Shares in gold miner Northern Star fell more than 5% yesterday as the company missed output forecasts and warned investors of rising production costs.
The miner missed analysts’ expectations for gold production out of its flagship Kalgoorlie SuperPit, while its Pogo mine in Alaska saw a weak quarter and higher costs.
The shares fell 5.4% at one point and ended the day down more than 3% at $9.66.
For the three months to March, Northern Star reported total gold sales of 380,075 ounces. Sales were down 3% from the December quarter but were up sharply from the 368,273 ounces sold in the March, 2021 quarter.
Revenue for the quarter jumped more than 20% from a year earlier, a figure local investors skated over on Wednesday in their initial analysis as they worried about higher costs.
The company’s all-in sustaining cost (AISC) of $A1,656 an ounce in the three months to March was up just 3% from the $A1,598 of the same quarter of 2021.
Production for the quarter included 212,820 ounces of gold sold from the SuperPit at Kalgoorlie. That was down from 234,419 ounces sold a year earlier.
The company sold 109,766 ounces of gold sold at Yandal in WA, up from 91,116 ounces a year earlier and 57,489 ounces of gold sold at Pogo which was up sharply from the 40,008 ounces in the March, 2021 quarter.
While this means that its Australian operations, which account for 85% of total production, are on track to meet FY 2022 production and cost guidance, this won’t be the case for its Pogo operation. It is expected to fall short of its guidance for production and costs.
In light of this, management has retained its June 30, 2022 group production guidance at 1.55 million to 1.65 million ounces but has lifted its AISC guidance to $A1,600 to $A1,640 per ounce. The latter is up from its previous guidance of $A1,475 to $A1,575 per ounce.
Nevertheless, thanks to an average realised price of $A2,468 an ounce, Northern Star reported sales revenue of $A937 million for the quarter.
This was broadly in line with what was recorded during the December quarter but up sharply ($A165 million or 21%) from the $A772 million reported for the March quarter a year ago.
Northern Star’s CEO, Stuart Tonkin, acknowledged that the company had a tough quarter saying in the ASX statement that “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,” he said in yesterday’s statement.
