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#Business Model/Strategy
Added 7 days ago

Disc: I own NST

Overview: One of the legendary Australian companies. World class gold miner. Has been hit by a 1-2 lately, with softer gold prices and the legendary Bill Beament jumping ship for Copper producer VXR. Feel like the ship is big enough to sail itself. As long as the company culture can continue it should be fine.

These guys are machines, their company report has the feel of a beehive. So many things at work concurrently; dig more, process more, explore more, spend less, buy mines, go go go! Implementation monsters.

Mines FY20:
Yandal - 2 mines, Jundee and Bronzewing, Open and Underground - 6.9Moz Resource 2.8Moz Reserve - 300koz mined at AISC $1095
Karlgoorlie - 318koz mined at AISC $1564. One mine put on "care and maintenance" due to inadequate financial returns.
KCGM (50% JV) - 111.9koz (6mo of production - unsure if this is their share or the whole lot) @AISC $1427
Pogo - 174koz @$2094
Total gold - 905koz @$1496

Forward Mines FY22 (skipping FY21 as SAR will only be half a year, just based off H1FY21 SAR+NST and doubled it.):
Yandal - 280koz @$1206
Kalgoorlie - 240koz @$2028
KCMG - 460koz @$1400
Pogo - 214koz @$1588
Carosue - 226koz @$1273
Thunderbox - 160koz @$821
Approx production - 1.58Moz @$1409

And none of these numbers factor in the capacity of NST to increase output through good management of their resources.

Gold price - took a quick look at the futures data (Jun 22): A$2300. Which is just a touch up from now. Fine for now.

A few other small points:

Pogo's AISC seems to be coming down ($2k in FY20, $1.5k in 1HFY21)

Karlgoorlie's ASIC seems to have risen in a mirror image to Pogo's. Not sure what that's about.  

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#Management
Added 2 months ago

Big news out of NST today - The man who took Northern Star Resources from a microcap to the world’s sixth biggest gold miner has made a surprise exit to back a base metals explorer - Bill Beament will retire from the Northern Star Board, effective July 1, 2021 to take up an Executive Director role with Venturex Resources (VXR).

Wonder what implciations Bill's departure will have on NST going forward, considering he was instrumental in the phenomenal growth of NST into a behemoth that it is today.

View Attachment

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#NST-SAR Merger Complete
Added 2 months ago

12-Feb-2021:  Implementation of Scheme

MERGER OF NORTHERN STAR AND SARACEN IMPLEMENTED

Northern Star Resources Ltd (ASX:NST) is pleased to advise that the scheme of arrangement (Scheme) in relation to the merger of Northern Star and Saracen Mineral Holdings Limited (Saracen), has today been implemented.

Scheme Consideration

In accordance with the Scheme, all Saracen shares have now been transferred to Northern Star, and eligible Saracen shareholders have been issued the Scheme consideration of 0.3763 Northern Star shares for each Saracen share held on the Scheme record date. The newly issued Northern Star shares are expected to commence trading on ASX on a normal settlement basis from Monday, 15 February 2021.

In addition, Northern Star has issued the Northern Star shares otherwise payable to "Ineligible Shareholders" (as defined in the Scheme Booklet) to a nominee who has been appointed to sell those shares so that the net proceeds of sale can be distributed to applicable Saracen shareholders in accordance with the process set out in the Scheme Booklet.

Changes to Northern Star Board Composition

Northern Star has appointed the following Saracen Directors to the Northern Star Board with effect from today.

  • Raleigh Finlayson, as Managing Director.
  • Anthony Kiernan, as Lead Independent Director.
  • John Richards, as Non-Executive Director.
  • Sally Langer, as Non-Executive Director.

In addition, with effect from today, Peter O'Connor retires from the Northern Star Board. Mr O'Connor joined the Board as a Non-Executive Director in May 2012, when Northern Star had a share price of approximately 40 cents and annual production of approximately 72,000 ounces.

