11-Apr-2024: NST-Operational-Update.PDF

Source: Commsec.

Nice Update (below, link above), nice chart, onward and upward.

Cost guidance (AISC) up, but gold production guidance of 1.60-1.75Moz maintained, despite the bad weather around Kal in April and March affecting production. They produced 1.18Moz in the first 9 months of this FY (to March 31st), so they only need to produce 402koz in the final quarter to hit the bottom end of that full year production guidance. And they produced 401koz in the March quarter despite the weather. Additionally they expect a strong June quarter, with increased grade and improved mill utilisation rates.

Northern Star Resources (NST) is Australia's largest listed gold miner headquartered in Australia, and Australia's best gold miner by a country mile. The market weren't too interested in them after Bill Beament left to head up Venturex (now Develop - DVP), but the market is coming around now - because with the gold price hitting new all time highs now on a regular basis, and NST being so big and dominant in the sector, and performing well too - producing so much gold at reasonable costs (remembering that costs have increased for every gold miner), NST is hard to ignore. They will also be an obvious play for international money looking to find some exposure to the sector, because NST is now one of the top 10 gold mining companies in the world (see here: Largest gold mining companies by Market Cap (companiesmarketcap.com)) and the 34th largest mining company (across ALL commodities) in the world (see here: The top 50 biggest mining companies in the world - MINING.COM 05-April-2024).

NST also operate one of the 10 largest gold mines in the world (the Super Pit, next to Kalgoorlie) - see here: Here are the top 10 largest gold mines in the world (miningreview.com) - and one of the two largest gold mines in Australia - the Boddington Gold Mine (owned by Newmont GoldCorp) is the other one.

The "Super Pit".

NST have stated (see here: Northern Star Resources approves $1.5 billion upgrade to KCGM's Super Pit Fimiston processing plant - ABC News 22-June-2023) that they believe that with the increased capacity, the Super Pit is primed to supersede Boddington Gold Mine as Australia's largest gold operation and join it as one of the top five gold producers (mines) in the world by 2029. And that will propel NST further up the world rankings in terms of top 10 global gold miners. Depending on what sources you use and the recency of the reporting, NST sits somewhere between 7 and 11 currently, however I believe they will be at #6 by 2030, and possibly higher if there is further M&A within the current top 6.

So the target is that NST will be a top 7 gold miner (likely #6 IMO) and be operating one of the world's largest 5 gold mines by 2030. Could be sooner than that depending on progress with the Super Pit expansion. It is already underway and due for completion in 2029, with full ramp-up being completed in 2030.

In June last year (see here) they said they had 120 million tonnes of pre-mined ore, estimated to hold about 3 million ounces of gold, at the Fimiston Mill (a.k.a. the Super Pit mill), and their chief technical officer (CTO) Steven McClare said that stockpile would be a "key feed source" for the new mill and provide certainty for the miner. Steve said, "If we stopped mining today, we could process that material and it would take more than nine years to actually get through that stockpile."

And they didn't stop mining obviously, so the stockpile continues to grow due to the current capacity constraints of the existing mill, however they are spending $1.5 Billion to upgrade that mill from 13 million tonnes a year to 27 million, so more than doubling annual ore processing capacity. And that is just ONE of their gold mines.

Disclosure: I hold NST shares, both here and in my largest two real money portfolios.

The announcement looks innocent enough but it has wider implications for the valuation of NST

Anyone who studied finance probably would have come across the concept of WACC or Weighted Average Cost of Capital.

This is basically the weighted sum of the cost of debt and cost of equity before tax as proportion of market value of debt and equity. You can look up the formula on the internet.

But in simple terms and from my basic understanding of debt and assuming NST had a higher cost of debt of more than 6.5%, locking in these senior notes in a period of rising interest rates would have the affect of lowering their cost of debt and therefore WACC and it would explain why the share price has rallied in the last week. Since lowering the cost of debt would decrease WACC and in effect increase the NPV of NST. This is not even accounting for what they plan to use the debt to increase shareholder value.

Probably the slight negative on this is that this will also increase the enterprise value.

I was a bit slow to act on this announcement and already had my NST proceeds deployed elsewhere.

Few price targets mainly downgrades

Target Price Cut 4.3% to A$11.00/Share by Jefferies

Target Price Cut 3.4% to A$11.35/Share by Morgan Stanley

Target Price Raised 3.6% to A$11.50/Share by UBS

Upgraded to Buy from Hold by Canaccord Genuity (headline only)

Getting close to the intrinsic value at the current gold price although not much reward buying here.

Haven't really spent any time going through their update but did notice the headline grabbing figure of profit down 83% on DJ feed.

For those who want to see the numbers, here is my rough sensitivity analysis of NST NPV/sh versus Gold Price (AUD)

Applying discount of 8% (ie: Disc factor 1.08). I should try and work out the correct WACC for the discount but takes more time to calculate and probably the only flaw in the below model. So I may have overstated the discount value - who knows.

