Shares 424M Options 5M * As at 19th November 2013 Share price: A$0.71 Market Capitalisation (ASX : NST) ASX 200 Undiluted ~A$300M Cash, Bullion & Investments (30 Sep 2013) A$50.0M
•Acquired Paulsens Gold Mine in Western Australia for A$40M in July 2010, repaid full acquisition within 7 months •Expanded production rate to 100,000oz/pa •Greatly extended the mine life to +5 years •Purchased Ashburton Project and FMG JV all for just $2M, Now hold +8,500km2 •Grown company resource base 2Moz in just 2 years •Dividend paying, currently 5% fully-franked yield, another 2.5¢ paid in September •Established our own in-house mining services division, “owner operator”
•Increased Company net profit after-tax by 30% to A$28.3M •Non-cash “write downs” of $10M on exploration and investments •EBITDA up 29% to $63.8M and earnings per share up 29% to 6.6¢ •Cash cost down 5% to $680/oz, all-in sustaining cost of $1,016/oz •Capital expenditure of $44M, includes $17.5M on “one-off” expansion items
PRODUCTION GROWN •Record FY2013 performance, 104koz mined, 93koz sold and 89koz recovered •Increased productivity by 100% in ore tonnes, now consistently mining at 500,000 tonnes per annum •De-risked the mine with capital development well in advance, 118,000t ore on surface stockpiles and multiple productions area to obtain ore from •Sep-Qtr 28koz mined and 26koz recovered at cash cost $671/oz and all-in sustaining cost of $996/oz COSTS CONTAINED •Proactive cost focused culture, not purely as response to challenging market commodity prices •Dropped total cost per tonne by 20%. Now showing up in a lower unit cost per ounce
Voyager 1 & 2: The Paulsens Engine Room •Voyager 1 is the flagship lode at Paulsens, runs at a rich 1,250–2,000 ounces per vertical metre •Currently mining 600m below surface. Mineralisation drilled to 950m and remains open at depth •Voyager 2 was discovered by NST in late 2010; host of stunning drilling results up to 12,178gpt •Voyager 2 sits immediately adjacent to Voyager 1 offering multiple production horizons with minimal development required •Head grade improving as production has commenced from the high-grade Voyager 1 Extension Zone •Paulsens resource has increased by +400% in last 3 years •Exploration drilling underway for further extensions to known lodes
•Large part of upper mineralised structure not mined by previous owners due to hedging and other factors •Resource stands at 92koz1 @ 10gpt •Upper Levels expected to contribute 10,000-15,000ozpa of high-grade low cost production •Ore development is underway and first stoping has commenced •Early indications show grade and strike lengths will exceed forecast •Resource remains open along strike and down-plunge
Ashburton – a 100,000ozpa stand-alone operation •Project has been deferred, however strategy changed to free-milling oxide project early 2013 •Ashburton Project located within trucking distance of Paulsens •Acquired in June 2011 for zero cash payment; royalty payable on production over 250koz •Oxide open pit operation from 1998 to 2004, produced 340,000oz @ 3.3gpt •JORC resource recently upgraded by 66% to 1.7Moz1 •This has the potential to take group production to 200,000ozpa •Recent drilling extended sulphide mineralisation by 400m, significant results include; •48.0m @ 6.0gpt Au, including 24.0m @ 8.6gpt Au •18.5m @ 8.5gpt Au, including 10.7m @ 11.9gpt Au •Further exploration to define additional oxide material is under review
Exploration: writing the next chapter for Northern Star •Very little exploration done within 50km radius of the 1Moz Paulsens deposit •Recently expanded our tenement package to 8,500km2 with FMG JV deal on all non-iron ore rights across the Ashburton region •Now hold vast tracks across the Ashburton geological basin •Over 100 targets identified across two major regional structural trends that cut the basin •Limited surface exploration program is underway
Exploration: The Titan Discovery •High-grade Titan discovery made just 100m from Paulsens mine infrastructure •Discovery hole returned 6.9m at 24.7gpt •Titan runs parallel and immediately adjacent to the producing Voyager 1 and 2 lodes •Discovery has strong potential to be a separate mining area •First exploration outside the down-plunge window of the Paulsens mineralisation •Majority of holes have intersected significant quartz up to 22m true thickness •Quartz is the host for Paulsens style mineralisation •A dedicated rig was recently commissioned
•Paulsens is bounded by a Gabbro unit, traditionally seen as a ‘fence’ around the orebody •Drilling aimed at testing the theory that the mineralisation is deposited on the other side of Gabbro and itself mineralised •Results support this theory with hits up to 379gpt in the Northern and 113gpt in the Southern Gabbro •Mineralisation intersected in both Southern and Northern Gabbro settings •Results highlight potential to replicate the 900,000oz Paulsens quartz lode •Surface drilling is underway
•Great potential on the highly prospective “Paulsens Mine Corridor” part of the Nanjilgardy Fault, 25-40km long corridor along the axis of Wyloo Dome •All known orebodies and mineralisation, including the Paulsens Gold Mine lie inside this corridor •Great early results at Belvedere 8km from Paulsens, recent hits include 8m @ 14.7gpt and 9m @ 12.7gpt
Exploration: Kazput Coal Discovery •Significant coal discovery just 60km from Paraburdoo and 100km from Paulsens Gold Mine •Initial Exploration Target of 340-615M tonnes3 with thick thermal coal intersections of up to 65m along a 7km strike •Initial analysis shows the coal would be suitable for fuelling a major base-load power station, may also be amenable for a coal-to-liquids project which could supply diesel to the Pilbara •Budget of $2 million approved for further drilling to establish a maiden JORC resource in Q1 2014 •Northern Star will remain totally focussed on gold and plans to quickly optimise the coal assets via one of several corporate options
FY2014: Production and Cashflow Guidance •Key FY2014 forecasts @ Gold Price A$1,450/oz: •Total production of 100-115koz •Cash Costs C1 of A$610-690/oz (inclusive of all royalties) •All-in sustaining costs of A$900-1,050/oz (inclusive of all royalties) •Capital expenditure of $28M predominantly “sustaining capital” •Generating surplus cash of A$50-70 million
Key reasons to invest in Northern Star •Extremely strong cash generation from high-grade and high-margin ounces •Expect FY14 all-in sustaining cost to be ~$1,000/oz •Growing production to underpin surplus cash growth •Sufficient resources to secure +5 year mine life, with further extensions expected •New Titan discovery at Paulsens, 6.9m at 24.7gpt within 100m of mine infrastructure •Exploration continues to return outstanding high-grade results at Paulsens and Ashburton •Dividend paying, 3.5 cents in FY2013, equating to a 5% fully-franked yield •Great balance sheet with cash and Investments of A$50 million
I own NST & BDR
NST Price at posting:
68.0¢ Sentiment: Buy Disclosure: Held
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