Northern Star Resources says it has hit its 600,000 ounce a year production target as it expects to produce more than 150,000 ounces (ozs) of gold in the three months to June 30.
That was after reporting on Monday that March quarter output rose to more than 119,900 ounces.
Northern Star said that as a result it had narrowed its FY2018 guidance to 540,000oz – 560,000oz, which is within its previous range of 525,000oz – 575,000oz. The forecast for all-in sustaining costs (AISC) remains unchanged at $A1,000 – $A1,050/oz.
Northern Star says that now it has completed the capital investments associated with its 600,000 ozpa growth strategy, this production increase is expected to result in a rise in free cashflow from the June quarter onwards.
Gold sold in the March quarter totalled 119,976oz at an AISC of $A1,075/oz, taking the total for the nine months to March 31 to 387,254oz at an AISC of $A1,053/oz.
During the quarter, Northern Star continued to accelerate the implementation of its organic growth strategy, investing and $A33 million in expansionary capital, including exploration, to grow the group’s production and mineral inventory.
After allowing for this expansionary capital, Northern Star said it generated underlying free cash flow of $A32 million in the March quarter, leaving it with cash and equivalents of $A439.1 million and no debt at the end March.
Northern Star Executive Chairman Bill Beament said shareholders were about to reap the rewards of the organic growth strategy initiated by the Company over two years ago.
“This strategy began with the acquisition of Tier-1 assets at an opportune time in the cycle,” Mr Beament said in yesterday’s report.
“We then invested prudently in exploration at and around these centres. This resulted in the Company establishing mine life visibility of ten-plus years.
“In the latest quarter, we completed the expansionary capital expenditure program stemming from this exploration success, paving the way for us to hit the 600,000ozpa production target in the current quarter.
“The combination of this increased production, low operating costs and completion of the capital investment program will drive free cashflow significantly higher.
“This means our organic growth strategy will have met the ultimate objective of everything we do – maximising financial returns. In the process, it will help ensure we maintain the highest rate of return on equity in our industry and one of, if not the, highest rates of return on the Australian stock exchange.”
Mr Beament said the strategy was also continuing to deliver highly significant exploration results, such as those contained in the ASX announcement dated February 20 this year, which were yet to be included in the Resource and Reserve inventory.
These results are expected to be reflected in the annual Resource and Reserve update which will be released in the September quarter.
Northern Star shares fell 0.1% to $6.39.