We've only had a spike over 2780 for about a few weeks before the gold price crashed back down to the current level of 2703 AUD

In addition to @Bear77 updates. Going to put this here so it is easier to read and discuss

Pogo: Jury is still out on AISC and production guidance, but heading in the right direction. AISC guidance US$1,300 - 1,400 US/oz (1,857 - 2,000 AUD/oz). FY23 Prod guidance 240-260koz

Yandal: AISC slightly up. Guidance 1,525 - 1,625 AUD/oz. FY23 Prod guidance 480 - 520

Kalgoorlie: AISC pretty much flat. Guidance 1,560 - 1,660 AUD/oz. FY23 Prod guidance 820 – 870

Overall performing as expected. Only shining light is KCGM (Kalgoorlie). Pogo still a bit of a concern. Yandal might just scrape through for FY23.

Enough of a hold for me. I did contemplate selling out at one stage for maybe one of the Strawman "favourites" (ie: AD8, CGS etc...) but seems gold has been trending up. Will ride out for now until I find something else.

Will be interesting to do a DCF valuation in the same way I do Capricorn Metals. I also noticed NST trades at a higher multiple than Capricorn (CMM) although Karlawinda reserves are 13 years.

[held]

Looks like the buyback is just a drop in the ocean for now. Still 1.16b shares outstanding. Halfway through the buyback

15m out of 39m bought back so far.

Question is whether NST will continue or pause the buyback.

Old news now but NST has recently started buying back shares

Looks like it's providing a floor for the shares and removing some overhang from the SAR merger

[Held]

KCGM Mill Expansion PFS Update

Going briefly through the slide deck and the announcement, it is not clear why they looked at full rebuild option (22mtpa) as CAPEX is more and IRR is less. Will hazard a guess the rebuild would be the less complex option.

Also there is no figure for the NPV.

Looks good on paper. But the study looks very generic and not much detail. I suppose we may get another update soon. I'm yet to listen to the recording or see the transcript.

Northern Star’s Stuart Tonkin seeks to build a new gold dream

https://www.afr.com/companies/mining/northern-star-s-stuart-tonkin-seeks-to-build-a-new-gold-dream-20220509-p5ajv1

Article in the AFR by their WA reporter Michael Bennet on May 15 - text included below for those outside the AFR paywall

A little over 18 months ago, the acquisitive Northern Star Resources unveiled its biggest deal yet – a $16 billion tie-up with fellow Perth gold miner Saracen Mineral Holdings.

At the time in early October 2020, Northern Star’s shares jumped to $14.84 as investors cheered the plan to bring the iconic Kalgoorlie Super Pit under one owner, unlock $1.5-$2 billion of pre-tax synergies and – eventually – produce 2 million ounces of gold a year.

It peaked at almost $17 a month later, at a time when gold was going for about $US1900 an ounce. But on Friday, while gold was trading around $US1822, Northern Star shares changed hands for $8.55 – around 42 per cent lower than when it unveiled the Saracen “merger of equals”, compared to an 18 per cent gain in the broader S&P/ASX 200.

Other gold miners have also sold off as the economic and interest rate outlooks shifted, with the only bigger gold miner on the bourse, Newcrest Mining, down around 19 per cent and the All Ordinaries gold sub industry index off 30 per cent.

But Northern Star – which has previously proved sceptics of its growth strategy wrong – continues to divide the market as managing director Stuart Tonkin seeks to execute on its acquisitions and oversee a new era beyond the renowned legacies left by former leader Bill Beament and Saracen’s Raleigh Finlayson.

Bears versus bulls

At Perth-based broker Argonaut, analyst John MacDonald reiterated his sell on the stock following its March quarterly late last month, even trimming his valuation to $7.60, citing its “relatively narrow margins”.

However, at the other end of the market, Canaccord’s Tim McCormack has a net asset valuation and price target about double that at $15.15, backing management to achieve its goal of being a 2 million ounces a year producer and telling clients it’s a buy.

Other brokers including Citi, Barrenjoey and Macquarie also rate Northern Star a buy, albeit with slightly lower targets of $13, and $14 for the latter.

Mr MacDonald’s relative bearishness partly stems from his doubts Northern Star will notably lower its overall costs, a dynamic that he says has weighed on the margins generated from production in the past few years.

“Northern Star is still striving for better performance on average across the group. On our figures a 25 per cent corporate level margin on 20 million ounces can justify the share price,” he says.

“Problem is, Northern Star has delivered a 10 per cent average margin on 3.5 million ounces depleted since mid-2020.”

Rising costs are a topical problem for the industry, with all miners recently suffering as inflation, COVID-19 disruptions and supply chain bottlenecks bite.

In its most recent quarterly, Northern Star upped its full-year “all-in sustaining costs” (AISC) guidance to $1600-1640 an ounce, up from $1475-1575, blaming higher costs at its Pogo operation in Alaska to “accelerate mine productivity” and “optimise its future cost profile”.

For a company that sold 380,075 ounces at an average realised price of $2468 an ounce in the quarter, general observers would say things still look pretty good.

The trouble is, Northern Star has a higher AISC than major peers Newcrest and Evolution Mining at a time when costs are in the spotlight. More broadly, AISC may not always give shareholders the clearest picture of the returns heading their way.

In fresh analysis questioning “who actually makes money?” in the industry at an Aussie dollar gold price of $2600 (the average price in the March quarter) Euroz Hartleys analyst Michael Scantlebury says a key issue is that the AISC metric misses some expenses.

He says one of the “largest culprits” is development capital expenditure being allocated as non-sustaining capital, which “becomes an issue when miners are required to continually (every year) develop new mines to sustain mine life”.