Northern Star Executive Chair Bill Beament welcomed Mr Finlayson, Mr Kiernan, Mr Richards and Ms Langer to the Northern Star Board and thanked Mr O’Çonnor for his invaluable contribution.

“Peter has been an outstanding Director,” Mr Beament said. “His wisdom, experience and commercial acumen saw him play a vital role in the creation and execution of Northern Star’s growth strategy.

“His deep understanding of financial markets and the sound advice he provided based on many years of experience made him invaluable, particularly in times of intense merger and acquisition activity.”

Mr Beament said the Board looked forward to working with the new Directors as the Company embarked on its next chapter of growth.

“We have a diverse Board, with each Director bringing particular skills and experience,” he said. “This composition will help ensure we continue growing returns for all Stakeholders using our first-class team of people, exceptional asset base, strong cashflow and robust balance sheet.”

Delisting of Saracen

An application has been made to remove Saracen from the official list of ASX, which is expected to take effect on and from Monday, 15 February 2021.

--- ends ---

(There is also an appendix which includes a summary of the material terms of Mr. Finlayson's employment agreement - the new NST MD, who came with Saracen.  Click on the link at the top to read the full announcement, which includes that appendix.  Bill Beament continues in his role as Executive Chairman of NST.) 

[I hold NST shares.]

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#Fundie/Analyst Views
Last edited 2 months ago

10-Feb-2021:  On today's episode of Ausbiz's "The Call", Henry Jennings from Marcus Today (in the studio) and Andrew Wielandt from DP Wealth Advisory in Toowoomba, Queensland (via Skype) both gave NST the thumbs up (a "Buy" call), so it's been added to the Ausbiz "The Call" portfolio today.  NST and SAR both reported well this morning and the merger is now complete (this week) with the two companies reporting as one company as from this coming Friday, 12-Feb-2021.  As the guys say, if you like gold, this is the one to own, and I do.

Click on the link above to watch today's episode.  The commentary on NST starts from the 7 minute mark.

[I hold NST shares.]

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#FY21 H1 Results
Last edited 2 months ago

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.]

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#Scheme Approved 2/2/21
Added 3 months ago

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.

View Attachment

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#Quarterly Reports
Added 3 months ago

21-Jan-2021:  December 2020 Quarterly Activities Report

PRODUCTION AT TOP END OF GUIDANCE, UNAUDITED NPAT OF A$100M AND DEBT CUT BY A$125M

Gold sales of 252,899oz; Standout performance at Pogo in face of COVID-19 challenges; Strong balance sheet with corporate debt cut to A$375M and A$372M in cash, bullion and investments

HIGHLIGHTS

  • Gold sold in the December quarter up 11% to 252,899oz; This was at the upper end of the published December quarter guidance range of 226,000-254,000oz
  • Strong performance at all operations:
    • Australian Operations (including 50% KCGM) sold 198,701oz at an AISC of A$1,526/oz (US$1,115/oz)*
    • Pogo Operations sold 54,198oz at an AISC of US$1,365/oz
  • Group all-in cost (AIC) of A$1,825/oz (US$1,333/oz) (including substantial investments in production growth), KCGM open pit material movement increased 22% over previous quarter; significant progress achieved on Pogo mill expansion to 1.3Mtpa; Pogo’s Jameson cell installed and gold recoveries +91%
  • Average realised price of A$2,295/oz in the December quarter; This included 48% of gold sold (~122,000oz) into hedged positions, reducing hedge book to ~10% of the next three years’ production
  • Strong underlying free cash flow of A$93M generated during December quarter; This was despite investing ~A$63M in growth capital and exploration
  • Unaudited NPAT of ~A$100M; Operating mine cashflow of A$290M; Net mine cashflow of A$169M
  • Cash, bullion and investments of A$372M at 31 December 2020 after repaying A$125M of corporate bank debt, A$40M in stamp duty/M&A and A$10M for FY20 tax balancing payment during the quarter
  • December quarter production:
    • Yandal Gold Operations:
      • 65,396oz mined and 68,405oz sold at an AISC A$1,203/oz (US$879/oz) with AIC of A$1,407/oz
    • KCGM Gold Operations (50% Ownership):
      • 48,460oz mined and 58,565oz sold at an AISC A$1,359/oz (US$993/oz) with AIC of A$1,561/oz
    • Kalgoorlie Gold Operations:
      • 71,709oz mined and 71,731oz sold at an AISC A$1,968/oz (US$1,437/oz) with AIC of A$2,132/oz
    • Pogo Gold Operations:
      • 58,744oz mined and 54,198oz sold at an AISC US$1,365/oz with AIC of US$1,629/oz
  • Second court date to finalise merger with Saracen Mineral Holdings (ASX: SAR) set for February 2, 2021
  • Combined group on track to achieve annual production guidance of 1.6Moz with pathway to 2Moz while unlocking synergies of A$1.5-2B
  • Northern Star will host a quarterly conference call today, 21 January 2021, at 12:00pm AEDT (9:00am AWST). The call can be accessed at https://webcast.boardroom.media/northern-star-resourcesltd/20201027/NaN5fff9378aec8340019d1c1dc

