Northern Star Reports 385koz Gold Sales at A$2,246/oz, Revises FY25 Production to 1.63-1.66Moz
Northern Star Resources reported solid March quarter results with strong cash flow and progress on its KCGM Mill Expansion, despite operational setbacks delaying grade uplift and prompting a downward revision of FY25 production guidance.
- March quarter gold sales of 385koz at A$2,246/oz AISC
- FY25 production guidance lowered to 1,630-1,660koz with AISC increased to A$2,100-2,200/oz
- KCGM Mill Expansion project on track with A$728 million spent to date
- Underlying free cash flow of A$201 million and net mine cash flow of A$295 million
- De Grey Mining acquisition effective 23 April, implementation scheduled for 5 May
Strong March Quarter Performance Despite Operational Challenges
Northern Star Resources Ltd (ASX: NST) delivered a robust operational and financial performance for the March 2025 quarter, selling 385,441 ounces of gold at an all-in sustaining cost (AISC) of A$2,246 per ounce. The company generated an underlying free cash flow of A$201 million and a strong net mine cash flow of A$295 million, underscoring its capacity to sustain growth and shareholder returns amid a challenging operating environment.
Operationally, the Kalgoorlie production centre, which includes the KCGM asset, faced delays in accessing higher-grade ore from the Golden Pike North area, impacting mined grades and prompting a revision of FY25 production guidance. Despite this, mining efficiency at KCGM is expected to improve significantly in the June quarter, with increased stoping fronts at Mt Charlotte and the Fimiston Underground ramping up.
Revised FY25 Guidance Reflects Near-Term Setbacks and Cost Pressures
Northern Star has revised its FY25 production guidance downward to 1,630-1,660koz from the previous 1,650-1,800koz range, reflecting the delayed grade uplift at KCGM and operational challenges. Correspondingly, the AISC guidance has been increased to A$2,100-2,200/oz, up from A$1,850-2,100/oz, driven by higher maintenance costs across the Yandal region and increased royalties due to elevated gold prices.
Growth capital expenditure guidance has been accelerated to A$950-1,100 million (excluding the KCGM Mill Expansion), reflecting increased development activity at key sites such as Wonder Underground (Thunderbox), Griffin (Jundee), and Mt Charlotte (KCGM). Exploration expenditure has also been revised upward to A$230 million, supporting expanded drilling programs and life-of-mine extensions.
KCGM Mill Expansion Project Progresses on Schedule
The KCGM Mill Expansion Project, a cornerstone of Northern Star’s growth strategy, remains on track with A$728 million spent to date and FY25 capital expenditure guidance unchanged at A$500-530 million. The project will nearly double processing capacity from 13Mtpa to 27Mtpa, targeting steady-state production of approximately 900koz per annum from FY29 following a two-year ramp-up.
During the quarter, the project transitioned from concreting to structural and mechanical installation phases. Major equipment deliveries are complete, and key infrastructure such as electrical switch rooms have been installed, positioning the project well for the planned early FY27 ramp-up.
Financial Position and Shareholder Returns
Northern Star maintains a strong balance sheet with net cash of A$181 million after paying a A$279 million dividend in the quarter. Cash and bullion holdings total A$1,121 million, and the company’s corporate bank facilities remain undrawn. The on-market share buy-back program is 89% complete, reflecting management’s commitment to returning value to shareholders amid historically high gold prices.
De Grey Mining Acquisition Nears Completion
The Scheme of Arrangement to acquire De Grey Mining Ltd became legally effective on 23 April, with implementation scheduled for 5 May 2025. This acquisition is expected to enhance Northern Star’s portfolio with the addition of the Hemi project, subject to final permitting and approvals. The integration will also provide potential tax benefits through consolidation of De Grey’s tax losses and accelerated depreciation.
Managing Director Stuart Tonkin highlighted the company’s confidence in overcoming near-term operational challenges and the strong cash flow outlook as production ramps up. He also noted ongoing monitoring of external risks such as US tariff exposures and foreign exchange volatility.
Bottom Line?
Northern Star’s near-term operational hurdles at KCGM temper FY25 outlook, but strong cash flow and strategic projects set the stage for growth.
Questions in the middle?
- How quickly will KCGM’s mining efficiency and grade uplift materialize in the June quarter?
- What impact will the De Grey acquisition have on Northern Star’s production profile and cost structure post-implementation?
- How might evolving US tariff policies and currency fluctuations affect Northern Star’s cost base and profitability?