Instead, he says investors should buy gold miners with the lowest “corporate all-in costs” (CAIC), such as smaller players West African Resources and Perseus Mining, arguing the metric identifies the “truly lowest cost operators in the industry”.

Northern Star was ranked the seventh lowest CAIC producer, just ahead of Evolution.

“We stress that successful producers find the balance between sustaining profitable operations, investing in future growth and rewarding shareholders,” Mr Scantlebury says.

Homing in on costs

Growth has long been core at Northern Star. However, the company recently shunned an estimated $1 billion-plus acquisition of a stake in the Windfall gold project in Canada after failing to make the deal stack up.

The move saw the market home in on costs, and performance at Pogo and its WA operations, particularly “KCGM”, the trigger for the Saracen deal – to consolidate their stakes in Kalgoorlie’s “Golden Mile” under one owner for the first time in 125 years.

The market’s key focus is the release of KCGM’s mill expansion study in coming months to see if it will up throughput at the plant to around 22 million tonnes, which analysts expect to chew up more investment dollars, likely in the hundreds of millions.

Pogo, an underground mine that Northern Star paid $US260 million for in 2018, is also getting more love.

Barrenjoey’s Daniel Morgan says it’s showing improvement after the company guided to an annualised run-rate of 240,000 ounces in the second half following “heavier” investment in people and equipment.

Citi’s Kate McCutcheon adds: “Pogo gets a lot of air time, but we’d highlight that it’s only about 15 per cent of our group EBITDA.”

Speaking from Pogo, Northern Star’s Stuart Tonkin acknowledged the decline in its share price since the Saracen deal, saying it partly reflected the broader industry sell-off but also some “temporary operational pressures”.

However, he argued that its elevated all-in costs reflected the investments being made in future growth, and it actually has a “low-capital intensity” compared to peers.

M&A would remain part of Northern Star’s strategy to ultimately produce 1.8-2.2 million ounces a year with a decade-plus reserve life, he says. But Tonkin is keen to point out his focus is on “sustained value” for shareholders and that its organic growth options are looking good.

He adds that while “investor sentiment” expected value straight away from the Saracen deal, they did articulate that it would take time and investments in KCGM and its Yandal operations in WA to liberate synergies, drive production growth and lower costs.

“From what I see today, the business is in a much stronger position than the sum of the parts,” he tells The Australian Financial Review.

“The past two quarters have been impacted by the current labour and cost environment, but I am comfortable we have the team and the strategies in place to deliver our value-creating organic growth strategy, which will reflect again in the share price.

“Northern Star has a track record of being able to deliver production growth, reserve and resource growth, dividend growth and retained earnings growth without having to trade one for the other or focus on the short term over the long term.”

06-May-2022: (Friday): Interesting ABC News article on Wednesday (04-May-2022): Miner Northern Star Resources strikes gold beneath Kalgoorlie's Super Pit - ABC News

Plain Text: https://www.abc.net.au/news/2022-05-04/gold-miner-drills-beneath-kalgoorlie-super-pit/101035098

Miner Northern Star Resources strikes gold beneath Kalgoorlie's Super Pit

ABC Goldfields / By Jarrod Lucas

Posted Wed 4 May 2022 at 3:05pm, updated Wed 4 May 2022 at 3:23pm

Underground access was restored from within the Super Pit last year through a portal on the western wall.  (ABC Goldfields: Jarrod Lucas)

It has been described as the "first glimpse" of a new world-class gold system beneath Kalgoorlie's famous Super Pit.

Despite more than a century of mining on the historic Golden Mile, there has been limited exploration outside of the rich deposits which have yielded more than 21 million ounces since the Super Pit began production in 1989.

Underground access portals on the western wall were developed last year to provide new drilling platforms for testing north-west of the existing pit.

The work represented the first significant underground mining activity on the Golden Mile in more than 30 years.

The investment by Perth-based gold miner Northern Star Resources is starting to pay off after it said it hit pay dirt.

In the company's annual reserves and resources statement to the ASX this week, Northern Star said drilling had increased the underground resources 20 per cent to 5 million ounces.

Northern Star Resources chief operating officer Simon Jessop inspects the entrance to the new underground portal inside the Super Pit in May last year.  (ABC Goldfields: Jarrod Lucas)

Northern Star managing director Stuart Tonkin said the portals had been developed 1.5km in length and drilling only began last November.

"It's really not been a lot of time drilling and we're obviously continuing to drill now," he said.

"But we've already added a million ounces of inferred material."

He said there was 5 million ounces of Fimiston underground resource.

"So again it shows us the thin end of the wedge," he said.

"That investment is starting to show great signs of where the future can be underground there."

Deepest workings 1.4km underground

More than 3,500km of tunnels and shafts have been created underneath the Super Pit — equivalent to driving from Perth to Sydney- in a century of mining the area.

The deepest historical workings extend about 1400m below the surface.

But drilling has hit gold mineralisation as deep as 2km below the surface.

Northern Star has made no secret of its ambitions to eventually restart underground mining and is taking delivery of 39 new haul trucks as part of a $250 million fleet overhaul.

Northern Star Resources chief executive Stuart Tonkin inspects the Fimiston Mill.(ABC Goldfields: Jarrod Lucas)

"We're really only looking at the one quadrant at the moment," Mr Tonkin said.

