Northern Star Resources took a hit on Wednesday after the growing gold miner announced disappointing first quarter production results, thanks largely by weakness at its Pogo operation in Alaska.
The shares fell 2.5% to $8.26, helped lower by weak global gold prices.
Northern Star blamed operational problems at its Alaskan operations for the weaker than expected quarterly production, but management says a record June quarter is now expected.
While the company’s Australian mines performed comfortably within guidance, its Alaskan operations were hit by the combination of the late delivery of a new underground mining fleet and the introduction of a new mining method.
This held back production temporarily, which saw a temporary rise in costs in the quarter.
Total gold sold by the group in the three months to March 31 was 185,296 ounces, down 12% from the December quarter, at a marginally higher all-in sustaining cost (ASIC) of $US1,369 an ounce (around $US1,930 an ounce).
But the 185,296 ounces was up a very solid 54% from the March quarter of 2018 (which was not included in the latest quarterly report) when 119,976 ounces of gold were produced – all from Australia.
Of that the Australian operations sold 149,069oz (up 24% from the March, 2018 quarter) at an AISC of $A1,200/oz ($US855/oz, while the Alaskan operations sold 36,227oz at an AISC of $A2,062/oz ($US1,468/oz).
But executive chairman Bill Beament said the changes at the Pogo mine in Alaska had begun to take effect. Nearly 45% of gold sold from Pogo over the quarter was sold in March.
He tipped a record group production in the June quarter and maintained Northern Star’s full-year guidance of between 850,000 and 900,000 ounces, with expectations to hit the upper end of the range.
“In light of this strong progress at Pogo, Northern Star is set for record production in the June quarter of 235,000-260,000oz at an AISC of A$1,075-A$1,175/oz,“he said.
“We always said it would take 18 months to implement our strategy at Pogo, so despite the temporary delays we are still on schedule,” Mr Beament said.
The company has, however, increased its all-in sustaining cost guidance slightly from $A1,125 to $A1,225 an ounce to $A1,225 to $A1,275 an ounce.
Northern Star said it had cash and equivalents at March 31 of $A288 million ($A292 million at December 31) after investing $44 million in exploration and expansionary capex in the quarter.
Northern Star again said it has no bank debt.
