The Northern Star Resources Ltd (ASX: NST) share price could be on the move today after the release of its quarterly production update.
How did Northern Star perform in the fourth quarter?
Newcrest Mining Limited (ASX: NCM) isn’t the only gold miner to finish FY 2020 strongly. This morning Northern Star revealed that it had a strong end to the financial year.
According to the release, Northern Star delivered a record 262,717 ounces of gold sold during the June quarter. This was achieved with an all-in sustaining cost (AISC) of A$1,475 an ounce (US$969 an ounce). This includes 50,251 ounces of gold sold at its Pogo operation for an AISC of US$1,276 an ounce.
For the full year, Northern Star achieved record total sales of 900,388 ounces at an AISC of A$1,496 an ounce (US$983 an ounce).
From this, its Australian operations sold a record 727,352 ounces at an AISC of A$1,350 an ounce (US$887 an ounce). This was at the low end of its stated 720,000 ounces to 800,000 ounces guidance range. The balance was made up by the Pogo operation, which mined 200,718 ounces and sold 173,036 ounces at an AISC of US$1,402 an ounce.
High gold price boosts balance sheet.
Northern Star reported an average realised price of A$2,208 an ounce for FY 2020.
This includes sales of 271,378 ounces into hedged positions, reducing the hedge book to 536,426 ounces and equal to just 15% of the next three years’ production.
This led to the company’s underlying free cash flow coming in at A$218 million during June quarter, despite investing ~A$44 million into growth capital and exploration.
As a result, Northern Star’s cash, bullion, and investments rose by a sizeable 40% to A$770 million at 30 June 2020. Its corporate bank debt stood at A$700 million, with A$200 million repaid post quarter on 6 July.
Northern Star’s Executive Chair, Bill Beament, commented: “Our quarterly sales of 262,717oz was not only a record, but also very solid given the imposts stemming from the COVID-19 measures we moved quickly to put in place.”
Mr Beament believes this demonstrates just how much its free cash flow can grow when conditions return to normal.
“All together, this demonstrates the significant potential to grow our free cashflow as the impacts of COVID-19 on production and costs are alleviated and, importantly, as our exposure to the spot gold price increases,” he added.
FY 2021 group production and cost guidance will be published with its annual reserve and resource update in the coming weeks.
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