Earnings call transcript: Northern Star Resources faces challenges in Q1 2023

Northern Star Resources reported a mixed financial performance in its latest earnings call for the first quarter of 2023. The company highlighted significant operational achievements and strategic initiatives, but the market response was notably negative, with the stock price experiencing a sharp decline. According to InvestingPro data, the company’s Financial Health Score currently stands at 0.86, indicating potential areas of concern. The company’s revised production guidance and increased costs contributed to investor concerns. For detailed insights into Northern Star’s financial health metrics and growth potential, investors can access the comprehensive Pro Research Report, which provides expert analysis of key performance indicators.

Key Takeaways

• Northern Star generated a net mine cash flow of $295 million in March.
• Operating cash flow increased by 22% from the previous quarter to $846 million.
• The company revised its FY25 production guidance to 1.63-1.66 million ounces.
• Market reaction was negative, with the stock price dropping by 34.07%.

Company Performance

Northern Star Resources demonstrated robust cash flow generation in the first quarter of 2023, with net mine cash flow reaching $295 million and operating cash flow rising to $846 million. The company sold 385,000 ounces of gold at an all-in sustaining cost of AUD $2,246 per ounce. InvestingPro data reveals the stock has declined 37.5% year-to-date and 28.57% over the past year, reflecting investor apprehension about increased cost projections and revised production guidance.

Financial Highlights

• Net mine cash flow: $295 million.
• Operating cash flow: $846 million, a 22% increase from the prior quarter.
• Free cash generation: $201 million.
• Gold sold: 385,000 ounces at AUD $2,246/oz.

Outlook & Guidance

Northern Star revised its FY25 production guidance to 1.63-1.66 million ounces, with an increased all-in sustaining cost guidance of AUD $2,100-$2,200 per ounce. The company plans to increase exploration expenditure to $180-$230 million and accelerate growth capital expenditure to $950-$1,100 million. The KCGM mill expansion is expected to generate positive free cash flow, while the company targets a 2 million ounce production milestone.

Executive Commentary

Stuart Tonkin, CEO, emphasized the favorable market conditions due to the high gold price, stating, "With gold price exceeding Australian dollars 5,000 dollars an ounce, it is an outstanding time to be producing and discovering gold." He also noted the company’s strategic flexibility, saying, "We’re not providing FY ’26 guidance today. We’re updating on the March."

Risks and Challenges

• Increased production costs could impact profit margins.
• Revised production guidance may not meet investor expectations.
• Potential operational challenges at KCGM’s Golden Pike North.
• Exploration and capital expenditure plans may strain financial resources.
• Market volatility in gold prices could affect future revenues.

Northern Star Resources faces a challenging landscape as it navigates increased costs and revised production targets. While the company remains optimistic about future growth and market conditions, investor sentiment has been cautious, reflected in the significant stock price decline.

Full transcript - Northern Star Resources CFD (NST) Q3 2025:

Conference Operator: I would now like to hand the conference over to Mr. Stuart Tonkin, Managing Director and CEO.

Please go ahead.

Stuart Tonkin, Managing Director and CEO, Northern Star Resources: Good morning, and thank you for joining us today. With me on the call is Chief Financial Officer, Ryan Gurner and Chief Operating Officer, Simon Jessop. To start, we are very pleased that De Grey shareholders voted overwhelmingly in favor of the scheme of arrangement, and we look forward to welcoming their team and their shareholders into Northern Star. I’d also like to take this opportunity to say thank you to all our employees and business partners who consistently deliver a strong performance, enabling both organic growth and inorganic opportunities like the DeGray acquisition. With gold price exceeding Australian dollars 5 thousand dollars an ounce, it is an outstanding time to be producing and discovering gold in the stable, low risk jurisdictions of Western Australia and Alaska.

Against this buoyant market backdrop, we generated strong net mine cash flow of $295,000,000 in the March, and pleasingly, there was positive contributions from all production centers despite operational challenges at our biggest asset, KCGM. Our balance sheet remains in a net cash position, and our hedge book continues to wind down as we deliver to the set schedule. In the March, gold sold totaled 385,000 ounces at an all in sustaining cost of AUD $2,246 per ounce. Mining of the high grade open pit ore at KCGM was delayed because of low productivity in the Golden Pike North area, but I’d like to emphasize that the impact to the ounces is a delay only. And as we look ahead in the June, the high grade ore is now accessible with mining efficiency on track to lift significantly.

And more broadly at KCGM, we remain impressed with the progress we are making in this multi decade asset. The foundations are established, and we are commencing a very exciting period where we are poised to generate a positive step change in free cash flow generation from KCGM. As a result of recent operational challenges at KCGM, we have revised our FY twenty five group production guidance to 1.63 to 1,660,000 ounces. Partially offsetting KCGM impact, we have increased guidance at Pogo as the mine continues to deliver consistently strong performance. Turning to the FY twenty five all in sustaining cost guidance, we have increased the range to Australian dollars 2 thousand 1 hundred dollars to $2,200 an ounce as a result of delayed access to the Golden Pike North, some unplanned maintenance costs at Yandall, and also the higher royalties from the elevated gold prices.

Detailed guidance information is provided on page three of the quarterly report. Continuing our KCGM mill upgrade, our project team remains very busy, and I’m pleased with the progress of the KCGM mill expansion to date. There have been significant activity during the quarter as observed by all the structural installation of the major plant components on-site. The project remains on track, and FY ’twenty five capital expenditure guidance of 500,000,000 to $530,000,000 remains unchanged. I’d now like to hand the site over to Simon Jessup, our Chief Operating Officer, to discuss our operational highlights.

