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.

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.

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.