Earnings call transcript: Northern Star Resources Q1 2025 sees strong gold sales

Northern Star Resources, with a market capitalization of $21.9 billion, reported its Q1 FY2025 earnings, highlighting robust gold sales and a strong net cash position. According to InvestingPro analysis, the company has maintained a GREAT financial health score of 3.46, supporting its optimistic outlook on future growth driven by strategic initiatives and project advancements.

Key Takeaways

• Q1 FY2024 gold sales reached 381,000 ounces.
• The company maintains a strong net cash position of $616 million.
• Northern Star’s stock price fell by 34.07%, closing at 14.12.
• Expansion projects and cost management are key focus areas.

Company Performance

Northern Star Resources demonstrated solid operational performance in Q1 FY2025, with gold sales totaling 381,000 ounces. The company continues to leverage its diversified portfolio and strong production growth strategy, maintaining a competitive edge in the mining industry. With gold prices remaining high, the company is well-positioned to capitalize on favorable market conditions.

Financial Highlights

• Gold sales: 381,000 ounces
• Net cash position: $616 million
• Operational cash flow: $751 million
• Free cash generation: $14 million
• Dividend paid: $416 million

Market Reaction

The stock currently trades near its InvestingPro Fair Value, with a year-to-date return of 67.55% and a P/E ratio of 21.14. InvestingPro analysis shows the stock maintains strong momentum, with analysts setting price targets ranging from $8.92 to $23.00, suggesting mixed views on its valuation. The company’s beta of 0.78 indicates lower volatility compared to the broader market.

Outlook & Guidance

Northern Star Resources projects full-year gold sales between 1.7 and 1.8 million ounces, with all-in sustaining costs ranging from A$2,300 to A$2,700 per ounce. The company anticipates stronger production in the second half of FY2024, supported by ongoing project developments and efficiency improvements.

Executive Commentary

CEO Stu Tonkin emphasized the company’s commitment to delivering superior returns for shareholders. COO Simon Jessop highlighted the importance of optimizing operations at key sites, while CFO Ryan Gurner discussed the benefits of productivity gains and structural changes at KCGM.

Risks and Challenges

• Fluctuating gold prices could impact revenue.
• Potential production disruptions due to labor market changes.
• Cost management remains a critical focus amid rising operational expenses.
• Regulatory approvals and project timelines pose potential delays.
• Global economic conditions may affect investor sentiment and market dynamics.

Q&A

During the earnings call, analysts inquired about the potential 20,000-ounce production impact in the December quarter and the anticipated grade improvements at KCGM and Jundee. The management team addressed these concerns, providing insights into project timelines and cost management strategies.

Full transcript - Northern Star Resources CFD (NST) Q1 2026:

Stu Tonkin, CEO, Northern Star Resources: Good morning and thank you for joining us today. With me on the call is our Chief Financial Officer, Ryan Gurner, and our Chief Operating Officer, Simon Jessop. As we confirmed this morning, for the September quarter, we sold 381,000 ounces of gold at an all-in sustaining cost of A$2,522 an ounce. The quarter delivered a mixed performance across the portfolio, but our Kalgoorlie production hub performed very well, led by KCGM, where we maintained elevated production and development rates. Also, pleasingly, costs for the quarter were better than forecast, reflecting our efforts on containing spending and continued focus on capital discipline. Despite the mixed production results for the quarter, we remained well positioned to deliver our full-year guidance of 1.7 to 1.8 million ounces of gold sold at an all-in sustaining cost of A$2,300 to A$2,700 an ounce.

The KCGM mill expansion remains on track for commissioning in early FY2027, and significant progress is underway for this exciting step change to the operation. This week, we received ministerial approval from the WA Government for the Phoemston South project and associated infrastructure, which supports high future throughput and long-term cost efficiency at KCGM to deliver sustainable, high-margin ounces. We’ve also seen a consistent uplift in production rates from both the open pit and underground operations at KCGM, which Simon will talk to shortly. With consistent primary ore feed and the significant 3 million ounces of stockpiles ready for processing, we’re on track to maximize mill utilization and deliver on our production growth targets there. The group underlying free cash flow of A$14 million reflected investment outflows relating to the KCGM mill expansion project, returns to shareholders of A$416 million in dividends and A$67 million in tax installments.

Our investment-grade balance sheet remains strong with a net cash position, and as the KCGM mill expansion is in the final build year, we’re poised for increased production and lowering spending, whilst our hedge delivery schedule also declines and provides greater leverage to spot gold prices. This outlook is very favorable towards growing cash flows in the near term. To operations, earlier this month, two separate events occurred at Ryan Gurner, Glenn R. Jardine and South Kalgoorlie operations that will see an estimated impact to December gold sales of up to 20,000 ounces. The effective volumes will be scheduled for processing across the remainder of the year, and Simon will provide further detail on both these events shortly. I’m proud of the team’s swift response to safely restore the operations as soon as possible.