Simon Jessop, Chief Operating Officer, Northern Star Resources: Thank you, Andrew. For the Kalgoorlie Production Centre, which includes KC Gem, Karasu Dam and Kalgoorlie operations, we sold 197,000 ounces of gold and Australian all in sustaining cost of $2,139 an ounce. This production delivered a mine operating cash flow of $332,000,000. The region also spent $262,000,000 on significant growth capital projects. This included 121,000,000 on the KCGM mill expansion, 37,000,000 on KCGM open pit mine development, and 41,000,000 on KCGM underground mine development.

At KC Gem, open pit material movement was 15,300,000 tonnes, with mining efficiencies being impacted by slow productivity while de stacking the Eastern Side of Golden Pike North. Mining efficiencies have since improved, and we are confident mining volumes will increase to 20 to 22,500,000 tonnes per quarter from the June. Ore mined from the open pit saw the beginning of a step change in ore volumes, with 2,200,000 tonnes mined and 84,000 ounces in the quarter, a 90% increase in ore and a 100 increase in ounces compared to the H1 quarterly average. We look forward to increased ore and total material movements from KCGM as the efficiencies and opportunities return to KCGM’s open pit. Underground mining volumes at Casey Gem were 4% higher quarter on quarter and 29% higher year on year.

Casey Gem’s underground operations increased development to a new record of 7.4 kilometres for the quarter. The development meters will continue to increase as we begin to open up more of the Finiston Underground and Mount Charlotte ore bodies. A new KCGM portal will be developed in the Drysdale area during the June, which will be 400 meters below the surface. This platform will con will commence the journey of delineating the many mineralized systems at depth and is very exciting for KCGM’s long term growth. At Carasoo Dam, mined ounces were consistent quarter on quarter at 65,000, while ounces sold were lower due to a smaller contribution from the underground mines, which will reverse in the June.

The Kalgoorlie operations, underground mines and mill delivered to plan with a 15% reduction in all in sustaining costs to $1,892 an ounce and a 10% reduction in all in costs over the quarter. Processing volumes at KCGM were lower due to its planned major shutdown and lower availability and utilisation over the quarter impacting gold sales. A higher head grade for Q4 is expected as ore volumes from the open pit and underground sources all increase. The KCGM mill expansion project is 46 complete at quarter end, on time and within budget. We remain very pleased with the on ground construction activities as the project transitions from concreting into structural and mechanical installation.

Total engineering progress for stage one is at 89%, while all design reviews are now complete. The concrete port is 65% complete, with an impressive 19,000 cubes poured to date. At our Yandel production centre, including Jundee and Thunderbox, we sold 120,000 ounces of gold at an Australian all in sustaining cost of $2,398 an ounce. This production delivered a mine operating cash flow of $210,000,000 while we spent $91,000,000 on growth capital projects. At our Jundee operation, development advance increased to 7.9 kilometres, with over 3.7 kilometres in development drill platforms completed year to date.

Lower mine grade was from the Griffin Underground development ore commencing, with milling grades forecast to remain at similar levels in the June. Griven development continued to ramp up over the quarter as a future new ore source, while processing was again on plan. The Thunderbox operation mined 64,000 ounces for the quarter. The Wunder Underground mine continued to ramp up ahead of plan, with fifteen fifty two metres developed, with one jumbo averaging five seventeen metres per month. In the open pits, the Otto Bore Mine was completed at the start of the quarter, while the Bannockburn Open Pit commenced mid quarter as an important long term fee.

At the Thunderbox process plant, we milled 1,430,000.00 tonnes and sold 56,000 ounces of gold. The mill throughput averaged a new quarterly record of eight thirty nine tonnes per hour, twelve percent above nameplate. A major shutdown was completed within the quarter. For our Pogo operation, we sold 68,000 ounces of gold at an Australian all in sustaining cost of $2,292 an ounce. This production delivered a mine operating cash flow of a hundred and 26,000,000.

During the quarter, I visited Pogo for my second time and met with the team to understand the current operational status and their opportunities. I was very impressed with the quality of the work the Pogo team is undertaking while also seeing significant opportunity for growth at this asset in time to come. Development lifted 10% quarter on quarter to an average of 1,500 metres per month, while the operation is now mine constrained with milling on demand. I would now like to pass over to Brian, our chief financial officer, to discuss the financials.

Ryan Gurner, Chief Financial Officer, Northern Star Resources: Thanks, Simon. Good morning all. Northern Star remains in a great financial position. Our balance sheet remains strong with net cash of a hundred and 81,000,000 at thirty one March. Figure nine on page 10 sets out the company’s cash, bullion, and investment movements for the quarter, with key elements being the company generating 846,000,000 of operating cash flow, a 22% lift on the prior quarter.

After deducting capital of 529,000,000 relating to the KC Gem expansion, plant and equipment and mine development, 58,000,000 of exploration and lease payments, Quarterly free cash generation was 201,000,000. In relation to our FY ’25 growth capital projects, the Casyderm expansion project remains on track with spend of a hundred and 21,000,000 during the quarter. Activity included progress of engineering design work, construction, concrete pause, and steel erection. All major equipment items have now been delivered to site. And forecast capital expenditure for the year remains unchanged at 500 to 530,000,000.