He said the company would put more drill drives to the south as well as onto the eastern side beneath the plant.

"At the moment it's like trying to eat an elephant, you've got to pick off bits and really focus in on it, and this drill drive is the first part of that," Mr Tonkin said.

Mine life beyond 2035

The current reserves at the Super Pit and neighbouring Mt Charlotte mine stand at 11.9 million ounces.

There are 27 million ounces of resources which require further geological work to prove up as reserves under the JORC Code.

The significance of the latest underground drilling results is the fact they are outside the current mine plan, which will result in further cutbacks of the Super Pit until at least 2035.

Drilling from the underground portal has already defined one million ounces of new gold resources.   (ABC Goldfields: Jarrod Lucas)

"This is currently not in the plan, so it's important we get in and do this work over the next couple of years to define it and start to work out the scale and magnitude and how it can come into the mine plan," Mr Tonkin said.

"This is on top of the confidence we already have for the future of the Super Pit."

He said he was not surprised by the latest find.

"We're really confident we have multiple decades ahead of us," Mr Tonkin said.

"There is no geological reason why this terminates at depth."

The drilling results were released as Northern Star prepared to announce the results of a feasibility study into a potential expansion of the Fimiston Mill in coming months.

The Fimiston processing plant is one of the biggest in Australia and was commissioned in 1989.

It has since undergone two expansions and treats more than 13 million tonnes of ore a year from the Super Pit and Mt Charlotte.

Mr Tonkin said expanding to 23 million tonnes a year was among the options being considered.

Key points:

• Northern Star Resources is Australia's second-biggest gold producer behind Newcrest Mining
• The company paid $1.1 billion for a 50 per cent stake in Kalgoorlie's Super Pit in 2019
• Northern Star Resources and Super Pit co-owner Saracen Mineral Holdings completed a $16 billion merger last year (meaning that Northern Star now own 100% of the Super Pit).

--- ends ---

The Kalgoorlie Super Pit is just one of NST's mines of course, but there wouldn't have been too many people who viewed it as a future growth option for NST, but it has just become exactly that with the gold they are discovering under the existing pit.

Disclosure: I hold NST in all of my main RL portfolios and NST is also the largest position in my Strawman.com virtual portfolio.

Quarterly report out for NST

https://www.nsrltd.com/investor-and-media/asx-announcements/2022/april/quarterly-activities-report-march-2022

One of the main items is downward revision on Pogo production guidance. Also increased guidance on costs due to increased development spending on Pogo.

14-April-2022 - Just to add to the straw by @edgescape on NST's announcement yesterday that they have agreed to sell their Paulsens Gold Operation (Paulsens) and Western Tanami Gold Project (Western Tanami) to Black Cat Syndicate Ltd (ASX: BC8) for $44.5m. This deal is subject to BC8 achieving finacing and if that occurs, NST will receive $14.5m plus 8,340,000 (i.e. 8.34m) fully paid ordinary shares in Black Cat (BC8) at a deemed issue price of $0.60 per share which is worth an additional $5m (or $5,004,000 to be exact). BC8 closed at 68c/share today. The other $25m is made up of $10m worth of milestone payments (details below) which are dependent on future gold production from both mines and $15m "deferred consideration" to be paid on 30 June 2023, so NST are really selling Western Tanami and Paulsens (which was their original company-making foundation asset) for just $14.5 million, plus around $5m worth of BC8 shares, plus another $15m to be paid in the middle of next year (total value: $34.5m). If BC8 produce gold from both mines in the future then NST can be paid up to an additional $10m in milestone payments as those milestones occur, as follows:

• $2.5 million cash on production of 5,000 ounces of refined gold from Paulsens;
• $2.5 million cash on production of 5,000 ounces of refined gold from Western Tanami;
• $2.5 million cash on production of 50,000 ounces of refined gold from Paulsens; and
• $2.5 million cash on production of 50,000 ounces of refined gold from Western Tanami.

Don't know about you, but I don't reckon I'd ever heard of Black Cat Syndicate before yesterday...

It should be noted that Paulsens and Western Tanami have both been on C&M ("care and maintenance", i.e. mothballed) as the AISC was too high for the gold that remained there in each case. A smaller company could perhaps give those assets the love and attention they need to become money makers once again - which is clearly what BC8 intend to do - however for NST, Australia's second largest gold mining company (behind NCM) and now one of the top 10 largest gold producers in the world (in terms of both market cap and ounces of gold produced per annum), they have bigger fish to fry now.

Source: https://www2.asx.com.au/markets/company/nst [14-Apr-2022]

Still look like good value here to me!

Disclosure: I hold NST in my 3 largest RL portfolios as well as in my Strawman.com portfolio. They are still my number one gold producer pick, even with Bill Beament gone.

Northern Star CEO Stuart Tonkin, executive chairman Bill Beament and former chairman Chris Rowe in 2016 posing for a Mining Journal article titled, "Beament not going anywhere" They were right for the next 4 years at least, but Bill did leave in 2021 to head up Venturex, now called Develop Global (DVP), and Stuey took over as MD (retaining his CEO position also). Bill B was replaced by Michael Chaney AO, who is also the Chairman of Wesfarmers and had been Wesfarmers' MD for 13 years (from 1992 to 2005). Chaney (pictured below) was also previously the Chairman of NAB and Woodside (WPL) and was a former director of BHP. He started his career originally as a petroleum geologist.

