summary Details - Paulsens

Kalgoorlie Gold Operations

Production Summary	Mar-16 Qtr	Jun-16 Qtr	Sep-16 Qtr	Dec-16 Qtr	FYTD
Kalgoorlie Operations
Ore Mined	Tonnes	292,550	321,620	334,486	328,013	662,499
Mined Grade	gpt Au	6.0	5.2	4.4	5.9	5.1
Ounces Mined	Oz	56,818	54,133	47,235	62,169	109,404
Milled Tonnes	Tonnes	331,698	321,103	348,181	355,144	703,325
Head Grade	gpt Au	5.6	5.2	4.9	5.2	5.1
Recovery	%	94	95	94	93	94
Gold Recovered	Oz	55,861	50,819	51,725	55,660	107,385
Gold Sold	Oz	52,052	54,592	49,188	53,531	102,719
Cost per Ounce
Mining	A$/oz	436	444	449	487	469
Processing	A$/oz	126	153	324	174	246
Site Services	A$/oz	21	50	57	44	50
Ore Stock Movements	A$/oz	14	(9)	(130)	32	(45)
Royalties	A$/oz	42	42	36	40	38
By Product Credits	A$/oz	(4)	(5)	(7)	(5)	(6)
Cash Operating Costs	A$/oz	635	675	729	772	752
Rehabilitation - Accretion & Amortisation	A$/oz	5	2	5	4	4
Corporate Overheads	A$/oz	44	43	55	35	45
Mine Development / Sustaining CAPEX	A$/oz	95	106	108	180	145
Kalgoorlie Operations Mine Exploration	A$/oz	14	20	31	54	43
All in Sustaining Costs	A$/oz	794	845	928	1,045	989
Depreciation & Amortisation	A$/oz	212	212	209	249	229

Table 8: Summary Details - Kalgoorlie Operations