Investor reaction to Northern Star’s report

Sometimes, some investors are not bright, and others do not really read what companies put out to the ASX.

Take Northern Star Resources (ASX:NST), which yesterday issued its March quarterly report, and the shares sold off because it supposedly ‘missed’ forecasts.

The company revealed that it sold just over 401,000 ounces in the three months to March 31, while the market was expecting 424,000.

Additionally, the company saw a rise in costs for the quarter, which boosted the key All-In Sustaining Cost per ounce (AISC) for the year to June 30. That’s because the big wet restricted tonnages processed, so costs rose.

Standard stuff; the shares fell 5%, much of which was related to the 3% slump in gold prices overnight.

But there were some investors who seemed concerned about the ‘miss’, except it wasn’t new news—Northern Star revealed the sales figure and the rise in costs in an early update on April 11, as well as the reason for the higher costs.

"Gold sold for the March quarter totaled 401 koz, impacted by significant weather events across the Northern Goldfields," the company said in the one-page release.

"With these disruptions behind us, the June quarter has started with strong operational momentum, including at the Kalgoorlie Production Centre with increased access to high-grade Golden Pike North material, early access to first ore at Wonder underground in the Yandal Production Centre, and grade improvements at Pogo Production Centre.

"At 31 March, Northern Star remains in a strong financial position with net cash of A$174 million. Cash and bullion totaled A$1,076 million (vs December quarter: A$1,089 million) after the payment of the FY24 interim dividend of A$169 million.

"Northern Star remains on track to deliver its FY24 Group gold sold guidance of 1.60-1.75 Moz (9 months to date: 1.18 Moz) based on positive momentum leading into an expected strong June quarter, driven predominantly by increased grade and mill utilization rates.

"The events during the quarter have led the Company to revise its FY24 AISC guidance to A$1,810-1,860/oz, up from A$1,730-1,790/oz. Cost pressures remain prevalent across our sector as well as costs linked to the buoyant gold price.

"Northern Star maintains its FY24 growth capital guidance of A$1,150-1,250 million and exploration budget of A$150 million," the main part of the statement ended.

That is what the company repeated in Tuesday’s release. The company, like many of the groups operating across the goldfields, was hit on one, two, or even three occasions by the wet weather events in the quarter—that’s stuff media and analysts failed to follow up to any degree.

The extra information in Tuesday’s release was the sale price for those near 401,000 ounces. Northern Star said it realized an average gold price of A$3,024 per ounce, leading to sales revenue of A$1.212 billion and free cash flow of A$143 million. The latter was up from A$102 million in the second quarter.

Interestingly, the AISC pressures were broken down into the company’s three main production areas – The Super Pit and surrounds near Kalgoorlie, the Yandal mines, and the Pogo mine in Alaska – costs were higher at the latter but not at the Super Pit where Northern Star is spending heavily to expand production to more than a million ounces a year.

About Glenn Dyer

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.

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