ASX: NST
ASX Announcement 27 April 2022
QUARTERLY REPORT MARCH 2022
KEY POINTS
Environment, Social and Safety (ESS)
LTIFR at 0.5 per million man hours
COVID-19 Management Plan for workforce and neighbouring communities performing well
Decarbonisation Asset Pathway announced, setting out 35% emission reduction by 2030
Production
Gold sold totalled 380,075oz at an AISC of A$1,656/oz (US$1,199/oz) and all-in cost (AIC) of A$2,171/oz
By production centre:
o Kalgoorlie: 212,820oz gold sold at an AISC of A$1,659/oz
o Yandal: 109,766oz gold sold at an AISC of A$1,444/oz
o Pogo: 57,489oz gold sold at an AISC of US$1,483/oz
Australian Operations, which account for 85% of Group production, on track to meet FY22 production and cost guidance
Pogo expected to operate at 2H annual run rate of ~240koz, FY22 now forecast lower production and higher cost
Group FY22 production guidance remains unchanged at 1.55-1.65Moz; Group FY22 AISC guidance now A$1,600-1,640/oz, up from A$1,475-1,575/oz
Discovery and Growth
A$166 million spent on net growth capital and A$26 million on exploration
First year of five-year profitable growth pathway delivered significant, on track progress:
o Kalgoorlie: KCGM material movement annualising 66Mtpa, up from 30Mtpa at acquisition
o Yandal: Final stages of completing Thunderbox mill expansion to 6Mtpa
o Pogo: Mill expansion to 1.3Mtpa completed, mine ramp-up progressing
Financial
March quarter average realised price of A$2,468/oz for sales revenue of A$937 million
Cash and bullion of A$533 million at March 31; Net Cash1 of A$433 million
Corporate
Negotiations concluded with Osisko Mining Inc. (TSX: OSK) for potential JV participation; Northern Star retains a C$154 million (A$169 million) convertible funding agreement with Osisko, maturing December 1, 2025
Subsequent to quarter end, binding agreements signed to sell Paulsens and Western Tanami non-core assets for up to A$44.5 million
1 Net Cash is defined as cash and bullion less corporate bank debt (A$100M)
OVERVIEW
Northern Star Resources Limited (ASX: NST) is pleased to report operational and financial results for the March quarter 2022, with gold sold of 380,075oz at an all-in sustaining cost (AISC) of A$1,656/oz.
In summary, Kalgoorlie's production was impacted by mill availability and Yandal performed in line with expectations. Pogo established a higher paradigm for development metres.
Figure 1: FY22 Group Gold Sales and AISC
OUTLOOK
Northern Star's FY22 guidance for its Australian Operations, which account for 85% of the Group portfolio, remains unchanged despite input cost and ongoing COVID-related workforce challenges. Improved KCGM plant availability and sustained high grades at Yandal will be the primary drivers of planned improved performance in the June quarter.
While Pogo has responded to several productivity initiatives and is on track to operate at a 2H run rate of ~240koz per annum, FY22 production is now expected to be lower. Given the need to accelerate mine productivity to optimise its future cost profile, Pogo will temporarily incur an elevated cost structure.
Northern Star's FY22 gross growth capital and exploration guidance remains unchanged. Lower development receipts, due to earlier than expected commercial production at Thunderbox and KCGM, results in higher net growth capital guidance.
Commenting on the March quarter performance, Northern Star Managing Director Stuart Tonkin said:
"We have sustained our strong safety performance across our three production centres while working hard to protect our workforce from the pandemic and keep our sites operating as the world continues to live with COVID-19.
"During the quarter, Kalgoorlie was impacted due to unplanned mill downtime events while Yandal performed in line with expectations. As foreshadowed, higher mining inventory at Pogo is delivering a better milling outcome but we have more work to do to deliver on Pogo's potential.