Accelerated activity across the Australian portfolio has driven our FY twenty five forecast growth capital expenditure, excluding the mill expansion, higher to a range of 950,000,000 to 1,100,000,000.0. This includes, at Yandle, development advance ahead of plan at Wanda Underground and Griffin, as well as higher material movement at Orillia whilst in development. And at KCGM, development advance ahead of plan at Mount Charlotte, additional costs associated with finishing the East Wall remediation works, and greater activity in the Finiston South cutback due to delayed access to Golden Pike North, which has also driven some efficiencies and higher unit costs. Today, have flagged that our exploration expenditure will be higher for the full year from the previously guided 180,000,000 to $230,000,000, with additional funds allocated to further advance underground drill platforms across KCGM, Pogo, and Jundee. This investment will pave the way for enhanced drilling programs across those assets in FY ’26 and FY ’27.

On other financial matters, year to date depreciation and amortization of $8.00 $3 per ounce is at the midpoint of the guided range and is expected to remain within the range for the full year. For the quarter, noncash inventory charges for the group are a credit of 44,000,000, primarily from the increase in stockpiles at TBO, CDO, and KCGM. Eight point five million Northern Star shares, were bought back, and canceled during the quarter. So that’s $8,500,000, apologies, were bought back and canceled during the quarter, and the company is 89% through the $300,000,000 program. As previously highlighted, the company has now begun paying corporate tax on its Australian operations.

The current estimate for q four, which will depend on gold price, is between 60 to 80,000,000 for the Australian operations and 30 to 40 US million for Pogo. Also a reminder that we will pay interest on the notes in q four, which will amount to 18 US million. The company’s committed hedge position at thirty one March is set out on table five, page 10. During the quarter, the company delivered a 35,000 ounces into contracts and did not add any further commitments. 70 of the hedge commitments align to the build and early commissioning phase of the KCGM plant expansion.

In relation to the recent impulse of tariffs on goods imported to The US, we continue to monitor and assess the impact to our pogo operations, including country of origin assessments for the operations direct and indirect supply chain. And finally, in relation to De Grey, the consideration value paid will be subscribed to the assets acquired, which is expected to be tax deductible from the implementation date. Northern Star may also be eligible to con consolidate De Grey’s tax losses, which will be confirmed post implementation. Current estimates of the landholder duty obligation from the transaction is in the range of 200 to 300,000,000, which is expected to be payable within twelve to eighteen months. And as the transaction is likely to be an asset acquisition for accounting, transaction costs will be capitalised into the asset value as opposed to expensed in the income statement.

I’ll now pass back to Darcy for the q and a. Thank you.

Daniel Morgan, Analyst, Barron Joey: Thank

Conference Operator: Your first question today comes from Daniel Morgan from Barron Joey. Go ahead.

Daniel Morgan, Analyst, Barron Joey: Hi, Stu and Tim. First question is just about the, I guess, the operations at the super pit and the delay to accessing Golden Pike. Can you just describe like how far like, is this just a delay on the business plan that was articulated a couple of years ago, and we should just be moving that business plan to the right? Or does some of these productivity issues mean that what you thought two years ago and how much you could get out of Golden Pike in, say, FY twenty six and beyond? Like, do you have to slow down and be more selective mining?

I’m just trying to get a feel for how far into the future these issues translate.

Stuart Tonkin, Managing Director and CEO, Northern Star Resources: Yeah. Thanks, Dan. It’s it’s an important point. I guess you’re right in saying that five year strategic outlook was delivered in July 2021. Right?

So we’re at the tail end of that for that 2,000,000 ounce target, and it’s not about, you know, if if we get to two, it’s it’s when we get to two as we then add the mill expansion and then integrate HEMI into the to the overall outlook over future years. So our attitude is, no. The gold has not, moved for for three, you know, billion years. It is still there. It’s the rate at which we’re extracting it.

We certainly have experienced some of that destocking of of the multiple work areas and the congestion with the fleet at the bottom of the pit floor, which we’re overcoming. So it’s really about now, you know, the efficiency coming back, the productivity coming back, and those tonnage rates basically filling the mill with the primary oil from the pit floor as opposed to set off with the stockpile material. So it’s against where we’d, you know, maybe been aggressive on everything going perfectly well. And Simon can talk about, you know, the confidence of the outlook, but it’s really just about the rate at which we’re mining at the bottom, having that East Wall remediated and that waste removed, from above us.

Simon Jessop, Chief Operating Officer, Northern Star Resources: Yeah. Just to just to add to that, Daniel, really pleased with, where we are positioned. So late in the quarter, we finished the difficult difficult mining of the of the destack, and now we’re back to just normal efficient benches, mining down on the east side of the pit. So it is, it is purely a slight delay to the to the ounces. It’s no change on the future outlook.

The pleasing thing is we’re we’re past the low productivity efficiency of mining big rocks in the destack area. That’s all finished now, and we’re just destacking with normal benches. So best we’re in the best shape we’ve been on in that part of the pit.

Daniel Morgan, Analyst, Barron Joey: I know plans, you know, plans are always theoretical, and they come up against hard won experience. Just wondering if given the time you’ve had in in this with the physical experience of Golden Pike and and mining the super pit, do you have the the right number of equipment and the right, you know, resourcing to achieve your outcomes, or do you have to revisit, you know, how many trucks you need, etcetera?

Simon Jessop, Chief Operating Officer, Northern Star Resources: Yeah, Daniel. I think, in the commentary, I talk about, now we’re past the the the low efficiency, mining in that destack area in particular. We we will revert to that 20 to 22,500,000 tonnes a quarter from this quarter, and we’ve started this quarter extremely well in terms of total material movements. So now we’re past that, difficult part which is behind us. We’re seeing all the productivities lift, the trucking hours lift, the digging efficiencies lift.