--- click on the link at the top for the full report ---

[I hold NST and SAR shares.]

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#NST-SAR Merger News
Added 4 months ago

10-Dec-2020:  NST: Results of First Court Hearing

NST & SAR have released a joint announcement this morning detailing the progress of the merger, including a timeline (with dates) on page 2 (which includes the SAR special dividend).  SAR shareholders will vote in mid-January and the scheme will become effective mid-February.

[I hold both NST and SAR shares.]

Unfortunately, NST haven't uploaded this announcement to their website's ASX announcements page, so we're stuck with the ASX version (with their "FOR PERSONAL USE ONLY" watermark making it hard to read).  I imagine it will get uploaded some time today or tomorrow.

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#NST & SAR to merge
Added 5 months ago

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.

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#Excellent Bull Case
Added 5 months ago

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.

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#Quarterly Reports
Last edited 6 months ago

27-Oct-2020:  September 2020 Quarterly Activities Report

To view that report without the ASX's "FOR PERSONAL USE ONLY" obscuring the text, you can download it directly from the NST website, however they haven't uploaded it to the site yet (as I type this) - when they do, you will see it appear here:

https://www.nsrltd.com/investor-media/reports/quarterly-reports/

STRONG QUARTER WITH PRODUCTION AT UPPER END OF GUIDANCE

Production on track to rise 40% over next three years with costs to fall 10%

Gold sales of 227,532oz at upper end of quarterly production guidance; All-in cost of A$1,752/oz and average realised price of A$2,493/oz; Hedge book reduced to just 13% of next three years’ production

HIGHLIGHTS

  • Gold sold in the September quarter of 227,532oz; This was at the upper end of the published quarterly guidance range of 207,000-233,000oz
  • Outstanding performance at Yandal and Pogo:
    • Australian Operations (including 50% KCGM) sold 176,526oz at an AISC of A$1,544/oz (US$1,081/oz)
    • Pogo Operations sold 51,006oz at an AISC of US$1,199/oz, quarterly costs were 14.5% lower than FY20
  • Group all-in cost (AIC) of A$1,752/oz (US$1,226/oz), demonstrating low capital intensity for growth
  • Average realised price of A$2,493/oz in the September quarter; This included sales of ~65,000oz into hedged positions, reducing the hedge book to approximately 13% of the next three years’ production
  • Strong underlying free cash flow of A$132M generated during September quarter; This was despite investing ~A$42M in growth capital and exploration
  • Unaudited NPAT of ~A$100M; Operating mine cashflow of A$254M; Net mine cashflow of A$170M
  • Cash, bullion and investments of A$470M at 30 September 2020 after repaying A$200M of corporate bank debt on 6 July and paying out A$200M (or A27cps) in fully franked dividends in the quarter
  • September quarter production:
    • Yandal Gold Operations: - 79,946oz mined and 73,743oz sold at an AISC A$1,209/oz (US$846/oz)
    • KCGM Gold Operations (50% Ownership): - 46,018oz mined and 53,959oz sold at an AISC A$1,461/oz (US$1,023/oz)
    • Kalgoorlie Gold Operations: - 64,064oz mined and 48,824oz sold at an AISC A$2,116/oz (US$1,481/oz)
    • Pogo Gold Operations: - 59,988oz mined and 51,006oz sold at an AISC US$1,199/oz
  • Annual production forecast to grow at industry-leading rate of 40% to 1.25Moz over next three years, with low capital intensity; Costs expected to fall by 10%
  • Reserves double to 10.8Moz (on price of A$1,750/oz (US$1,225/oz)); Resources increase 67% to 31.8Moz
  • Strong September quarter results from Northern Star and Saracen (ASX: SAR) highlight the outstanding combined growth profile and cash generating capacity of the companies under the proposed merger
  • Northern Star will host a quarterly conference call today, 27 October 2020, at 11:00am AEDT (8:00am AWST). The call can be accessed at https://webcast.boardroom.media/northern-star-resourcesltd/20201027/NaN5f8e63ecd7fcb30019896f4c

