What price NST?, page-2

Non-controllable issues -
1) The first is the POG - that can't be controlled by NST, although hedging can provide some certaintly of income, but I would not be suggesting that.

I won't comment too far on this, although, please note the AUD and it's long term phase through the commodities super cycle, which has ended. KISS method will show you where the AUD is going long term, and it's definitely not up! Regardless of the POG, the AUD should weaken for years yet, expect buoyant local gold prices...I'm not going into macro detail on the AUD - way too lengthy - I've stated a lot on the NST and gold threads already over the past year!

Conrollable issues -
2) greater reserves need to be built to ensure ongoing income potential and remove negativity in that area

$50m on drilling in some of the best brown-fields in Australia should achieve large upgrades. Already the high grade nature of results outside current resources is extremely encouraging. Although, I'd like them to find one big deposit, like Tropicana.

3) AISC needs to be contained/reduced to improve profitability and to further prove management's ability to manage

I don't expect any issues if NST manage AISC within guidance, especially in respect to an increasing AUD POG. Currently, in Australia and around the world there's downward pressure on costs because of the recent death of commodity prices = good AISC environment.

4) reduce or fully repay debt

With $120m cash on hand, $35m of debt is not an issue and can be extinguished tomorrow.

5) establish a clear dividend strategy (i.e. reward shareholders and display confidence in NST's future)

The MD has already flagged that the board's policy is to distribute 1/3 of cash. They will reiterate OR upgrade that in the month ahead.

6) increase production - will help profitability, cashflow, assist in reducing ASIC, and help to give NST greater investor exposure/confidence

First, see question two. Also, there's massive amounts of spare capacity at Kanowna, Jundee and Putonic. What's required is the feed, hence $50m exploration spend.

Historically, these mines once produced a lot of gold pa:
- Kanowna, 506k oz in 2006
- Jundee, 412k oz in 2009
- Plutonic, 333k oz in 2003

The three acquisitions last year were simply massive as the capital infrastructure was just as important as the mines, to build these mines today would cost billions...Loads of spare capacity to ramp production is key to NST's growth in the years ahead!

7) limit the issue of further shares - there could be a desire by NST to buy more mines (and issue more shares in the process) , but to do so at present would mean paying a premium price. I believe NST needs to work with what it has and not get side-tracked.

See last question about increasing production. Also, If they issue shares at higher prices there is less dilution, not more. I'll back management here to make the best decisions for shareholders, caveat being they don't buy Lihir. hehe

IMHO - do your own research

I did when they first started purchasing mines a year ago from the majors.