So very, very confident going forward.

Daniel Morgan, Analyst, Barron Joey: And just last question. And apologies. I mean, everyone on this call has got a lot of results today, and, I may have missed this. But I think you alluded to you lifting your expiration spending today, and you’re just lifting some of your capital budgeting today, excuse me, in relation to, I think, some success you’ve had on the expiration piece. Can you just expand on that piece?

Thank you.

Stuart Tonkin, Managing Director and CEO, Northern Star Resources: Yeah. Thanks, Dan. So these largely are leading indicators in development for drill platforms to to feed into next year’s drilling budget as well. So we had a 80,000,000. We sort of lift that beyond 200,000,000 largely driven by the drill platforms across, Pogo, heading to the north, those, north lanes across Goodpaster, KCGM, including a new portal to be cut down in the in the West wall at Drysdale, And equally, over at Yandle, big drill platforms across Yandle, at Jundee, etcetera, so and some of the new underground.

So it’s it’s really the lead indicator. The drilling the actual drill meters and drill core, you’ll see reflected in our reporting of our resource and our reserves coming out in a week. And then this is drill platforms that feeds into that as well

Daniel Morgan, Analyst, Barron Joey: in a month. Okay. Thank you very much.

Conference Operator: Your next question comes from Kate McCutcheon from Citi.

Kate McCutcheon, Analyst, Citi: So just the guidance revisions, it is material, 400,000,000, dollars 4 15 ounce cost increase. How much of that are you putting down to royalties? How much is the Angela at high in maintenance? And how do we think about that KCGM head grade hitting the mill into q four?

Ryan Gurner, Chief Financial Officer, Northern Star Resources: Yeah. Thanks, Kate. I’ll start with the with the cost on the question on the cost. Yeah. So royalties well, royalties and and foreign exchange is likely to be 25 to $30 an ounce, you know, when we when we cut the full year numbers is is where we think we it it’ll land.

Obviously, this quarter, gold price is much higher than it was the prior quarter, so just the the outlook there. It’s probably about $25 an ounce currently for the year to date cost base is is that. So that’ll probably lift with the gold price. And then the unplanned maintenance across the year is gonna be you know, it’s currently probably $30 an ounce. We don’t foresee that happening.

We we don’t foresee additional cost this quarter at at Yandel around maintenance for the processing facilities, so it’ll probably likely land about $25.05 dollars an ounce. So in combination of those two items, they’re about $50 50 dollars an ounce in combination of those two year to date.

Kate McCutcheon, Analyst, Citi: Okay. Got it. And the KPGM head grade for q four?

Simon Jessop, Chief Operating Officer, Northern Star Resources: Yeah. Kate, Simon here. Just in terms of the the head grade, you can see the, for the quarter, we mined, 84,000 ounces from the open pit at a head grade of roundabout 1.3. So that’s similar to to the head grade that we’re feeding into the mill last quarter. What you’ll see in the next quarter is the underground contributions start to kick up as, Finster underground gets into its stoping as well as, a much higher contribution from from the open pit across not just Golden Pike, but, OBH, as well.

So you’ll see the the head grade for the mill lift, probably in a range of, you know, point three to point five, of a gram per tonne in quarter four.

Kate McCutcheon, Analyst, Citi: Got it. Yeah. Because I think we you had previously said the underground will be running at three to 3,500,000 tonnes by the end of the FY.

Simon Jessop, Chief Operating Officer, Northern Star Resources: Yeah. The under the underground’s a a building that development piece is that lead indicator. So we’re still seeing last two quarters, 7.2 kilometers, 7.4 kilometers. And then the stoping, is turning on in terms of Finiston as well as, a lift out of some stoping areas at Mount Charlotte. So it’s not a straight line.

It is lumpy with the production coming in, but really happy with the the way, we’re setting up Union Consoles, Union Jack, Golden Pike Stock Works, which is all three mines within Vimiston itself. So the production fronts are building, and we’re developing, a lot of areas with a lot of production drilling. So stoping has commenced for Finston, and it’ll now get a real kick and lift.

Kate McCutcheon, Analyst, Citi: Okay. Thank you. And then a question for Ryan. So you noted the tax benefits from incorporating DeGray, but no DNA uplift for the group until Hemi delivers first gold. The latter part makes sense, but not so much the format.

Can you just talk me through the delta or how we think about the tax impacts for the next five years that you called out in the results?

Ryan Gurner, Chief Financial Officer, Northern Star Resources: Yeah. Sure, Kate. Yeah. So you’re right. So DNA won’t start till we start pouring gold bars.

So you’re right there. Yeah. Tax is a is a funny one, but a good one, I guess, for the business. So I guess the acquisition value is what we pay. So, you know, we’ll be issuing shares at a price on implementation date.

So that’s the value that’s marked. And then some things like cash that Degray hold aren’t relevant for that that valuation piece on the on the tax base. So it’s gonna be a significant value. But from a tax perspective, we can start, I guess, depreciating or getting a taxable a reduction in our taxable income from day one. That’s the advice, and and that’s what we’ll be doing.

Now, of course, tax lags, so it’s not gonna you won’t see it day one. It it’ll be more so later when we do our tax return that that you’ll start to see that catch up. Yeah.

Kate McCutcheon, Analyst, Citi: Okay. And is there anything you can say on the magnitude?

