News: NST Northern star resources on track to meet fy17 production guidance, page-8

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30/10/16

19:45

Post #: 20234621
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Originally posted by DaLatta ↑

The low production number and cash generation was a surprise however after a soft opening on Friday the share price was well supported.

The conference call explains a lot and noted some significant positives:

1. Q1 budget was always less than 25% of annual guidance. First half budget is 241koz with a "significant" increase in 2nd half.

2. Q1 AISC was lower than budget despite the above. The next 1-2 quarters will "comfortably" bring annual AISC within guidance.

3. Jundee reduced mill throughput was due to an unplanned outage of the pebble crusher - now rectified with contingency options in place. The opportunity was taken to trial additional parameters on the mill loading to optimise the plant. The result is RECORD throughput during October +25% 140-175t/h, average 155t/h and 200t/h with oxide blend. This has lifted confidence to deliver growth without material CAPEX. Can now achieve 1.5mt/a, up from 1.2 mt/a.

4. Kundana (100%) 50,000oz/a Millennium mine ahead of schedule, planned Q4 production and under $20m budget.

5. Kanowna Belle roaster maintenance during quarter deferred oz's into Oct which have already been recovered. Significant mill improvements without any trade-off in recoveries taking the run rate to 2mt/a from 1.8mt/a. New Velvet discovery will be producing this quarter even though no resource has yet been formally defined.

6. Hedge book 265koz @ 1750/oz worth $22m marked to market, will significant benefit 2nd half cashflows.

7. Exploration of note: total $17m and 100km of drilling during the quarter. Kalgoorlie: Velvet expanding. New hanging wall discovered at Northern end of Rubicon. Raleigh defined high grade for over 350m still open along, up dip & down dip. Jundee: new Armada discovery continuing to grow, excited that indications show structure may expand to 2.5-3km total length. Paulsens: defined new high grade intersections on Galileo structure and South looks good for future growth.

8. BB closing: Significant progress at all assets for future production growth - I look forward to giving some updates in the very near future on some of that work.

In summary, production and cash generation for the remaining quarters will increase and growth plans are on track.

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DaLatta, thank you for providing insights into NST's first quarter performance. The conference call highlights how super leadership with a talented team overcomes set backs with relative ease.

NST should be recognised for its first class culture, not just the its sustained high ROE and EPS growth.

Bill B leave us in no doubt that despite a slow start this financial year that company guidance for 2017 is on track to be achieved while setting us up for a big lift in 2018 production levels.

NST Price at posting: $4.07 Sentiment: Hold Disclosure: Held
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