Northern Star Resources: Driving Growth with Gold Production Expansion

About Northern Star Resources Limited

Northern Star Resources Ltd (ASX: NST) is a prominent Australian gold mining company with operations in Western Australia, Northern Territory, and Alaska. Established in 2003, NSRL focuses on the exploration, development, and operation of gold projects in sovereign risk-free regions. Key assets include the Kanowna Belle, Thunderbox, Pogo, and KCGM mines. In 2021, NSRL merged with Saracen Metal Holdings, its joint venture partner in the Super Pit gold mine. The company’s gold is utilised across various industries, including jewellery, electronics, and as a store of value in financial markets. NSRL is headquartered in Subiaco, Western Australia.

Operations and Growth

Northern Star Resources’ operational performance has been exceptional, with the company continuing to meet and exceed expectations across multiple sites. The total gold sold in the first half of FY25 reached 410koz, with an All-In Sustaining Cost (AISC) of A$2,128/oz (US$1,391/oz), in line with the company’s guidance. The strong operational performance has been underpinned by consistent production from key assets, including the Kalgoorlie Production Centre (KCGM), Yandal, and Pogo.

At KCGM, production is set to increase in the second half of FY25 following the completion of East Wall remediation and the ramp-up of underground development. With a focus on increasing production from higher-grade sources, KCGM is expected to deliver a strong performance over the coming years, contributing significantly to Northern Star’s growth. The company’s focus on operational excellence is also evident at the Yandal and Pogo production centres, where mills are operating at or above nameplate capacity. Notably, the Jundee and Thunderbox mills at Yandal have delivered exceptional results, while the Pogo mill has operated at an annualised run rate of 1.5Mtpa.

The overall operational performance of Northern Star reflects its commitment to maximising the potential of its existing assets. As a result, the company remains on track to meet its FY25 production guidance of 1,650-1,800koz of gold sold at an AISC of A$1,850-2,100/oz. This strong performance, coupled with increasing production from higher-grade ore bodies at KCGM, positions the company for a solid second half of FY25.

Strategy for Expansion

A key element of Northern Star’s strategy is its commitment to organic growth through targeted investments in exploration and capital expenditure. For FY25, the company has set a growth capital expenditure budget of A$950-1,020 million, in addition to A$500-530 million earmarked for the ongoing KCGM Mill Expansion Project. This investment is crucial to driving Northern Star’s long-term growth, particularly as the company looks to increase its gold production capacity significantly over the coming years.

One of the company’s most important growth initiatives is the KCGM Mill Expansion Project, which aims to boost the processing capacity of the Fimiston plant from 13Mtpa to 27Mtpa. The expansion is a critical part of Northern Star’s strategy to increase production at KCGM, with the aim of reaching 650koz of annual gold production by FY26 and up to 900koz per year at steady state from FY29. The KCGM Mill Expansion has already seen significant progress, with bulk structural steel delivered to site, primary crusher pre-assembly underway, and major equipment scheduled for delivery in the coming quarters. The expansion is expected to be a key driver of future growth, and Northern Star has carefully planned its capital expenditure to ensure the project stays on track.

Northern Star’s commitment to organic growth is also reflected in its exploration strategy, with A$180 million allocated for exploration activities in FY25. This investment will help the company continue to expand its resource base, with ongoing exploration at key sites such as KCGM, Carosue Dam, and Kalgoorlie Operations. Exploration activities will focus on high-potential areas, including the Golden Pike North open pit and the ongoing ramp-up of the Mt Charlotte and Fimiston underground operations at KCGM. These investments will be critical in ensuring that Northern Star can continue to deliver sustainable production over the long term.

In addition to KCGM, Northern Star is advancing other projects across its portfolio, including at the Yandal and Pogo production centres. At Yandal, the Jundee and Thunderbox mills are set to deliver stable production, with improved grade consistency and mill availability anticipated in FY25. The expansion of the Thunderbox mill is also expected to increase throughput from 2Mtpa in FY25 to 4Mtpa from FY26, with new satellite feed sources being developed to support this growth. Similarly, at Pogo, Northern Star is focused on maintaining high throughput rates, with the mine set to operate at a targeted throughput of 1.4Mtpa in the remainder of FY25.

Financial Performance

Northern Star Resources has delivered a strong financial performance for the first half of FY25, reporting a record net mine cash flow driven by both robust operational results and higher gold prices. The company generated underlying free cash flow of A$72 million in the period, which is expected to increase in the second half due to higher gold sales. The increase in cash flow has allowed Northern Star to maintain a solid financial position, with cash and bullion totalling A$1.215 billion by 31 December 2024. This financial strength is bolstered by the receipt of A$206 million from the Osisko debenture proceeds, ensuring continued support for the company’s expansion strategy.

Additionally, Northern Star’s balance sheet remains investment-grade with net cash of A$265 million, positioning the company well to continue funding its ambitious growth plans. The company also undertook a share buyback program, repurchasing 24.8 million shares at an average price of A$10.38, with A$43 million remaining under its A$300 million on-market buyback. These positive financial results underline the company’s strong operational performance and financial discipline, providing a solid foundation for future growth.