Ryan Gurner, Chief Financial Officer, Northern Star Resources: Well, it’ll it it’s it’s it’ll be accelerated. So so I guess it it’s gonna be something like, you know, between 5,000,000,000 and 5,500,000,000.0, and it’ll be deductible. So 50% of it will be deductible over five years. So tax, you can accelerate. So that gives you some indication.

It won’t be linear, but it’ll be something like that, remembering that we’ve still got to do all the work and the final values have got to be set. But that’s the thematic.

Conference Operator: Thank you. Your next question comes from Hugo Nicolache from Goldman Sachs. Please go ahead. Thank you. Your next question comes from Levi Spry from UBS.

Levi Spry, Analyst, UBS: Yes. Morning, Sean. Thanks for your time. Yes. Busy day, so details might be a bit light.

But it’s just just following on from Dan and and take their great question. I’m gonna explore that going into sort of next year. And understanding that this is categorically just a a quarter delay to to what we were thinking about before, that all of the destocking is finished, the underground ramp up is on track, and that that, yeah, that that overall head grade students from from July 1. So can you just expand, Simon, on on on that grade piece into, yeah, sort of this quarter, I guess?

Stuart Tonkin, Managing Director and CEO, Northern Star Resources: Yeah. Thanks, Levi. Look. The the destocking, it’s it’s finished where we are, but we’re we’re seeing signs now in this quarter of the improvement of those productivities in in Golden Pike. So, you know, we’re we’re we’re showing the kind of the turning point of the performance coming out and the grade coming out.

But the backstop’s always, you know, the the stockpile grade going in, and as the the underground volumes from development ore into stoping contributes. So that’s you know, that quarterly delay is really our know, what we’re talking about today is the f y twenty five delivery of of, of guidance. We’re not talking about FY, ’26, but these things are you know, they’re all they’re all on a pathway to add, add that plus the mill expansion plus hemi in time. So, yeah, appreciate everyone wants the the rest of their models filled out, but we’re we’re here just to really, you know, recap on the events of the quarter and the outlook for the for this quarter. And in normal normal course, we’ll be publishing in in the July, the June quarterly plus the outlook for Airfoil twenty six, And we’re we’re very excited with the progress across all the assets, albeit there’s some slippage on on, you know, weeks and months.

We’re very happy with what we’re seeing, you know, in regard to the outlook.

Levi Spry, Analyst, UBS: Yeah. Got it. Okay. Thanks. And so just expanding on the grade piece then.

Can you just talk us through the timelines there in terms of your your plans for integration and optimization of that into the portfolio, what that could look like after May 5?

Stuart Tonkin, Managing Director and CEO, Northern Star Resources: Yeah. So completion with with that delisted now, the completion is the May 5, so, you know, I guess, week away. The integration, obviously, with the with the team, occurs rapidly, but the you know, it’s still dependent on finally on the approvals, so the regulatory approvals that are that have been articulated by by DeGray. So that’s still the, I guess, the FID point. But all the other works on the mill, EPC, PCM decisions and the mining contracts and all of the long lead items, and the progressing sort of stakeholder engagement, all those things been continuing in parallel, with the DeGray team, for for a number of months now.

So we will basically, yeah, map out what that looks like. But, essentially, the CapEx will need to be reviewed, assessed, you know, dusted off to to make sure it’s it’s relevant. But our learnings from KCGM has impressed us on, ability to to take learnings from from famous to mill expansion into the DeGray build as well. So I’m pretty excited about those opportunities that we can bring to that. And it’s likely the second half of this calendar year, we’ll be giving, you know, more color on the the timeline for for heavy development.

Levi Spry, Analyst, UBS: Nice one. Okay. Thank you. Thanks, Jim.

Conference Operator: Thank you. Your next question comes from Andrew Bowler from Macquarie. Please go ahead.

Andrew Bowler, Analyst, Macquarie: Good day, Stu, Ron, and Simon. Maybe one for you, Simon, just expanding on Kate’s question about the KCGM underground. I think Kate sort of mentioned that, you know, previous commentary was, you know, rough exit rate of 3,000,000 tonnes per annum this year and then sort of grinding its way up by half a million tonnes per annum per year over the next couple of years. Just wondering if you could just give us a, you know, a fresh update on on that sort of expected growth rate of half a million tonne that you’ve commented on previously. Is that still valid, or or is it likely to be a little bit little bit shy of that over the next couple of years?

Cheers.

Simon Jessop, Chief Operating Officer, Northern Star Resources: Yeah, Andrew. I think, look, We’re we’re as as we normally do it, around diggers, and that quarter one will will provide a a good KCGM update as to where the underground’s at, the open pit, and and all of the assets. But it is it is very lumpy as you can imagine trying to develop from Fimiston Underground. There’s three mines within one we call Fimiston, but there is genuinely three mines within that particular mine. The thing we are excited about is, the the development of all of those levels really opening up, as well as, you know, the bypass link we’re doing down to Crisis, which I’ve mentioned in the diggers presentation last year.

Crisis is right near the surface, and, we’ve nearly we will be getting into that with high tonnes, big product productive areas early into next year. So, the building blocks are all happening. We’re we’re expanding very, very rapidly at that particular area. Things like Drysdale that will will, is new new to the, I suppose, news flow. That is 400 meters below the surface, and, you know, we get into the West Wall, down below 400 meters there, and then really can, accelerate some some huge opportunities there.

So pleased to, provide an update on the underground, really in that q one, sort of July or August sort of area. But in terms of the lead indicators, very, very happy with the underground progress.