Northern Star Resources (ASX: NST) is pleased to report strong operating and financial results for the September quarter, 2020.

Gold sales of 227,532oz were comfortably in line with the Company’s published guidance for the quarter of 207,000oz – 233,000oz (22% of the annual guidance of 940,000oz – 1,060,000oz).

This strong operating performance, including all-in costs of A$1,752/oz, was complemented by an average realised price of A$2,493/oz. This resulted in robust margins which in turn led to underlying free cashflow of A$132 million after investing A$42 million in growth capital and exploration.

Northern Star finished the quarter with cash, bullion and investments of A$470 million and corporate debt of A$500 million compared with A$770 million and A$700 million respectively at June 30. During the September quarter, the Company repaid A$200 million in debt and paid fully franked dividends totalling A$200 million, or A27¢ a share. These comprised the postponed interim dividend, the final dividend and the special dividend.

The Company also continued to reduce its hedge book, which now represents just 13 per cent of forecast production for the next three years, as part of the ongoing strategy to increase its exposure to the significantly higher spot price.

Northern Star Executive Chair Bill Beament said the results highlighted the ongoing strength of the Yandal Operations, the successful ramp-up of production at Pogo and further benefits from the changes being implemented at KCGM.

“Jundee is simply one of the great gold mines of Australia, as shown by sales of more than 73,000oz in the quarter at an AISC of A$1,209/oz,” Mr Beament said.

“We are also delighted with the results at Pogo, which continued to improve on every metric as the benefits of the new bulk mining method and other changes we have introduced flow through. Costs for the quarter are 14.5 per cent lower than in FY20 and the project is generating strong free cashflow.

“Our changes with Joint Venture partner Saracen at KCGM are also paying dividends, with costs beating guidance.”

Mr Beament said the results at the Kalgoorlie Operations reflected mine sequencing which resulted in lower grades and reduced overall tonnages. Gold sales were also reduced due to a planned roaster shutdown. However, this increased the inventory of concentrate, which will be poured in the current quarter.

“Overall, we expect to increase production at the Kalgoorlie Operations each quarter this year and ultimately meet our full year guidance there.”

Northern Star’s production is set to rise by 40 per cent over the next three years to 1.25Moz and costs are forecast to fall by 10 per cent.

“We have one of the strongest growth profiles in the global gold industry and we will achieve this with one of lowest capital intensities in the global gold industry,” Mr Beament said.  “This combination enables us to deliver strong growth in production and free cashflow while maintaining our superior financial returns.”

Mr Beament said Northern Star’s strong quarterly performance, combined with the excellent September quarterly results released by Saracen last week, provided further insight into the significant strengths of the proposed merged group.