As I’ve already said, the company remains well positioned to deliver our full-year guidance, with stronger grades expected at KCGM in the second half, along with improved volume and grade performance across the broader portfolio. Combined with the growing leverage to gold prices and ongoing cost focus, we are firmly aligned to our purpose of delivering superior returns for our shareholders. Now, I’d like to hand over to Simon Jessop, our Chief Operating Officer, to discuss the operational highlights.

Simon Jessop, Chief Operating Officer, Northern Star Resources: Thank you, Stu, and good morning. The Kalgoorlie production centre delivered a strong quarter. At KCGM, our largest asset, production met expectations while costs came in significantly lower, reflecting the team’s disciplined approach to cost and capital management. Underground ore volumes reached an annualized run rate of 2.9 million tonnes, with lower grades attributed to a step up in development activity. Our Northern Star Mining Services team delivered 8.7 kilometers of development for the quarter, up from 7.5 in the June quarter, an outstanding effort by the team. Open pit ore volumes and grades were in line with expectations and ahead of last year. Productivity is set to further improve, with Golden Pike North returning to one mining level ahead of schedule, reinforcing our confidence in achieving KCGM’s FY26 production target of $550,000 to $600,000 ounces.

KCGM mill tonnes delivered an annualized run rate of 11.6 million tonnes, notwithstanding a major planned shutdown during the quarter. For FY26, mill throughput is forecast to be 12 million tonnes, with mill grades expected to lift for the remainder of the year. As Stu mentioned, we had an event at South Kalgoorlie earlier this month. After 60 millimeters of rain, a wall slip occurred in the historic open pit, temporarily affecting infrastructure for the underground mine. The main portal to the underground operations remains unaffected. A return to normal stoking is expected during the quarter. Let me close on the Kalgoorlie production centre by sharing how pleased I am with the progress on the KCGM mill expansion. Over recent months, construction has advanced significantly, and the project is now moving into electrical and piping installation.

Through the remainder of FY26, we’ll transition into the final stages of construction, including finishing works, fit-outs, and commissioning and testing. Turning to our Yandal production centre, the highlight for the September quarter was the milling performance at Thunderbox, achieving an annualized record throughput of 6.7 million tonnes per annum, exceeding the 6 million tonnes per annum nameplate capacity for a second consecutive quarter. The cost environment across Yandal remains challenging, and we continue to pursue cost initiatives wherever possible to mitigate pressures. At Jundee, gold sales of 55,000 ounces came in below plan due to lower stope grade ore at both Jundee and Remote, which was also impacted by lower recovery. We expect similar grades through the December quarter, with improvement anticipated in the second half.

Development at Griffin is progressing ahead of schedule, with first ore now underway, unlocking future access to higher grade stope tonnes, a great effort by our Northern Star Mining Services team. As Stu mentioned, earlier this quarter, a localized structural failure occurred in the crushing circuit at Jundee. The team has acted swiftly, enabling operations to resume within two weeks. At Thunderbox, I’m very pleased with the mill’s performance, exceeding nameplate for the second straight quarter. This strong throughput helped offset lower grades from their earlier open pit, which are scheduled to improve in the second half. Meanwhile, open pit mining at Bannockburn ramped up significantly, with first ore expected to feed the mill in the second half of FY2026. Finally, turning our attention to Pogo.

At Pogo, the underground mine and mill operated an annualized run rate of 1.4 million tonnes per annum during the September quarter, despite a planned major mill shutdown, a fantastic effort by our U.S. team. Mine grade was affected by sequencing but is expected to improve over the remainder of the year. The mill continues to focus on recovery optimization, achieving 87% recovery despite lower head grades. Development of the two new portals is progressing well, unlocking access to the central veins and good pasta systems. Most supporting infrastructure is nearing completion, with the portals also set to improve ventilation and haulage efficiency across other areas of the mine. Mine development averaged 1,664 meters per month, exceeding our 1,500 meter target. Let me finish by reaffirming that we are on track to deliver our group production guidance of 1.7 to 1.85 million ounces.

The June quarter is forecast to be the strongest, as key growth projects reach completion. Across the business, our team remains and continues to have a sharp focus on cost and capital discipline. I would now like to pass on to Ryan, our Chief Financial Officer, to discuss the financials.