Andrew Bowler, Analyst, Macquarie: No worries. Thanks, Dan. Maybe just one for Ryan as well. I mean, obviously, you talked about, the DeGray assets coming on the balance sheet and being able to, reduce your taxable income with those day one. Just so I can understand a little bit better, the as a nonaccountant, so it it sounds like you’re saying on a on a dollars per ounce basis, you will see a lift next year in in depreciation, not just a a dollar million lift as well.

It’ll be actually, you know, over the over the ounces you’re producing from the other assets, you’ll see an increase in in D A next year. Is that correct?

Ryan Gurner, Chief Financial Officer, Northern Star Resources: No, Andrew. Bit the opposite. So we will be getting a tax shield from day one, which you’ll see in cash cash flow. But from a DNA p and l perspective, no. So we won’t we won’t have any depreciation until we start pouring gold bars at Hemi.

So for for for the in the future. So so the DNA next year for the business won’t be really any different to what it is now. So it’s only when we start pouring gold bars that you’ll see a a depreciation, amortization step up or change. It’s about tax cash now that we get the benefit from.

Andrew Bowler, Analyst, Macquarie: Okay. Copy that. So it’s more the, you know, the built up losses that that have happened, you know, within DeGray already more so than than obviously, you know, depreciating asset. But okay. Yeah.

Copy that. Appreciate

Ryan Gurner, Chief Financial Officer, Northern Star Resources: that, mate. Thanks.

Andrew Bowler, Analyst, Macquarie: That’s all for me.

Conference Operator: Thank you. Your next question comes from Al Harvey from JPMorgan. Please go ahead.

Al Harvey, Analyst, JPMorgan: Yeah. Morning, team. I suppose you have mentioned that, you know, you are coming up to, you know, you’re at the end of your five year timeline for the FY twenty six target. Suppose I just wanted to get a sense on when we might get an update on the next five year outlook and how things, you know, might have changed given high gold price environment, how that’s changing, how you’re thinking about potential further growth. Maybe just, yeah, an overview on that would be helpful.

Stuart Tonkin, Managing Director and CEO, Northern Star Resources: Yeah. Thanks. Thanks, Al. And we’ll yes. Today is not the day to do that.

No. It’s a very busy day for reporting. But as you know, you know, our sort of July guidance outlook for 26 and round diggers where we present the outlook is probably good timing to give a bit more flavor. But I would say, you know, the twenty twenty one five year outlook, you know, what has changed, we’ve seen great stabilization performance improvement from Pogo. We’ve seen, you know, delivery of expansion and and continuity across Gandel.

The CAL ops have been firing on all cylinders as does CDO with cash flow generation, and then it’s really KCGM around that East Wall remediation, which was a, you know, an unproven plan when we we committed to it, but we’re we’re a long way through it. So it’s really on top of that. The mill expansion, you’ve seen, being, you know, approved, and and we’re over halfway through it, as well as now an inorganic opportunity with the addition of HEMI to the to the portfolio. So, you know, a bit has changed, but fundamentally, it’s it’s very positive change. And the gold price has lifted $3,000 an ounce Australian in that same period.

So if we hadn’t changed something or hadn’t improved stuff, you know, we’d we’d probably be mad. So I think it’s just it’s just a much stronger outlook, and we will certainly be looking, you know, at the next sort of, you know, three years fundamentally when all those catalysts come back in, and and really look at that active portfolio management, and really looking at the best highest margin ounces. So a lot of the decisions we’ve made in previous years are still correct and right under the current gold price environment, and we’re executing and delivering on those. And we were aware that they were multiyear commitments, and we’re still charging through, the actions to stabilize and and make that sustainable because we’re looking at a multi decade outlook. So, yeah, we’re pretty excited, and and you’ll get an update this calendar year on on our our outlook for for the next few years.

Al Harvey, Analyst, JPMorgan: Sure. Thanks, Jeff.

Conference Operator: Your next question comes from Matthew Fryden from MST Financial.

Matthew Fryden, Analyst, MST Financial: Sure. Thanks. Morning, Stew and team. Can I ask on Hemi? And you’ve obviously highlighted that the next key step is is more around state and federal permitting.

Can can you give us a bit of a, I guess, a more a more in-depth update on how how that’s tracking from your perspective? I’m particularly interested in how that process goes, you know, particularly through the state and federal election periods, you know, potentially some some movements in the various bureaucracies there. So wondering how that is is kind of playing out and how you expect that to potentially play out, particularly through the federal election period. And then secondly, I guess, terms of your internal, permitting team presumably taking over some of that work that the the degree team has been conducted. You know, obviously, you’ve got an external driver, which is the the state and federal ministries, but there’s also an internal driver there in terms of you guys getting up to speed with all of that work and and, as I say, potentially taking over some of that responsibility in liaising with those those those departments.

So it does seem like the timelines continue to push out a little bit on this process over time. So is there a timeline that that you’re currently hopeful to working towards in terms of final approvals? When when do you expect to get a a decision around that? Thanks.

Stuart Tonkin, Managing Director and CEO, Northern Star Resources: Yeah. Thanks, Matt. And I think, you know, DeGray had had been articulating what the timeline was, and we’re not, you know, indifferent to what that is and what was published in the scheme, documents. So we were perhaps a bit more conservative and and had a bit of a buffer, which doesn’t you know, fundamentally doesn’t change, you know, returns outlook or or timing. And in fact, the neat the neatness of, you know, teams moving from FIM into HEMI, is very strong.