“Both companies have again demonstrated the tier-1 quality of our assets,” he said. “Our combined production is growing to 2Moz a year by FY27 while most of our peers have a falling production profile. Our costs will continue to reduce and our combined scope for further organic growth in tier-1 locations is exceptional.” (*)

Notes:

  1. (*) Refer to the ASX release by Northern Star and Saracen entitled “Northern Star and Saracen agree to A$16B merger-of-equals” dated 6 October 2020 and available at www.nsrltd.com, www.saracen.com.au and www.asx.com.  The proposed merger is to be implemented by way of a Saracen scheme of arrangement (Scheme).  Key conditions of the Scheme include approval being obtained from Saracen shareholders in general meeting, scheduled to occur during January 2021.  Further information about the Scheme (including key risks for Saracen shareholders) will be provided by Saracen to Saracen shareholders and released to ASX in due course, in the form of an explanatory statement (as that term is defined in section 412 of the Corporations Act) and notice of meeting (Scheme Booklet).  The Scheme Booklet will also include or be accompanied by an independent expert's report that will opine on whether the Scheme is in the best interest of Saracen shareholders.

--- Click on the link at the top (one of them) for the full report ---

[I hold NST and SAR shares.]

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#Company Presentations
Added 6 months ago

12-Oct-2020:  NST + SAR joint Investor Presentation - Diggers & Dealers Conference, Kalgoorlie

The ASX's new website (launched today) had a few hiccups, and one of them is the way they're adding their "FOR PERSONAL USE ONLY" watermark to the left edge of all ASX announcements by everybody.  They are covering up text and making announcements hard to read, and when the announcement is a slideshow like this one, they don't even fit the watermark up the left hand edge - it just says "IAL USE ONLY" on each page instead.  Quite sub-par really.

Thankfully, the better companies also allow you to download these announcements directly from their own website.  NST are one of these better companies, and the announcement (their joint NST+SAR Diggers and Dealers Company Presentation) - without the annoying watermark - can be viewed by clicking on the following link:

https://www.nsrltd.com/wp-content/uploads/2020/10/Investor-Presentation-Diggers-and-Dealers-12-10-2020.pdf

Because the two companies are merging, and the merged entity will be called "Northern Star Resources" and have the NST ticker code, I am not going to post straws under SAR (Saracen Mineral Holdings) as well as NST, just under NST from now on.

[NST and SAR are among the gold producers that I hold shares in.  NST has been my favourite ASX-listed gold producer for the past five years - and I've done VERY well out of them.  This merger will only make them even bigger, even more relevant, and better.  They are going to be on a lot more overseas investors' radars now as well, which isn't a bad thing, because their fundamentals, when compared to other large global gold miners, look excellent.  Bill Beament has always run NST as a business first, and a miner second.  Sustainable and growing profitability and way above average total shareholder returns have been a feature of NST for the past 5 or 6 years.  NST compares very well with the vast majority of other ASX-listed companies, not just gold producers.  Northern Star has been a consistent outperformer.]

 

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#NST & SAR to merge
Added 7 months ago

06-Oct-2020:  Presentation - SAR and NST agree to Merger of Equals

plus:  Saracen and Northern Star agree to Merger of Equals

and:  Saracen AGM Presentation - "There's nothing like Tier 1 Gold"

Transaction rationale

The scale and liquidity to attract both gold and generalist investors.

  • Top-10 global gold miner with sector-leading production growth; pathway to 2Mozpa 
  • Size and liquidity to attract generalist as well as gold-focused global investors and Australian large cap funds
  • Increased investor relevance and capital markets presence
  • One of the few global gold companies of this scale with operations exclusively in Tier-1 jurisdictions
  • Long-life producer with over 19Moz in Reserves and 49Moz in Resources
  • Combined market capitalisation of ~A$16.0 billion with strong global share register
  • Strong balance sheet with pro-forma net cash of A$118 million (as of 30 June 2020)
  • Strengthened platform to capitalise on accretive M&A opportunities.

A compelling combination - Takeaways

A unique opportunity exclusively available for both companies to unlock significant value, and build a major global gold producer with an exceptional high-margin growth profile.

Benefits to Northern Star shareholders

  • Exposure to high-quality, de-risked operations and infrastructure at Thunderbox and Carosue
  • Saracen’s open pit expertise.