That's all folks... For now...

Except: Paulsens the DNA of Northern Star - MiningNews.net

And: Northern Star hits gold at Paulsens (businessnews.com.au)

Those articles are from circa 2015/2016. Bill Beament bought Paulsens off Intrepid Mines for $40m in 2010 and built Northern Star up from that one foundation asset. NST's market cap today is $12.8 billion.

Intrepid to sell Paulsens mine for A$40M - The Northern Miner

Paulsens

Paulsens

Pogo Mine reaches 4 million ounce

NST Divests Paulsens and Western Tanami Project

$44.5M received from the sale to Black Cat Syndicate.

Ann: Negotiations concluded with Osisko Mining

Not sure why this wasn't mentioned but it is pretty significant development as also I noticed this is when the share price started reversing from the $8 level.

The withdrawal of NST from this hopefully means capital can be redirected towards operational improvements within NST which should mean better returns on investment.

Ran a vastly oversimplified DCF analysis of NST based on their guidance and making a heap of assumptions, including a steady aisc and a flat 2m oz p.a. after a few years. Basically just ballparking here to try and work out a rough value for the company.

After 20 years with a 10% Discount rate we get a value of 9.7 bil (current market cap 10.4 bil). (Gold price USD 1700)

Using a 5% discount rate the value is 15 bil.

I find this curious as much of the analysis I've heard (podcasts) has said that gold producers are undervalued at the moment and are factoring in a $1500 USD gold price. Given the recent inflation figures, I think we are unlikely to see $1500 for a sustained period of time.

2 directors have bought on market recently.

Doc below - it really is just a ballpark doc and doesn't consider things like capex for new projects, or new projects coming online, etc.

https://docs.google.com/spreadsheets/d/1NmgXyvSXOiua11X8cENRz_Sg9auhpfIiIKzu66p6R6k/edit?usp=sharing

26-May-2021:  Investor Presentation - KCGM Site Visit

Also - two days ago (24-May-2021):  Northern Star appoints Michael Chaney as Non-Executive Chair

In their KCGM (Kalgoorlie Consolidated Gold Mines, i.e. the Kalgoorlie Super Pit) Site Visit Presso, NST took the opportunity to reconfirm their FY21 guidance, saying KCGM was...

• On track to achieve FY21 production guidance; 440-480koz at AISC A$1,470-A$1,570/oz
• Operation being de-risked and productivities are increasing with multiple production sources; Production to rise to +675kozpa by FY28
• KCGM leads Reserve and Resource growth:
  • 11.6Moz Reserves (up 20% over 9 months)
  • 26.3Moz Resources (up 38% over 9 months)
  • Underpins ~13 year mine life
• Further growth via Resource conversion (KCGM Inferred Resources 8.6Moz), host of strong intersections outside Resources and Reserves, backlog of assays pending due to congested assay labs…
• ...and focused exploration across a >90Moz gold camp.

And KCGM is just ONE of their assets.

[I hold NST shares, and I like their choice of Michael Chaney - who used to head up Wesfarmers {WES} - as NST's new non-executive Chairman, now that Bill Beament is moving to head up Venturex {VXR}.]

[P.S. I wonder whether the "backlog of assays pending due to congested assay labs" is positive for XRF Scientific {XRF} or ALS Limited {ALQ}...]

By the way, at the bottom of the below image (the KCGM asset overview; click on the image for a larger version) - you can see the northern end of the town of Kalgoorlie - the streets and houses - which puts the Super Pit into some perspective.  It is BIG!

10-Feb-2021:  Half Year Results Summary   plus   Half Year Results Presentation

and   Half Yearly Report and Accounts

RECORD PROFITS, CASHFLOW AND INTERIM DIVIDEND

Growth strategy on track, with completion of Saracen merger paving way for increase in production to 2Mozpa, underpinned by organic sources and low capital intensity All results relate only to Northern Star; Saracen and Northern Star financial results to be combined from 12 February 2021 (merger implementation date)

HIGHLIGHTS

• Record underlying net profit after tax (NPAT) of A$194.4M for the December Half, up 63% from previous corresponding period (pcp)
• Earnings per share of A25¢; up 27% from pcp
• Record statutory NPAT of A$184.5M, up 46% from pcp
• Record underlying free cashflow of A$226M, up 94% from pcp, after record investment of A$108M in exploration and expansionary capital to grow production by 40% over the coming three years
• Record Group EBITDA of A$472.2M, up 47% from pcp
• Revenue of A$1.1B, up 34% from pcp
• Interim dividend increased to A9.5¢ (fully franked), up 27% from pcp; Based on payout policy of 6% of revenue and calculated on the pre-merger issued capital base
• Significant financial, operational and Company growth achieved while maintaining superior returns, with annualised average return on equity of 17.4%
• Gold sales of 480,431oz at an average price of A$2,386/oz; 39% of gold sold into the hedge book, reducing hedging to ~10% of next three years’ production
• Outstanding results across operations; EBITDA from operations of A$517M, up 42% from pcp; EBITDA margin of 46%
• Cash, bullion and investments of A$372M at 31 December; Bank debt A$375M
• On track to meet NST FY2021 production guidance of 940,000-1,060,000oz
• Northern Star will host an interim results conference call today at 8:00am AWST (11:00am AEDT). The call can be accessed at https://webcast.boardroom.media/northern-star-resources-ltd/20210210/NaN6017468828cb65001a531637

--- click on the links at the top for more ---

[I hold NST shares.  As stated at the top, although the merger between NST and SAR (Saracen) is now complete, these results are only for the 6 month period ending 31-Dec-2020 so do NOT include any contribution from SAR.  Very impressive!  NST are still the Second Largest pure-play gold producer listed on the ASX and the best run (managed) gold producer by a LONG way, and they are now also a Top-10 global gold producer as well post the merger.]