Now we’re not, you know, until completion, and and with it, we’re there, we’ll be engaging with all the stakeholders. We’ve stayed very close to decisions to date. But likely in the next quarter, we’ll have feedback from regulators, on you know, after doing site visits and after doing reviews and stakeholder engagement. So, yeah, this calendar year, we’ll be getting updates and and and passing that through to the market as we we learn those things. And fundamentally, we don’t see any, you know, federal or state, obviously stability of the political landscape changing this.

We have very good experience through the section 38 at KCGM, recently with that experience with regulators. So we’re very familiar with the the process, and engagement with those regulators throughout the Hemi, approval process as well. So, yeah, all all all considered, all understood, and nothing is, different to what we expected, I guess, when we announced this deal late last calendar year.

Matthew Fryden, Analyst, MST Financial: Yeah. Got it. Thanks, Hugh. Is is there any sort of, I I don’t wanna say drop dead date, but any sort of timing that you’re conscious of in terms of making, long lead item decisions or design decisions around the project whereby, you know, you’d you’d really need to have some kind of firmness around approvals come in, you know, before you go go down that path, or you’re pretty flexible with the timing, you know, in in terms of some of those design decisions?

Stuart Tonkin, Managing Director and CEO, Northern Star Resources: Yeah. So I think importantly, this was all done well before announcement and, you know, the due diligence period. We completed good good reviews of all of those, you know, the flow sheet designs, the the comfort with the the mining volumes and the plans, etcetera. Now you don’t wanna change things, because you’re resetting clocks on approvals. Right?

So, fundamentally, it it is what is being put in. We’re happy with that, and it is going through the approvals process. So, you know, leaving technical boffins, looking at stuff, they’ll continue to tamper with it. We’ve we’ve definitely frozen it and understood that it’s a good plan, and it’s what’s being approved. And we’re okay to follow that and execute it on that time frame once approved.

But some of those timelines, I say, out of out of our control. They’re understood, and they’re predictable in Australia, which is why we love tier one jurisdictions and and understanding of that regulation, but we we can’t speed it up. And I I guess we’re going through the due process, and doing it prudently, and therefore, we’re not gonna reput and rechange and modify, because it will add time to resetting some of those time online approvals, which we might do. So, there’s a very strong, understood, business case that DeGray have articulated. There’s some some refining and optimization as you go, but it’s really on the margins as opposed to wholesale changes to to that DFS plan.

Matthew Fryden, Analyst, MST Financial: Yep. Understand. Thanks, Stu. And and maybe just finally, again, coming back to the kind of integration, pace, can you remind us, I guess, what the what the vision or the or the plan is in terms of how much of that work, you know, you internalize back on onto Northern Star teams? Or, you know, how how many kind of teams or members of of the De Grey team will continue to to sort of conduct the work that they were doing previously?

I guess, yeah, how how do you see the division of responsibilities in terms of progressing the the the project forward? Thanks.

Stuart Tonkin, Managing Director and CEO, Northern Star Resources: Yeah. We’re we’re well rehearsed at integrating assets along the journey as you as you can sort of see by history. You know, there’s there’s roughly a 20 odd, De Grey people, that have been, you know, building up this asset over over the time. They they come in as a as a HEMIA project, you know, under Northern Star Banner. There’s no, you know, island or isolation or silo there, and they’re enhanced by our corporate oversight team, you know, the shared services that are here.

And I’ll remind people, you know, with our 350 plus geologists, with our 250 plus mining engineers, you know, we we have more technical prowess than any, you know, contracting external house, in house. We have that. We have that skill, and that’s what would bring Fort DeGray shareholders to an asset like this to derisk it, as well as a net cash balance sheet fully funding the build of this, plus the outlook of, you know, dividend paying day one. All these things are the merit as to why we got a 99.6% approval on the votes that were put on this scheme of arrangement. So I think it’s our job now to demonstrate, you know, why it’s derisked and how we can move this project forward in on a lower risk basis, and and that’s because of our bench strength.

We’ve got nearly 7,000 employees with our contracting partners. You know, DeGray has a 20. So I think it shows that, you know, we’re gonna be able to help assist this project better than anyone.

Matthew Fryden, Analyst, MST Financial: Yeah. Understand. Thanks, Stu, and, yeah, looking forward to more updates later in the year. Thanks.

Stuart Tonkin, Managing Director and CEO, Northern Star Resources: Thanks, Matt.

Conference Operator: Thank you. Your next question comes from Hugo Nicolache from Goldman Sachs. Please go ahead. Good

Stuart Tonkin, Managing Director and CEO, Northern Star Resources0: morning, Steve, Ryan, Simon. Apologies for technical issues earlier and if some of these points have been subsequently covered. But just picking up on some of the earlier questions, and you’ve obviously highlighted some of the near term challenges at KCGM and the accelerated growth spend ahead of plan in some other areas. I guess looking forward, if we take your revised guidance midpoint into the fourth quarter, it’s implying a gold production run rate of about 1,800,000 ounces. But based on some of the comments today and operational improvements, it sounds like that should probably be trending upwards.

I guess, you know, marrying that up with some of the comments you’ve previously made, Stu, around, you know, having levers across the portfolio to to deliver that 2,000,000 ounce target. You know, how should we interpret those four q rates into FY ’20 ’6 and then relative to that 2,000,000 ounce target going forward?

Stuart Tonkin, Managing Director and CEO, Northern Star Resources: Yeah. Thanks, Hugo. I think I think earlier in the call, I reiterated we’re we’re not providing FY ’26 guidance today. We’re we’re updating on on the March. And and as you’ve just done the maths, quarter four, yeah, shows a shows a four forty, four 50 kind of order, and it won’t therefore, obviously, 1,800,000.0 ounce per annum run rate.