Benefits to Saracen shareholders

  • Stronger near-term cash flows
  • Exposure to growth and North American platform through Pogo
  • Northern Star’s underground expertise.

Benefits to both sets of shareholders

  • Top-10 global producer, with 19Moz in Reserves and 49Moz in Resources
  • Complementary Board and management teams to drive growth and continued sector-leading returns
  • Diversification of production and cash flows across a number of high quality, low-risk Tier-1 jurisdictions
  • Transaction unlocks A$1.5-2.0B NPV in pre-tax synergies to be delivered via geographic, operational, and strategic synergies
  • Leading approach to environmental, social and governance principles and practices
  • Consolidation of ownership at KCGM for the first time [NST & SAR own KCGM 50/50 - which includes the Kalgoorlie Super Pit]
  • Dominant position in greater Kalgoorlie district, targeting 1.1Mozpa in production
  • Rationalised ownership of the Yandal belt, spanning Jundee, Bronzewing and Thunderbox
  • Significant organic growth pipeline across a merged portfolio with enviable geological endowment
  • Enhanced financial strength and flexibility to pursue accretive M&A
  • Increased investor relevance and capital markets profile

--- click on links above for more ---  [and there is a lot more]

[I hold both NST & SAR shares, and I flagged this merger as a possibility last year and again earlier this year after the two companies became JV partners in KCGM - i.e. the Kalgoorlie Super Pit.  It just makes sense.  Very positive IMO.]

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#Guidance Update
Added 8 months ago

13-August-2020:  Resources & Reserves, and Guidance Update (ex-KCGM)

PRODUCTION SET TO INCREASE 30% OVER NEXT TWO YEARS AND COSTS TO FALL 10%

FY21 production guidance (ex-KCGM) is 720koz-820koz; Production (ex-KCGM) is forecast to rise to ~900koz in FY22 and ~1Moz in FY23, driving down AISC by 10%; Resources increase by 3.2Moz, underwriting longer mine lives and increased cashflow.

HIGHLIGHTS

Resources at June 30, 2020

  • Group Resources increased by 3.2Moz to 22.3Moz (after depletion of 912,000oz and acquisition of Bronzewing Project); Resources per share have grown by +120% over the past five years (ex-KCGM)
  • Importantly, Measured and Indicated Resources increased 29% to 13.8Moz; This underpins continued replacement of Reserves in coming years
  • Increased inventory will underpin further organic production growth, longer mine lives and cashflow
  • Resources breakdown:
    • Pogo up 13% to 6.7Moz at 9.8gpt; This is the largest Resource in Pogo’s history
    • Jundee up 16% to 5.3Moz, with a further 1.6Moz at Bronzewing to be included as part of the Yandal Operations
    • Kalgoorlie Operations at 6.8Moz
      • Kanowna up 16% to 2.2Moz, 100% Kundana at 1.2Moz, 51% Kundana at 1.0Moz, South Kalgoorlie at 1.9Moz
  • In FY20, NST acquired the 1.6Moz Bronzewing Project and agreed to divest the 1.6Moz Mt Olympus Project

Reserves at June 30, 2020

  • Group Reserves increased 12%, or 600,000oz, to 6Moz (after depletion of 912,000oz); Reserves per share have grown by 180% over the past five years (despite production of 3.6Moz)
  • Reserves are calculated conservatively using an assumed gold price of A$1,750/oz and US$1,350/oz compared with the current spot price of ~A$2,700/oz (US$1,940/oz)
  • Reserves breakdown:
    • Jundee up 25% to 2Moz (despite depletion of 379,500oz), with a further 800,000oz at Bronzewing to be included as part of the now consolidated Yandal Operations
    • Pogo Reserve of 1.5Moz (despite depletion of 200,700oz), grade up 7% to 8gpt, despite only drilling 62% of budgeted drill metres due to COVID-19 restrictions
    • Kalgoorlie reduced 25% to 1.6Moz (after depletion of 330,200oz); New estimate reflects a significant reduction in the Raleigh Reserve and a higher cost base used in the calculations
      • Kanowna at 700koz, 100% Kundana at 300koz, 51% Kundana at 400koz and South Kalgoorlie at 200koz
  • Considerable opportunity to further grow Reserves with conversion of the +22Moz Resource base

