Northern Star (ASX:NSM) is anticipating another modest rise in gold production this financial year, according to the guidance issued in Thursday's June quarter and full-year production and sales report.
The coming financial year will see substantial investment in expanding output, particularly in and around the Super Pit near Kalgoorlie, which continues to benefit the company.
However, the company has warned investors that the current September quarter will involve maintenance shutdowns (and likely lower gold output) at its three major producing hubs: Kalgoorlie (KCGM), Thunderbox (Yandal), and Pogo in Alaska.
The company reported gold production of 1.621 million ounces, just within guidance, and importantly, higher than the 1.563 million ounces produced in 2022-23.
For 2024-25, the company is projecting a range of 1.650 million to 1.800 million ounces, a notably wide range.
The cost range for this financial year is equally broad, from $A1,850 to $A2,100 per ounce. This range indicates a potential increase from no change on 2023-24 costs to a significant 13%+ jump at the top end. The top end rise would be much higher than 2023-24’s All-in Sustaining Cost (AISC) of $A1,853 per ounce, which was up 5.3% from $A1,759 per ounce in 2022-23, a period when inflation was higher than it is now.
Looking ahead, Northern Star indicated that gold production will be weighted towards the June half-year due to increased production from higher grades at KCGM and improved mill availability at Thunderbox and Pogo. In the September quarter, planned major shutdowns will occur across all three production centers.
The company will be spending heavily on expansion, with 2024-25 growth capital expenditure forecasted to be in the range of $A950 to $A1,020 million, plus the KCGM Mill Expansion capex of $A500 to $A530 million, which is in the second year of its build phase. Sustaining capital expenditure is forecasted to be in the range of $A200 to $A250 per ounce.
After spending $A140 million on exploration (down from the budgeted $A150 million), Northern Star reported a significant increase in Mineral Resources to 61.3 million ounces, up 3.9 million ounces, and Ore Reserves to 20.9 million ounces, up 700,000 ounces after mining depletion (as of March 31, 2024).
The KCGM operation is the focus of Northern Star's expansion over the next five or so years.
The company stated that in the coming year, "an increasing high-grade proportion of mill feed is expected to drive production growth over FY25 to be positioned to deliver 650koz in FY26."
"Increased high-grade volumes will be sourced from the Golden Pike North open pit area and from the ongoing ramp-up of both the Mt. Charlotte and Fimiston undergrounds. Scheduled planned shutdowns at KCGM will occur in 1Q and 3Q. Carosue Dam and Kalgoorlie Operations are expected to deliver consistent production over FY25 and FY26.”
At KCGM, growth capital spending on projects to deliver mill feed and infrastructure for the expanded mill is forecasted at $A460 to $A485 million. "These projects include the development and ramp-up of the underground mines to achieve 8 million tonnes per annum (with planned increases of half a million tonnes a year), open pit material movement, and infrastructure requirements (including underground services and tailings dam facilities with investment over FY25-27).
"Growth expenditure at Carosue Dam will establish both Wallbrook and Enterprise open pits, and at Kalgoorlie Operations to advance Crossroads and Joplin."
"The Company is now in the second build year of the KCGM Mill Expansion Project. Forecast FY25 growth capital expenditure is $A500 to $A530 million, or approximately 34% of the total $A1,500 million estimated spend. FY25 major works include the delivery and installation of major equipment (grinding, crushing, and flotation cells) as well as commissioning of service infrastructure (power lines, concentrate loadout facilities)."