But they are all all good signs and good signals as to what the outlook can be. And I’ll say it’s it’s not necessarily if, it’s when, you know, the the overall, you know, 500 a quarter plus plus with the mill expansion and Hemi’s addition in future years. These are these are just checkpoints because it’s not a straight line of growth. So, yeah, we’re not we’re not providing 26 today. In due course, in normal normal time, we will be assessing, that and likely the July, announcement with the June and the FY twenty six guidance with costs will come at that point.

Stuart Tonkin, Managing Director and CEO, Northern Star Resources0: Right. Fair enough. Thanks, Stuart. And and then just picking up on the comment you made a little bit earlier around active portfolio management in the current gold price environment. You know, are there any assets in the current portfolio that you think maybe don’t have the same medium of opportunities as others in the portfolio or maybe aren’t being appropriately valued in the broader portfolio context?

Stuart Tonkin, Managing Director and CEO, Northern Star Resources: Yeah. Good point. We probably don’t think any of them are being appropriately valued at this gold price, but the you know, they are all contributing to our to our cash flow, balance sheet strength, and and the investment we’re putting back into the assets. So the recognition is really part of what we’ve done always, is just looking at our highest margin ounces, where our investment’s made, and and that future outlook. So, yeah, it’s just part of how we think around the the being, you know, business first and not having to just be hoarders and collectors.

We’re certainly wanting to to make it most efficient for our shareholder returns. So that’ll be part of the the review, you know, the back end of this year.

Matthew Fryden, Analyst, MST Financial: Got it. Thanks.

Stuart Tonkin, Managing Director and CEO, Northern Star Resources0: And then just lastly, if I can, just on the reserve and resource update. Should we still expect that in the coming weeks consistent with sort of the timing over the last few years?

Stuart Tonkin, Managing Director and CEO, Northern Star Resources: Yeah. I think I said in the coming week, but I should have said coming month, just to correct that. So we we close it at the March, and, we’re doing that assessment work presently. So, yeah, typically, yeah, in short order after that, we’ll we’ll be releasing the resource reserve. So it it it could be in May.

It’s it’s probably more like the timing could be at the May.

Stuart Tonkin, Managing Director and CEO, Northern Star Resources0: Your

Conference Operator: next question is a follow-up from Daniel Morgan from Barron Joey.

Daniel Morgan, Analyst, Barron Joey: Hi, Stu, Ryan and Tim. Just a question on the hedge strategy. Mean, I don’t want to be Harry hindsight and go back and rerun the tape on gold prices and what we could have or should have done. But I just note that you’ve had two quarters now where you’ve allowed the hedge book to run off. Is that some recognition that the hedge strategy is, perhaps not working or dated now that you’re a larger, more diversified company.

I’m just wondering whether you might continue to let these hedges roll off over time and reduce your hedge book in time.

Stuart Tonkin, Managing Director and CEO, Northern Star Resources: Yeah. Yeah. Thanks, Dan. We’re still within policy, so it’s it’s not indifferent to our our policy, and the hedges were placed at the right time for the right purpose to achieve the, you know, the the right outcome. Things like Fimiston FID, the hedges that were placed at that point, equally were, you know, $5,600 above, the the FID decision amount.

So, yeah, we we certainly we we certainly aren’t saying, you know, Captain Onesight says says we’re out of the money. If you plug in the spot price, or whatever numb number you use for mark to market, you’ll get, you know, plus $10 minus $3 is is essentially what you’ll end up with. But it is what it is, and people understand it, and it’s and it’s visible. And I think you’ve seen us unwind the last two quarters not add not add forwards.

Daniel Morgan, Analyst, Barron Joey: Yeah. Thank you. And maybe just a a follow-up separately. I mean, the gold price is up quite simply bananas versus anything that we would have thought several weeks, months or a year ago or two. Just wondering how that feeds into how you manage your business, if at all.

You know, do you let this gold price fall to the bottom line, or do you look at the fringes of your ore bodies and and and things and go, well, let’s let’s expand mine lives and change grade decisions over time. Just wondering how you think the gold price feeds into running your business.

Stuart Tonkin, Managing Director and CEO, Northern Star Resources: Yeah. Look. I’d I’d say it doesn’t change certainly doesn’t change near term decision making. We’ve been settled some rails of some some good long term investment decisions, under any gold price environment. They’re all working to try to get our unit costs down, economy scales, up, and they absolutely get enhanced to survive, those decisions at a higher gold price.

Albeit, the high gold price, as we see across the sector, drags up costs. So that’s the part, you know, plus the tariff turmoil. Those are the things that we we have more focus and understanding of of protection against than gold price. They’re the things that directly hit margin and bottom line, and that’s that’s probably where more of the attention looks at as and cut off grades, etcetera, rather than gold price, and it’s always been the case. So, yeah, nothing no no one’s, wholesale changing, mine plans because of where the the price is at.

We’re certainly just looking and observing as we go.

Daniel Morgan, Analyst, Barron Joey: Okay. Thank you, Stuart and team.

Conference Operator: Thank you. There are no further questions at this time. I’ll now hand the conference back to Mr. Tonkin for any closing remarks.

Stuart Tonkin, Managing Director and CEO, Northern Star Resources: Look. Thanks all for joining us on the call. Look. Appreciate it is a very busy reporting day, and we’ll we’ll make ourselves available over the coming days to address any of the outstanding matters. So thanks very much for for joining us on the call.

Look forward to updating you soon, and have a great day.

Conference Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.

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