Court Approves Scheme 

Saracen Mineral Holdings Limited (ASX:SAR) and Northern Star Resources Ltd (ASX:NST) are pleased to announce that the Supreme Court of Western Australia (“Court”) has today made orders approving the scheme of arrangement by which Northern Star will acquire all of the shares in Saracen (“Scheme”).

Lodgement of Court Orders and Suspension of Trading It is expected that Saracen will lodge a copy of the Court's orders with the Australian Securities and Investments Commission tomorrow, Wednesday, 3 February 2021, at which time the Scheme will become legally effective. If this occurs, Saracen's shares will be suspended from trading on the ASX at the close of trading tomorrow.

25-Nov-2020:  Update on Proposed Merger of Equals

Saracen Mineral Holdings Limited (ASX:SAR, “Saracen”) and Northern Star Resources Ltd (ASX:NST, “Northern Star”) refer to their joint announcement dated 6 October 2020, in which Saracen and Northern Star announced execution of a binding Merger Implementation Deed (“MID”) under which Northern Star will acquire 100% of the shares in Saracen via a Saracen scheme of arrangement (“Scheme”).

Saracen and Northern Star are pleased to confirm that all Northern Star financier consents and Material Saracen Facilities and Relevant Agreements consents required under items 7 and 8 of clause 3.2 of the MID have now been obtained, and those conditions precedent are now satisfied.

The Scheme remains subject to the remaining conditions precedent in clause 3.2 of the MID, which include approval being obtained from Saracen shareholders and Court approval in relation to the Scheme.

As set out in the previous joint announcement, Saracen is expecting to circulate a scheme booklet (containing information about the Scheme and the basis for the Saracen Board's unanimous recommendation, as well as an Independent Expert's Report) to Saracen shareholders in December 2020. The Scheme is currently expected to be implemented in February 2021, subject to Saracen shareholders approving it and all other remaining conditions being satisfied.

The Scheme continues to be:

• unanimously recommended by the Saracen Board, subject to no superior proposal emerging for Saracen and the Independent Expert concluding (and continuing to conclude) that the Scheme is in the best interests of Saracen shareholders; and
• unanimously endorsed and supported by the Northern Star Board, subject to no superior proposal for Northern Star emerging.

Saracen and Northern Star will continue to update Shareholders about material developments in relation to the Scheme.  Saracen shareholders do not need to take any action at this time.

Authorised for release to the ASX by Bill Beament, Executive Chair (NST) and Raleigh Finlayson, Managing Director (SAR).

[I hold both NST and SAR shares.]

Also:  25-Nov-2020:  NST AGM Presentation   and   Chair's AGM Address

I note that the steep falls in the NST share price appear to have stopped with today's rise, however they still look like very attractive buying at sub-$13/share.  They were trading at $16.84 only 17 days ago (their closing price on Monday 9-Nov-2020 was $16.84).  At $12.91, where they are trading right now, as I type this, they are 23% below that level.

17th August 2020:  Dumile Capital ("Growth is Value"): Northern Star Resources – Do Better than Buffett

Thanks to Chagsy for bringing this excellent write-up on NST by Dumile Capital to our attention over in the "Gold as an investment" forum.

[I hold NST shares.  I also hold SAR shares.  SAR & NST are due to merge early in the new year (CY: 2021) after a Saracen (SAR) shareholder vote.]

This article centres around Berkshire Hathaway's recent smallish investment (for them) in Barrick Gold (NYSE:GOLD), one of the world's two largest listed gold producers (second largest gold company by market cap, and largest by EV when the article was written in August 2020).  I'm 99% convinced that it was NOT Warren Buffett who made that investment decision, as I've mentioned elsewhere here previously and as this article suggests early on.  WB has entrusted much of the Berkshire Hathaway (BH) everyday investment management decisions to his investment lieutenants,Todd Combs and Ted Weschler, as explained in this September 2020 article on BH's $US570 million bet on Snowflake (at IPO). 

As with WB's aversion to gold, he also actively avoids early-stage technology companies, yet Berkshire is now getting in on such tech companies at IPO, and investing US$564m in Barrick Gold (20.9m x NYSE:GOLD). 

Berkshire also recently (as in - in the past few years) invested in the USA's four largest airlines, something that NOBODY would have reasonably expected after reading ANY of Warren's comments on airlines, particularly that anybody who had shot the Wright brother's first successful plane flight out of the sky would have been doing future investors a huge service.  Then Berkshire exited all of them (sold out of all 4 airlines) near their lows earlier this year - a move which significantly contributed to Berkshire posting a $US49.7 billion loss for the quarter ending March 31, 2020.