Guidance

  • FY21 production guidance for Australian operations (ex-KCGM) is 540,000-600,000oz at AISC of A$1,425- A$1,525/oz (US$1,025-US$1,096/oz)
    • Jundee Operations 270,000-300,000oz at A$1,200-A$1,275/oz (US$863-US$917/oz)
    • Kalgoorlie Operations 270,000-300,000oz at A$1,650-A$1,750/oz (US$1,186-US$1,258/oz)
  • FY21 production guidance for Pogo is 180,000-220,000oz at AISC of US$1,200-US$1,400/oz; Guidance takes into account the impact of COVID-19 on operational restrictions
  • FY21 expansionary capital budget of A$99M, comprising:
    • A$50M (US$35M) at Pogo, with most of this applied to increasing processing capacity to 1.3Mtpa
    • A$37M at Jundee, predominantly for surface infrastructure upgrades and bringing on new production areas
    • A$12M at Kalgoorlie Operations for capital works

--- click on the link at the top for the full announcement ---

[I hold NST - they are my #1 Australian Gold Producer pick, and have been for the past decade.]

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#Trading Update
Last edited 10 months ago

8-July-2020:  June Quarter Trading Update

This time last year, the massive Kalgoorlie Super Pit, which used to be the largest OP (open pit) gold mine in Australia (recently overtaken by Newmont's Boddington Gold Mine) was owned by the two largest gold mining companies in the world - Barrick and Newmont - via their JV company known as Kalgoorlie Consolidated Gold Mines - or KCGM.  However those two giants of the industry have now sold their respective shares of KCGM to Northern Star (NST) and Saracen (SAR), Australia's 2nd and 4th largest gold producers (70%+ in gold).  Both companies have updated the market this morning.  I have already posted a straw about Saracen's update, and briefly mentioned the further positive gold price movement overnight. 

This straw is about NST's update, which the market seems to be more excited about so far, mainly because Bill Beament seemed very cautious and worried about the impacts of COVID-19 when he last provided a comprehensive update (and deferred their interim dividend payment).  This wasn't as obvious in their announcement at the time, but was very clear during the associated conference call with analysts and shareholders which I (as an NST shareholder) participated in. 

My view at the time was that Bill was being very conservative and was positioning the company to be able to get through COVID was as little damage as possible, and that his position and attitude was an excellent response to a very fluid and uncertain situation.  NST got sold down to close to $10/share (during that first week of April), almost re-testing their March low.  I took the opportunity at that time to top up my NST positions (I hold them in all of my portfolios, including my super).  

Today we will likely see a decent relief rally in NST, because things weren't nearly as bad as Bill thought they might be, and he's brought forward that interim dividend payment now to next week.  I would expect NST to finish the day somewhere between $14.50 and $15.  I love it when a plan comes together.

NST:  June Quarter Trading Update

UNDERLYING FREE CASHFLOW OF A$217.9M FROM SALE OF 262,717 OUNCES

Postponed FY20 interim dividend of A7.5¢ to be paid on July 16, 2020

Northern Star Resources (ASX: NST) advises that its cash, bullion and investments rose by 40% to A$769.5 million at June 30, 2020, up from A$551.4 million at March 31, 2020.

As a result, the Company’s balance sheet was net cash positive at June 30, 2020, with corporate bank debt of A$700 million.

Northern Star generated underlying free cashflow of A$217.9 million in the June quarter from the sale of 262,717oz. This took total sales for the 2020 financial year to 900,388oz while gold produced totalled 905,177oz. This was ~1.6% below the lower end of the FY20 guidance, which was withdrawn due to uncertainties stemming from COVID-19 (see ASX release dated March 26, 2020).

In light of this solid result, Northern Star will pay its FY20 fully-franked interim dividend of A7.5¢ a share on July 16. Payment of this dividend, which totals A$55 million, was postponed when the Company withdrew its guidance.