"Group-wide and against a challenging operating backdrop, we continue to safely advance the foundation of our five-year profitable growth plan. One year in, we have significantly lifted material movement volumes at KCGM, working through the OBH cutback, almost completed the Thunderbox mill expansion and successfully commissioned Pogo's expanded mill."
Northern Star's March quarter conference call will be held today at 9:00am AEST (7:00am AWST). The call can be accessed at:https://webcast1.boardroom.media/watch_broadcast.php?id=624be0089ad36
Figure 2: FY22 Group Guidance
FY22 GUIDANCE (REVISED) | UNITS | KALGOORLIE | YANDAL | POGO | TOTAL* |
Gold Production | koz | 900 - 950 Maintain | 430 - 450 Maintain | 205 - 220 Decrease from 220-250 | 1,550 - 1,650 Maintain |
AISC | A$/oz | 1,500 - 1,600 Maintain | 1,375 - 1,475 Maintain | 2,150 - 2,230 (US$1,570-1,625) Increase from 1,700-1,800 (US$1,275-1,350) | 1,600 - 1,640 Increase from 1,475 - 1,575 |
Growth Capital Expenditure: - Mine Development - Other Total Growth Capital Expenditure | A$M | 223 38 261 Maintain | 168 183 351 Maintain | 21 49 70 Maintain | 412 270 682 Maintain |
Development Receipts** Net Growth Capital Expenditure | (5) Decrease from (31) 256 Increase from 230 | (57) Decrease from (81) 294 Increase from 270 | - 70 (~US$55) Maintain | (62) Decrease from (112) 620 Increase from 570 | |
Exploration | A$M | 140 Maintain |
Notes:
*FY22 Group guidance excludes Kundana Assets and EKJV Interests divested as per ASX release dated 18 August 2021.
**FY22 Development Receipts are from pre-commercial gold sales (~29,560 ounces vs ~50,000 ounces previously), in line with the relevant Accounting Standard. From FY23, a change in the Accounting Standards will require reporting of Gross Growth Capital. Gross Growth Capital for FY23 and FY24 is estimated to be A$425M and A$380M respectively. AISC converted at a currency using AUD:USD = 0.73. Capital Expenditure converted at a currency using AUD:USD = 0.75.
Figure 3: Five-year growth pathway
Table 1: March quarter 2022 performance summary - by production centre
3 MONTHS ENDING 31 MAR 2022 | Units | Kalgoorlie | Yandal | Pogo | Total |
Underground Mining | |||||
Ore Mined | Tonnes | 1,419,418 | 911,087 | 258,567 | 2,589,072 |
Mined Grade | g/t Au | 2.3 | 3.2 | 8.3 | 3.2 |
Ounces Mined | oz | 105,387 | 92,408 | 68,999 | 266,794 |
Open Pit Mining | |||||
Open Pit Material Moved | BCM | 8,427,900 | 2,559,502 | - | 10,987,402 |
Open Pit Ore Mined | Tonnes | 2,145,060 | 829,129 | - | 2,974,189 |
Mined Grade | g/t Au | 1.5 | 1.0 | - | 1.3 |
Ounces Mined | oz | 101,619 | 26,977 | - | 128,596 |