However, back to this Dumile Capital article on NST.  Here is the best bit:

Northern Star Resources ($NST.ax), perhaps the industry’s biggest success story of the past decade, has achieved staggering returns for shareholders by executing a totally different approach. The stock’s 10-year return now stands at +15,755% (+66% annualized, not including dividends), while physical gold has risen 56% (4.5% CAGR), and Barrick has registered a cumulative loss of -42% (maybe a bit better if you add up dividends).

Northern Star has built its entire business around acquiring mispriced end-of-life assets from bloated operators like Barrick and making prudent capital investments to unleash the assets’ full potential by lowering extraction costs and extending their mine lives. The meteoric rise of NST highlights the utmost importance of management quality in a commoditized industry, as the major drivers of returns on capital are management decisions around mine transactions, operations, and gold hedging activities.

Former CEO and current Chairman Bill Beament was instrumental in formulating NST’s business model. Beament’s background as an underground mining engineer gave him a unique advantage to spot value where others couldn’t. With the support of a senior management team built with a focus on underground mining expertise, the Company has demonstrated that their ability to buy non-core “tired, unloved assets” from other companies and quickly turn them around into major performers that have a significant impact on NST shareholder value is not just a matter of getting lucky, but rather a repeatable process.

--- end of excerpt ---

I highly recommend reading the ENTIRE article - which includes Jundee as a good example of the NST model at work.  As I always mention, I hold NST, and they are my favourite gold producing company, so my opinion is likely biased towards them, however you can NOT argue against their outstanding total shareholder return numbers over so many different timeframes.  Bill Beament has done very well out of NST, no question, but so has every other NST shareholder who has held the stock for any decent length of time.

06-Apr-2020:  Pogo employee tests positive for COVID-19 while on leave

26-Mar-2020:  COVID-19, Guidance and Dividend Update

Northern Star, Australia's second largest listed gold producer, has withdrawn their previous production guidance admitting there have been disruptions to production at some of their mines and that there could well be further discruptions.  They have also deferred payment of their interim dividend until October.  That's something I've seen a number of companies do over recent days.  In this case however, it would appear that this was NOT priced in already, as NST are off over 11% so far today, while most of their peers (the larger ASX-listed gold miners) are up or down around 1% to 2% today.

25-Sep-2018:  Article in MiningNews.Net - see here - "Upside at Pogo Immense: Beament"

More of the same.  "We're not doing anything different here guys," said Bill Beament, pointing at Northern Star's track record of deals - 10 in eight years which created A$5.3 billion of value in the process.

Beament said Pogo's status as a tier one underground operation in a tier one jurisdiction fit within Northern Star's DNA.

"No offence, but you're not going to see Northern Star rush off to places like Africa," he said.

"We like Australia, the US and Canada.

"[Pogo] gives us great exposure to a prolific mineral belt.

"There are many global majors fighting to get into this jurisdiction as we speak."

What excites Northern Star is the potential at Pogo - it was once a 300,000oz per annum producer and could well be again in the not-too-distant future.

The company sees similarities between Pogo and its world-class Jundee mine.

"The reserve cut-off grade is 8.3 grams per tonne gold, which is nearly four times the cut-off grade of Jundee," Beament said.

Jundee's break-even cut-off grade is 6.5gpt gold, which Beament said highlighted the huge potential at Pogo.

Current owner Sumitomo had set an US$18 million exploration budget for this calendar year.

The results are due shortly and Northern Star will announce an updated JORC-compliant resource for Pogo when it takes ownership next month.

Beament pointed out Pogo had one tenth of the drilling completed at Jundee.

"This is a spectacular orebody," he said.

Unlike some of the company's other assets, Beament said Pogo wasn't a requiring a full renovation.

"This ain't broken," he said.

"We don't have to invest nearly as much as we've had to with our other assets."

Northern Star already has 16 members of its team onsite ahead of the acquisition close next month.

"It's called planning and preparation, and we're well advanced," Beament said.

I hold NST shares.

03-Feb-2020:  Northern Star's SPP shares are being allocated today.  They haven't officially released an announcement regarding how they have scaled back applications, they've just said that the SPP was seriously oversubscribed.  I've just got off the phone with their SPP info line however and one of my accounts - that had just 50 NST shares in it (a marketable parcel, but not much more than that) received only 7 (yep, seven) new NST shares in this SPP.  Apparently they've gone with a pro-rata scale back to avoid unnecessary dilution with those who have larger shareholdings.  In other words, the smaller your NST holding was on the record date (December 16, 2019), the smaller your allocation will be.  Luckilly I have a larger holding in another account.  Unluckilly, that other account is an industry super fund and they don't allow you to participate in SPPs - they only allow you to participate in rights issues - when the rights can be traded on the ASX.  I'm a little bit pissed off - $9 SPP price, and NST trading at around $13 now, but they are free to scale their SPP back any way they want to, and they're clearly looking after those with decent shareholdings before those with much smaller ones here.  I still have reasonable exposure to the company via my CBUS SMSF, but I would still have liked to have received more than seven shares in my other (main trading) account!!

