Northern Star Resources has narrowed its annual production guidance because of challenges at its Kalgoorlie hub but remains bullish in a record gold price environment.
Northern Star Resources has narrowed its annual production guidance because of challenges at its Kalgoorlie hub but remains bullish in a record gold price environment.
Northern Star’s financial year guidance was pulled back from 1,650-1,800 ounces to 1,630-1,660oz after production was challenged at its Kalgoorlie Consolidated Gold Mine operations.
Full-year cost forecasts were increased to $2,100-$2,200 per ounce from $1,850-$2,100/oz.
The result came off the back of a delayed grade uplift, after access to the Golden Pike area at KCGM was pushed back.
“Mining of higher grade ore in the KCGM open pit was delayed because of low productivity in the Golden Pike North area,” Northern Star managing director Stuart Tonkin said.
“Mining efficiency is on track to lift in significantly in the June quarter.”
Despite it, Northern Star generated net mine cashflow of $295 million across all its production centres.
Its cash and bullion position sits at $1.12 billion, in a record gold price environment.
It is also preparing to welcome the Hemi gold project onto its books, with its $5 billion all-scrip deal for De Grey in the final stages of completion.
Mr Tonkin said the company expected to be better placed to comment on timelines around Hemi in the latter half of the year, with the project yet to be approved by state and federal regulators.
“Northern Star will continue to advance the state and federal permitting process as well as work closely with all the Traditional Owners in the management of Native Title and Aboriginal heritage,” the company wrote.
Mr Tonkin said Northern Star was more conservative with its timeline expectations around approvals at Hemi than De Grey but expected to receive feedback from regulators next quarter.
He does not expect any issues for the process as a result of the looming federal election.
Northern Star also noted that it may be poised to benefit from De Grey’s previously incurred tax losses – a detail which will be confirmed following the transaction’s completion.
“Collectively, tax depreciation and tax losses will reduce Northern Star’s future taxable income and therefore income tax payments,” NST said.
“Tax depreciation will commence from the implementation date, and is expected to be accelerated allowing Northern Star to amortise approximately 50 per cent of the tax depreciable value within five years.”
Northern Star will pay a 25c per share interim dividend.
Northern Star shares were flat at $20.87 at 7.40am.
