A couple of uninspiring reports from miners Northern Star Resources and Evolution Mining saw each company’s stock price end Thursday’s ASX session lower than when it began.
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The September quarter production and sales report from Northern Star Resources (ASX: NST) was a bit on the light side.
The company revealed sales of 368,956 ounces for the quarter at an All In Sustaining Cost (AISC) of $A1,788 an ounce and an average price of $A2,494 an ounce.
That was down 4.4% from the 386,160 ounces sold in the September, 2021 quarter with a 12% higher AISC than the $A1,594 an ounce a year ago. The 2022 average price though was up 6.7% from the $A2,345 an ounce a year ago.
Despite these signs of weakness, the company reaffirmed its earlier 2022-23 gold sales guidance at 1,560-1,680koz gold sold at an All In Sustaining Cost (AISC) of A$1,630-1,690/oz.
Directors said (as they have said in past years) that production will rise in the second half of the financial year (and presumably costs will moderate as output rises).
“The Company is on track to deliver 1,560koz – 1,680koz gold at an AISC of A$1,630-1,690/oz in FY23. Gold sold will be weighted towards 2H as a result of the scheduled ramp-up of the Thunderbox mill expansion and grade improvements at Pogo (in Alaska), North Star said.
Exploration costs are still around $125 million for the year and capex is unchanged at $650 million.
Northern Star management said in the report that the company “is executing its operational improvement and growth project pipeline while responsibly advancing its strategic purpose to deliver superior returns to shareholders. The Company is closely managing its costs in this inflationary environment and will continue to adopt an agile and prudent approach to portfolio optimisation and capital growth expenditure.”
Northern Star’s financial position remains strong. “The Company’s FY23 growth program “is fully funded and aligns with our capital management framework of allocating capital to those projects that deliver superior returns” North Star told the ASX.
As at 30 September, the miner had net cash (which includes bullion and deducts bank debts) of $A173 million. Cash and bullion totalled $A473 million, while the company held a $A300 million corporate bank debt.
“The September quarter performance was slightly below plan with delayed production expected to be recovered in future quarters (Thunderbox mill commissioning and Pogo grade).
“Australia, which accounted for 86% of production, achieved positive net mine cash flow after funding its capital requirements. Optimisation efforts continue at Pogo with FY23 regarded as a transitional year now that development metres are consistently tracking above plan. Going forward, the focus remains firmly on sustainably lowering Pogo’s cost base.
Commenting on the September quarter performance, CEO Stuart Tonkin said:
“The September quarter has delivered a solid platform to leave us on track to achieve our FY23 targets. Importantly, we have maintained a strong safety focus across our three production centres to ensure the physical and mental wellbeing of our people.
“From the December quarter, we will start the rollout of the Critical Risk Program, which reinforces an awareness of the systems and protocols associated with critical risks across our operations.
“While labour and cost pressures have stabilised in Western Australia, they remain at elevated levels and supply chains – globally – are still under pressure. Northern Star is positioned well with a highly dedicated and professional team to navigate what remains a challenging operating environment.
“Recent currency movements are expected to have minimal cost impacts in FY23 on our Australian dollar cost base, while our realised gold price in Australian dollar terms remained stable quarter on quarter.
The company says it still plans to spend $650 million on capital and growth budget and $125 million on exploration in the year to June, 2023.
The shares eased 1.6% on Thursday to $7.90.
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Shares in smaller rival Evolution Mining (ASX: EVN) fell sharply on Thursday despite it leaving its 2022-23 guidance unchanged after its first quarter performance was hit by wet weather in Queensland in particular.
The shares fell almost 8% to $1.85, that’s within a cent of the lowest the shares have been this year ($1.84 in late September). The company is clearly in the naughty corner so far as investors are concerned.
Evolution told the ASX on Thursday it was still looking to produce around 720,000 ounces (plus or minus 5%) at an AISC of $A1,240 per ounce – plus or minus 5% (around $US870/oz).
Gold production in the three months to September was 161,098 ounces “with quarterly production scheduled to increase for the remainder of FY23.”
Evolution said production at its Mount Rawdon mine in Queensland was around 6,500 ounces lower than forecast because of the wet weather but planned plant maintenance shutdowns have been completed at the company’s Cowal (NSW), Red Lake (Canada) and Ernest Henry (Queensland) mines in the quarter.
The company said the all-in Sustaining Cost (AISC) of $A1,513 an ounce ($US1,034/oz) “and planned to trend lower over FY23.”
Evolution said its Cowal underground remains on budget and schedule with first stope ore due in the June 2023 quarter, the Ernest Henry Extension Pre-Feasibility Study (PFS) is on track to complete by December this year supported by new Mineral Resource with 28% increase in copper and 24% increase in gold.
“Subsequent drilling has demonstrated future potential to further increase the Mineral Resource in the PFS area,” Evolution said.
The company said it had cash of nearly $400 million at the end of the quarter and total liquidity of $923 million.
