Busy 4Q ahead
3Q23 PRODUCTION
Need To Know
- FY23 gold production guidance unchanged at 1,560-1,680k oz
- Cost (AISC) guidance lifted to A$1,730-1,760/oz
- Gold price touching US$2,000/oz
Operational issues dampened third quarter production, but Northern Star has maintained its full year guidance implying a good final quarter can be delivered.
NST produced 363koz of gold at a cost (AISC) of A$1,813/oz. This was slightly lower than expected due to extended mill downtime at KCGM and Pogo. Management is confident the repairs are complete, and that the production shortfall can be made up in 4Q. This will require higher grades and mill throughput at all three locations. The Pogo ball mill repair was done in three weeks, half the time previously expected.
Cost guidance was lifted for the full year to A$1,730-1,760/oz (FY22 A$1,633/oz) which is now ahead of consensus at A$1,719/oz. Management noted on-going industry cost pressures.
The balance sheet remains strong with $102m net cash at 31 March 2023 and cash and bullion of $452m after payment of the $124m dividend on March 29.
Investment View
NST has a high quality portfolio of assets capable of delivering production growth, margin improvement and high-returning brownfield investment. The company has various opportunities to expand existing assets and make acquisitions and/or capital management decisions.
With an average mine life over 10 years and a solid track record of resource development, NST is poised to generate very healthy cash margins and free cashflow.
NST is targeting gold production to reach 2.0Moz by FY26f from approximately 1.6Moz in FY23f.
Three key catalysts will drive the share price: (1) a mill expansion at KCGM to access the large stockpile of ore and improve efficiency (2) the Pogo expansion in Alaska and (3) further opportunities for acquisitions and capital management.
The gold price continues to nudge US$2,000/oz on concerns over the US banking turmoil and weaker global economic growth.
We re-iterate our Buy rating for NST.
Figure 1: GOLD PRODUCTION
Stock Overview
Share Price
Company Overview
NST owns several large Australian gold mines including the Kalgoorlie Super Pit. It also owns the Pogo mine in Alaska.
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