18 June 2019:  Company Presentation - London Roadshow

"An Australian gold miner - for global investors" - London Roadshow - June 2019

24-Apr-19:  March 2019 Quarterly Activities Report - which is subtitled, "Pogo hits inflexion point, paving way for record fourth quarter."

HIGHLIGHTS

• Gold sold in the March quarter of 185,296oz at an AISC of A$1,369/oz (US$975/oz)
  • Australian operations sold 149,069oz at an AISC of A$1,200/oz (US$855/oz)
  • US operations sold 36,227oz at an AISC of A$2,062/oz (US$1,468/oz)
• Pogo’s results reflect impact of significant changeover-related activity, including the late delivery of the new mobile underground mining fleet and the introduction of a new mining method, which limited production temporarily; This reduced production drove up the AISC per ounce
• In the March quarter, monthly expenditure at Pogo fell ~20% to US$18.5M from an average of US$22.5M per month in the previous two quarters. Further cost reductions are anticipated  
• Pogo is forecast to produce ~50,000oz in the June quarter  
• Turnaround at Pogo and ongoing strong performance at Australian operations expected to deliver record group quarterly production in the June quarter; Rising trend demonstrated by the sale of 82,000oz of gold in the month of March
• Operating cash flow of A$63M for the quarter; This is set to rise significantly in the June quarter
• Cash and equivalents at 31 March of A$288M (A$292M at December 31) after investing A$44M in exploration and expansionary capex in the quarter; Northern Star has no bank debt
• March quarter production:
  • Jundee Gold Operations: - 81,089oz mined and 67,420oz sold at an AISC A$1,021/oz (US$727/oz)
  • Kalgoorlie Gold Operations: - 84,492oz mined and 81,649oz sold at an AISC A$1,347/oz (US$959/oz)
  • Pogo Gold Operations: - 39,750oz mined and 36,227oz sold at an AISC A$2,062/oz (US$1,468/oz)
• At Pogo, the new mining method of long-hole stoping commenced late in the quarter and represented only 11% of the quarter’s processed tonnes.  The April month to date figure has increased to 27% and the processed head grade has risen to over 8gpt; This is forecast to increase to a ~60/40% stoping to development ratio in the coming quarters
• Five of the sixteen new pieces of underground mobile plant arrived on site in the March quarter; The balance is scheduled for delivery in the June quarter
• Pogo is on track for a maiden JORC Reserve mid-year; Eight rigs are now operating underground and a further four rigs are operating on the surface
• Outstanding results from Pogo Central Zone discovery, incl 1.5m at 48.6gpt, 1.3m at 33.2gpt, 5m at 13.9gpt; In-mine extensional drilling results incl 2.4m at 82.5gpt, 1.8m at 80.2gpt and 4.5m at 30gpt
• Australian operations on track to meet the top end of FY2019 production guidance of 600,000640,000oz
• At Jundee, open pit mining at Ramone commenced in February with ore to be processed this quarter; Regional exploration at Ramone has resulted in further discoveries at the nearby Ziggy and Marley prospects with results including 17m at 4.1gpt and 9m at 6.2gpt
• Surface diamond drilling continues to confirm the underground potential of the Ramone system
• Significant regional exploration success in the projected Zuleika Shear geological setting at South Kalgoorlie Operation with results including 1m at 246gpt and 1m at 28.6gpt.

Disclosure:  I hold NST shares.

16-Oct-2018:  Northern Star has released this announcement today titled, "Pogo Resource Update" in which they have increased the Pogo Resource estimate by 24% (or around 0.8 million ounces of gold).  

Highlights of the announcement:

• Northern Star, in conjunction with independent mining consultants CSA Global, has completed a comprehensive re-estimation of the Pogo in-mine Resource; This estimate is JORC-2012 compliant
• The JORC-compliant Resource estimate is now 8.8Mt at 14.7gpt for 4.15Moz, utilising a cut-off grade of 6.2gpt. This new estimate is in line with the non-JORC estimate stated in Northern Star’s ASX release of August 30, 2018 re the Pogo acquisition
• The previously reported non-JORC estimate of 4.1Moz at 12.2gpt included 765,000oz in satellite deposits external to the main Pogo mine; These deposits have not been included in this new estimate
• The new Resource estimate in the Pogo mine area of 4.15Moz has increased by 24% or by ~0.8Moz, predominantly through interpretation and remodelling of known mineralisation
• This new Resource estimate will underpin mine planning and operational optimisation at Pogo
• Northern Star assumed management control of the Pogo operation on 28 September 2018
• A$15-20 million budgeted for exploration and drilling at Pogo for FY2019
• Central Tanami Project: As announced on 19 September 2018, Northern Star has increased equity ownership of the Central Tanami Project (CTP) to 40% via a $20M option exercise.  Equity Resources in the CTP now total 12.3Mt @ 2.8gpt for 1.1Moz
• Following the Pogo Resource and the increased CTP ownership, Northern Star’s Group Resources stand at 188Mt @ 3.4gpt for 20.5Moz
• A revised JORC-compliant Ore Reserve estimate will be published following closure of FY2019 in line with Northern Star’s policy

NST also released another Investor Presentation on October 3rd - see here

NST also released a Pogo Site Visit Presentation Pack on September 28th (the site visit by analysts was on the 27th September) - see here

They also announced on October 1 that they had completed the Pogo acquisition - see here

Disclosure:  I hold NST shares.