The Company expects to resume dividend payments in the ordinary course of business.

As part of its COVID-19 measures, Northern Star also drew down an additional A$200 million in debt in the March quarter. The Company has repaid that A$200 million on July 6, reducing its corporate bank debt to A$500 million.

In the June quarter, Northern Star reduced its hedge book to 536,426oz at A$2,085/oz (170,080oz, or 34% of ounces sold, in the June half came from hedged positions) as part of the Company’s strategy to increase its exposure to the spot price. Pushed-out hedged positions are being brought back and deliveries will continue to be accelerated in FY21. The Company has one of the smallest hedge books as a percentage of annualised production in the Australian gold industry, with just 15% of the next three years production committed.

Northern Star Executive Chair Bill Beament said the Company’s staff and business partners had done an outstanding job in very difficult circumstances. This enabled Northern Star to maintain the full employment of the Company’s workforce and business continuity for all stakeholders.

“The health and safety of our people and the communities in which we operate is always our first objective and the measures we adopted in response to COVID-19 reflected that,” Mr Beament said.

“As we foreshadowed at the time, these measures incurred additional costs, reduced productivities and restricted production.

“We also adopted a prudent approach to managing our balance sheet, as reflected in the decision to postpone the interim dividend and drawdown the additional debt.”

Mr Beament said that as well as protecting its people, these measures were aimed at maximising the Company’s ability to continue operating at all its sites throughout the pandemic.

“To generate quarterly free cashflow of A$217.9 million in these circumstances is an outstanding result which reflects the performance of our staff and business partners, our success in being able to operate continuously throughout the pandemic and the underlying strength of our assets,” he said.

“The results at our Pogo mine in Alaska were particularly pleasing given the challenging circumstances emanating from COVID-19 where we effectively managed safe operations with 36 confirmed cases through the quarter.

“Despite the considerable impacts of COVID-19 at Pogo, the underlying trend of rising production and productivity continued. This further demonstrates the huge potential of this asset in more conventional circumstances.

“The teams at our Jundee and Kalgoorlie Operations excelled and we made strong progress towards our goal of unlocking the significant upside at KCGM.”

--- click on the link at the top of this straw for the rest of this announcement ---   

[I hold NST shares]

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#Ashburton Divestment
Added 10 months ago

22-June-2020:  Northern Star Divests Ashburton Project

Northern Star Resources Limited (ASX: NST) advises that it has agreed to divest the Mt Olympus Project comprising most of the Ashburton Project in Western Australia to Kalamazoo Resources Limited (ASX: KZR) for a deferred contingent cash consideration of A$17.5 million.

The deferred cash consideration is as follows:

  • A$5 million on mining of the first 250,000 tonnes of Ore; and
  • a 2% Net Smelter Royalty (NSR) on the first 250,000oz of gold produced (worth an estimated A$12.5 million using the current spot gold price of A$2,500/oz), with a 0.75% NSR on any subsequent gold produced from the tenements; and
  • the same NSR’s will also apply on any other metals produced from the tenements.

Northern Star Executive Chair Bill Beament said: “The Ashburton Project no longer fits in Northern Star’s portfolio but still has strong potential on both the exploration and production fronts.  The royalty structure also enables Northern Star to retain an exposure to the project.”

Completion of the divestment is conditional on Ministerial approval and third party rights being observed.

--- ends ---

Disclosure:  I hold NST shares, but not KZR shares.

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#Pogo employee has COVID-19
Added one year ago
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#COVID-19 Response/Update
Added one year ago

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.

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#Company Presentations
Last edited one year ago

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.

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#Company Presentations
Last edited one year ago
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#Jan 2020 SPP Results
Last edited one year ago

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!!

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#Company Presentations
Last edited one year ago

18 June 2019:  Company Presentation - London Roadshow

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

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#Company Reports
Last edited 2 years ago

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.

 

 

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#ASX Announcements
Last edited 2 years ago

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.

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