Ryan Gurner, Chief Financial Officer, Northern Star Resources: Thanks, Simon. Good morning all. The company is in a great financial position. Our balance sheet remains strong in a net cash position of $616 million, with cash equivalent of $1.5 billion at 30 September. On a net mined cash flow basis, the business generated $183 million, thanks to higher gold prices and prudent cost discipline. Figure 8 on page 10 sets out the company’s cash equivalent movements for the quarter, with key elements being the company recording $751 million of operational cash flow, net of $67 million in income taxes paid. After deducting CapEx of $614 million relating to plant and equipment and mine development, $59 million in exploration and $64 million in equipment, finance, and lease costs, quarterly free cash generation was $14 million. Looking ahead, operational free cash flow is expected to rise, with increasing production at KCGM from Golden Pike North and ramp-up of underground production.

Continued solid throughput at Thunderbox, with increasing grade planned and increased throughput and grade at Pogo. Also, during the quarter, the company paid its FY25 final dividend, totaling $416 million. Our growth projects and exploration plans are tracking well. Major operational growth capital investment includes at KCGM, open pit development at Great Boulder and underground development at Phoemston and Mount Charlotte, which will enable us to lift production over the coming years, and at Thunderbox, open pit development at Aurelia and Bannockburn. In respect of the KCGM growth project, $196 million was invested during the quarter, with major progress in structural and mechanical installation. As Simon mentioned, electrical and piping installation is now underway, with final construction, fit-outs, and commissioning to follow throughout this year.

The spend profile is forecast to decline over the financial year, with the completion of procurement, with forecast personnel and plant and equipment demobilizing commencing in the second half. At our Hemi project, $41 million was spent advancing process plant design, securing long lead time items, and progress on non-processing infrastructure. On other financial matters, Q1 costs track to plan, with our teams remaining disciplined with cost and capital decisions. Q1 depreciation and amortization is within the full-year range provided of A$875 to A$975 per ounce, and non-cash inventory charges for the group are a credit of A$34 million, driven by low-grade stockpile build and high ore stocks in the Golden Circuit at KCGM and a higher ore stock value at Jundee. From a tax perspective, we maintain our full-year cash tax guidance range of A$700 to A$835 million, with two-thirds expected to be paid in the first half.

Landholder duty for the DeGrussa and Saracen transactions are estimated at A$200 to A$300 million. Payment is expected over the next 6 to 18 months. A reminder, the company will pay its semi-annual coupon payment and annual insurance premiums in the next quarter. Finally, the company’s committed hedge position at 30 September is 1.275 million ounces, at an average price just over A$3,300 per ounce. I will now pass back to Harmony for the Q&A. Thanks very much.

Call Moderator: Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two, and if you’re on a speaker phone, please pick up the handset to ask your question. Your first question comes from Daniel Morgan from Barrenjoey. Please go ahead.

Daniel Morgan, Analyst, Barrenjoey: Hi, Stu and team. My first question relates to costs, really. You’ve said costs were lower than planned, and it looks like lower than market expectations. How much of this is lumpiness of spend, noting that sustaining CapEx, you’re run rating $576 million versus $750 million guidance. Obviously, CapEx can be lumpy. I’m just wondering how much, what initiatives really drove this cost outcome, how sustainable it is, and how much is it just lumpiness? Thank you.

Ryan Gurner, Chief Financial Officer, Northern Star Resources: Yeah, thanks, Dan. What we want to be careful to do is to not defer important sustaining capital that creates any future issues. There’s a fine balance there, but what it means is really a very strict focus on expenditures, necessary expenditures that obviously also support the full-year guidance. Yeah, pleasing to see that work and pleasing to see where even on a low ounce quarter where the costs came in, and we see that they just, those unit costs improved throughout the year, helped with just maintaining that cost but also growing the production base. We see the ability to sustain the unit costs and improve on them. There is a big structural change in that cost base as we turn on Phoemston next financial year, but it’s important this year’s another investing year, so it’s very important we keep that discipline, that focus, optimization across them.

Daniel Morgan, Analyst, Barrenjoey: Thank you. Just with the production plans, you flagged this 20,000 ounce impact in the December quarter. Reading the notes, it appears that you think some of this will be caught up through the year. Can you expand on the production impacts and whether they can be caught up?

Ryan Gurner, Chief Financial Officer, Northern Star Resources: Yeah, so essentially the impacts of the operations meant sort of downtime. We’re able to do other productive work and just re-sequence mine plans. The team’s been fantastic at being able to do that. Mining activities continued, so it’s really just mill disruption at Jundee, which we can absolutely catch up on. Hence, we’ve sequenced that into the second half of the year. Down at South Kalgoorlie, you know, it’s contributions, low volume, high grade, and some development activity, ground support continuing whilst we get the second egress reestablished, and then production turns back on. At this stage, we’ve said up to 20,000 in this quarter, but essentially it just gets deferred, not lost.