Milled Tonnes | Tonnes | 4,595,400 | 1,496,314 | 260,508 | 6,352,222 |
Head Grade | g/t Au | 1.7 | 2.4 | 8.2 | 2.1 |
Recovery | % | 86 | 92 | 86 | 87 |
Gold Recovered | oz | 213,286 | 107,683 | 59,025 | 379,994 |
Gold Sold - Pre-Production | oz | 330 | - | - | 330 |
Gold Sold - Production | oz | 212,490 | 109,766 | 57,489 | 379,745 |
Gold Sold | oz | 212,820 | 109,766 | 57,489 | 380,075 |
Average Price | A$/oz | 2,464 | 2,467 | 2,468 | 2,468 |
Revenue - Gold (2) | A$M | 524 | 271 | 142 | 937 |
Total Stockpiles Contained Gold | oz | 2,974,889 | 127,293 | 2,165 | 3,104,347 |
Gold in Circuit (GIC) | oz | 38,269 | 7,569 | 7,095 | 52,933 |
Gold in Transit | oz | 1,992 | - | - | 1,992 |
Total Gold Inventories | oz | 3,015,150 | 134,862 | 9,260 | 3,159,272 |
Underground Mining | A$M | 99 | 68 | 54 | 221 |
Open Pit Mining | A$M | 34 | 17 | - | 51 |
Processing | A$M | 123 | 31 | 34 | 188 |
Site Services | A$M | 18 | 7 | 11 | 36 |
Ore Stock & GIC Movements | A$M | (8) | (4) | (1) | (13) |
Royalties | A$M | 16 | 7 | - | 23 |
By-Product Credits | A$M | (2) | - | - | (2) |
Cash Operating Cost | A$M | 280 | 126 | 98 | 504 |
Rehabilitation | A$M | 3 | 1 | 1 | 5 |
Corporate Overheads (3) | A$M | 12 | 6 | 3 | 21 |
Sustaining Capital | A$M | 57 | 25 | 16 | 98 |
All-in Sustaining Cost | A$M | 352 | 158 | 118 | 628 |
Exploration (4) | A$M | 13 | 5 | 2 | 20 |
Growth Capital (gross) | A$M | 83 | 73 | 11 | 167 |
Development Receipts | A$M | (1) | - | - | (1) |
All-in Costs | A$M | 447 | 236 | 131 | 814 |
Mine Operating Cash Flow (1) | A$M | 179 | 116 | 27 | 322 |
Net Mine Cash Flow (1) | A$M | 97 | 43 | 16 | 156 |
Cash Operating Cost | A$/oz | 1,320 | 1,152 | 1,703 | 1,330 |
All-in Sustaining Cost | A$/oz | 1,659 | 1,444 | 2,049 | 1,656 |
All-in Costs | A$/oz | 2,106 | 2,154 | 2,281 | 2,171 |
Depreciation & Amortisation | A$/oz | 850 | 464 | 633 | 708 |
Non-Cash Inventory Movements | A$/oz | 173 | (47) | (25) | 79 |
(1) Mine Operating Cash Flow is calculated as Revenue, less Cash Operating Costs (excluding inventory movements) and Sustaining Capital. Net Mine Cash Flow is calculated as Mine Operating Cash Flow less Net Growth Capital.
(2) Excludes the impact of unwinding the hedge book fair value assumed as part of the initial acquisition accounting required in relation to the merger with Saracen. Revenue - Gold does not include Development Receipts.
(3) Includes non-cash share-based payment expenses in corporate overheads.
(4) Excludes exploration spend at non-producing projects and regional sites (A$6M).
Pogo Operations costs are presented in AUD which is the Group's presentation currency. USD cost disclosure is presented in Table 11.
