Northern Star Shines On Exploration Results
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Gold miner, Northern Star has revealed a significant upgrade to its estimated gold reserves around its Jundee mine in Western Australia to the point where the company may have found a major new gold province.
In an exploration update released yesterday with the company’s half year results(https://www.nsrltd.com/wp-content/uploads/2018/02/Exploration-Update-Final-20-2-2018.pdf) directors said they would add $10 million to its exploration budget in the area this year (boosting it to $45 million) because of the numerous discoveries and upgrades already outlined or made.
At least one possible new mine has already been outlined south of the Jundee operation and at least two other areas have shown very levels of gold mineralisation. Northern Star directors said it had "made multiple new gold discoveries at and around its Jundee gold mine in WA where the total endowment has reached 10 million ounces (10Moz)”. At current prices, that’s a gross value of more than $A16 billion.
"These discoveries are characterised by extremely high-grades and extend over significant dimensions of up to 2 kilometres (Km) each, They include the Zodiac discovery 800 metres (m) to the East of the Jundee mine, new significant results include 0.5m (half a metre) at 765 grams per tonne (gpt),” directors said. "Mineralisation at Zodiac has been defined over 2km and remains open in all directions.”
Northern Star said it is now drilling what will be one of the deepest holes in Australian gold history; "this hole is targeting two additional seismic reflectors below Zodiac, which has already returned grades up to 765gpt….Zodiac and these two additional reflectors all have potential to extend up-plunge to the surface and are therefore considered to have significant upside.”
The company said it had what it called "sensational deeper results down-plunge from the main Jundee Dolerite still to follow up on (past production 3.4Moz at 10gpt)”. These results included 0.4 of a metre at 611gpt, 0.3 of a metre at 380gpt and 6.8 metres at 142gpt.
In addition the Armada trend, located 400 metres west of Jundee, has grown to 2.5k metre strike (long); recent results include: “4 metres at 7.7gpt, 10 metres at 7.7gpt and 86.8 metres at 8.2gpt…Within the Armada trend, drilling has significantly extended the Revelation/Nexus portion with recent results including: 0.4 of a metre at 305gpt, 0.3 of a metre at 259gpt and 1 metre at 88.1 gpt.”
"At the Gateway 5100 lode, drilling has returned spectacular results close to surface, including: 1.2 metres at 957gpt, 6.9 metres at 49gpt and 11 metres 21.1gpt.”
The company said there had been a further "significant surface discovery at Ramone, 35km south of Jundee mine; Ramone already has potential to be an open pit mine with mineralisation outlined over 400m strike so far; results include 14 metres at 8.0gpt, 13 metres at 8.5gpt and 18.5 metres at 6.2gpt.”
"In light of this combined exploration success, Northern Star expects Jundee’s current Reserves of 1.4 million ounces to grow substantially as drilling continues,” Northern Star directors said. In a separate statement for the half year figures, the company said revenue was up, earnings down a touch because of the closure of one mine (while a new mining operation ramps up shortly) and it has $433 million on hand and no debt.
Interim dividend was lifted 50% to 4.5 cents, full franked.
Revenue rose 14% to $A435.3 million in year December half year, with net after tax profit dipping 7% to $79.1 million. Director said the fall was due to the “wind down of Paulsens (while the) Millenium mine is forecast to boost second half after tax profit”
Earnings before interest, tax, depreciation and amortisation reached $201.7 million which Northern Star said was a gross profit margin of 46.3% and 50% when the Paulsens operation is excluded.
A total of 267,278oz gold was sold at an average price of $A1,678/oz. All-in sustaining costs (AISC) were A$1,043/oz and the company says it is on track to meet 2018 guidance of 525,000-575,000oz at AISC of A$1,000-A$1,050/oz, Calendar year production in 2018 is forecast to rise to 600,000 ounces of gold.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.