After a bit of a wobble in the March quarter, Northern Star Resource’s Pogo purchase in Alaska paid off in the three months to June, helping push group gold sales for 2018-19 to record levels.
Northern Star’s June quarter and 2019 production and sales report yesterday told a story of a record quarter and full-year of gold sales that has happened thanks to the progress made at Pogo, the Alaskan mining operation acquired last August for $375 million from Japanese group Sumitomo.
Northern Star sold 232,042 ounces of gold at an all-in sustaining cost (AISC) of $A1238 an ounce across its operations during the June quarter. In the 2019 financial year, the company sold 840,580 ounces at $A1296 an ounce.
The Australian operations sold a record 639,243oz at an AISC of $A1,167/oz ($US817/oz), achieving the top end of the 600,000oz – 640,000oz guidance range. All up the Pogo operations mined 215,899 ounces of gold and sold 201,337 ounces at an ASIC of $A1,193 an ounce.
Pogo lifted sales 33% to 48,009 ounces during the June quarter from the Match quarter. That was still less than the 59,567 ounces and 57,534 ounces sold during the first two quarters of the 2019 financial year and reflects the extensive work Northern Star is doing to expand output at Pogo.
Costs at Pogo in the June quarter are still higher than the company-wide average at $A1724 an ounce, that is an improvement of 18% from the March quarter’s figure of $A2062 an ounce – a revelation that frightened investors in April when it was made public.
Northern Star chairman Bill Beament said in yesterday’s statement the progress now being made at Pogo “vindicated a strong belief in the ability of the site’s gold system to form the company’s third pillar (alongside the Kalgoorlie and Jundee operations).”
“We are confident that Pogo’s increasing rates of mine development and rising stoping tonnages will deliver higher gold production and lower costs,” Beament said.
“This will occur against a backdrop of a growing high-grade inventory in a Tier 1 location, all of which is entirely consistent with our overall objective of maximising financial returns for Tier 1 mines with long lives.”
The Kalgoorlie and Jundee operations both finished at the top end of their full-year sales guidances with 340,007 ounces and 299,236 ounces of gold sold, respectively.
Northern Star’s said the improved production results also gave it record cash flow of $104 million in the June quarter.
Beament noted that the current spot gold price is $A200 an ounce higher than the average price realised by the company during the quarter.
“Had Northern Star achieved the current spot price throughout the quarter, it would have generated an additional $46 million in revenue,” the company reported.
The Comex continuous gold price is up 10.8% so far this year and is currently around $US1,424 an ounce, or more than $A2,050 an ounce.
Northern Star’s shares rose 2.5% to $13.53.