Table 2: FY22 YTD performance summary - by production centre
9 MONTHS ENDING 31 MAR 2022 | Units | Kalgoorlie | Yandal | Pogo | Total |
Underground Mining | |||||
Ore Mined | Tonnes | 4,611,874 | 2,619,460 | 682,448 | 7,913,782 |
Mined Grade | g/t Au | 2.5 | 3.2 | 7.6 | 3.2 |
Ounces Mined | oz | 365,882 | 270,046 | 167,072 | 803,000 |
Open Pit Mining | |||||
Open Pit Material Moved | BCM | 25,547,165 | 8,703,338 | - | 34,250,503 |
Open Pit Ore Mined | Tonnes | 6,709,513 | 2,773,174 | - | 9,482,687 |
Mined Grade | g/t Au | 1.4 | 1.2 | - | 1.3 |
Ounces Mined | oz | 299,362 | 103,769 | - | 403,131 |
Milled Tonnes | Tonnes | 14,578,238 | 4,426,334 | 724,124 | 19,728,696 |
Head Grade | g/t Au | 1.7 | 2.4 | 7.3 | 2.1 |
Recovery | % | 86.99 | 91.28 | 85.07 | 87 |
Gold Recovered | oz | 680,447 | 316,886 | 144,879 | 1,142,212 |
Gold Sold - Pre-Production | oz | 1,412 | 23,755 | - | 25,167 |
Gold Sold - Production | oz | 688,647 | 298,018 | 147,058 | 1,133,723 |
Gold Sold | oz | 690,059 | 321,773 | 147,058 | 1,158,890 |
Average Price | A$/oz | 2,409 | 2,414 | 2,422 | 2,415 |
Revenue - Gold (2) | A$M | 1,659 | 719 | 356 | 2,734 |
Total Stockpiles Contained Gold | oz | 2,974,889 | 127,293 | 2,165 | 3,104,347 |
Gold in Circuit (GIC) | oz | 38,269 | 7,569 | 7,095 | 52,933 |
Gold in Transit | oz | 1,992 | - | - | 1,992 |
Total Gold Inventories | oz | 3,015,150 | 134,862 | 9,260 | 3,159,272 |
Underground Mining | A$M | 299 | 194 | 141 | 634 |
Open Pit Mining | A$M | 111 | 38 | - | 149 |
Processing | A$M | 362 | 85 | 92 | 539 |
Site Services | A$M | 52 | 20 | 29 | 101 |
Ore Stock & GIC Movements | A$M | 2 | (20) | - | (18) |
Royalties | A$M | 47 | 19 | - | 66 |
By-Product Credits | A$M | (8) | (1) | - | (9) |
Cash Operating Cost | A$M | 865 | 335 | 262 | 1,462 |
Rehabilitation | A$M | 9 | 3 | 3 | 15 |
Corporate Overheads (3) | A$M | 41 | 18 | 8 | 67 |
Sustaining Capital | A$M | 169 | 75 | 57 | 301 |
All-in Sustaining Cost | A$M | 1,084 | 431 | 330 | 1,845 |
Exploration (4) | A$M | 38 | 18 | 13 | 69 |
Growth Capital (gross) | A$M | 192 | 240 | 38 | 470 |
Development Receipts | A$M | (3) | (57) | - | (60) |
All-in Costs | A$M | 1,311 | 632 | 381 | 2,324 |
Mine Operating Cash Flow (1) | A$M | 627 | 289 | 37 | 953 |
Net Mine Cash Flow (1) | A$M | 438 | 106 | (1) | 543 |
Cash Operating Cost | A$/oz | 1,256 | 1,119 | 1,784 | 1,288 |
All-in Sustaining Cost | A$/oz | 1,574 | 1,441 | 2,254 | 1,627 |
All-in Costs | A$/oz | 1,904 | 2,115 | 2,605 | 2,069 |
Depreciation & Amortisation | A$/oz | 790 | 532 | 599 | 700 |
Non-Cash Inventory Movements | A$/oz | 202 | (66) | 9 | 106 |
(1) Mine Operating Cash Flow is calculated as Revenue, less Cash Operating Costs (excluding inventory movements) and Sustaining Capital. Net Mine Cash Flow is calculated as Mine Operating Cash Flow less Net Growth Capital.
(2) Excludes the impact of unwinding the hedge book fair value assumed as part of the initial acquisition accounting required in relation to the merger with Saracen. Revenue - Gold does not include Development Receipts.
(3) Includes non-cash share-based payment expenses in corporate overheads.
(4) Excludes exploration spend at non-producing projects and regional sites (A$16M).
Pogo Operations costs are presented in AUD which is the Group's presentation currency. USD cost disclosure is presented in Table 11.
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Northern Star Resources Ltd. published this content on 27 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 April 2022 22:44:05 UTC.