Daniel Morgan, Analyst, Barrenjoey: Last question, just looking at the key drivers across the business in terms of production outcomes in the quarters ahead, what are the key drivers and what is the expectation towards the December quarter? Key drivers being tonnes, grade. Obviously, you’re not going to have any mill outages apart from what you flagged at Jundee this quarter. Can you just run through that?

Simon Jessop, Chief Operating Officer, Northern Star Resources: Yeah, thanks, Daniel. Simon here. The big key driver is getting the Golden Pike North down to the one bench. It’s taken us the Q1 to get us down to the 600 bench at Golden Pike North. Now we’ve got the east side and the west side all at one level. We’re on top of where all the ounces really kick and that low strip ratio for the rest of the year. Even KCGM down at Golden Pike, we averaged a strip ratio of 5:1, and that will just decrease over the rest of the year. The hard work has really been done, so we are set for the jump. What I’m really pleased about is that the team has done it earlier than planned. That sets us up really, really well for the jump for the next few years, not just the quarter, for increased gold production at KCGM.

That’s the biggest lever. Across the rest of the group, it really is Yandal has some higher grade ore coming in from open pit sources in the second half, as well as increased grade contribution at Thunderbox from the undergrounds. Over at Pogo, it’s returning to around the average of the reserve grade. If you average quarter four and quarter one, we’re bang on the reserve grade. Q1 was lower, so it’s really getting back into some better areas at Pogo, primarily in the second half. They’re the key levers across the business that we see.

Daniel Morgan, Analyst, Barrenjoey: I imagine Golden Pike is going to be skewed or weighted to the second half of this financial year.

Simon Jessop, Chief Operating Officer, Northern Star Resources: Golden Pike now, we’re slightly ahead of plan in terms of we’re on the one mining level. The large ounce contribution from Golden Pike North, which we spent, you know, numerous years getting to, we’re there now, which is positive.

Daniel Morgan, Analyst, Barrenjoey: Okay, thank you so much, Stu and team.

Call Moderator: Thank you. Your next question comes from Levi Spry from UBS. Please go ahead.

Good day. Yeah, thanks for your time. Maybe I could just pick up on that Golden Pike North piece. Thanks, Simon. Will we see materially higher grades start coming through from the open pit at KCGM this quarter? Are you seeing them now?

Simon Jessop, Chief Operating Officer, Northern Star Resources: Yeah, correctly. Like we’re seeing the grades increase, but it’s not just the grade, it’s the volume. The grade’s always been there, but we haven’t had the volume piece with it. We now see that strip ratio just declining. We’re back on one efficient bench on both sides of the pit. You’ll see the grade climb at KCGM. I think we guided at the site visit for Q1 grade processed to be 1.2 to 1.4 grams per ton, and we averaged 1.4 for the quarter. You’re starting to see that grade jump up at KCGM.

Yeah, nice one. Thank you. Could I just ask a question around Hemi? Maybe just to sort of reiterate sort of timelines there you’re expecting. I think maybe there’s been some comments around a sort of two and a half year build. Have I picked that up correctly? Just, yeah, how do we think about the next steps forward there later in the financial year?

Ryan Gurner, Chief Financial Officer, Northern Star Resources: Yeah, thanks, Levi. Yeah, the two and a half year build essentially is, I guess, the commentary from the DFS and accurate. We basically say the six months of engineering and work and then, you know, a really two-plus year construction. What’s happening right now, obviously, is the approvals are still pending, working with all stakeholders to advance any needs that are there. We expected that in the March quarter, approvals could be met. We were going to refresh pricing to make sure that we update all the pricing with all the counterparties and put that in front of our board for a final investment decision during the end of this financial year.

I think what I’d explained was that the build, likely, we want to see KCGM turned on, contributing, you know, production increasing there, sort of seamless ramp-up and without the CapEx spend, and then neatly dovetail in the commencement of Hemi construction. Things can overlap as far as, you know, approvals, long lead items, expenditure, preparations, design, etc. It’s probably important that the transfer of knowledge from KCGM goes with the Hemi build. Yeah, it’s the second half, the late in the second half updates on that. We still need approvals before we can advance on, you know, turning earth and doing things up there.

Yeah, okay. Thank you. Thanks, Stu.

Call Moderator: Thank you. Your next question comes from Matthew Frydman from MST Financial. Please go ahead.

Sure, thanks. Morning, Stu and team. A couple of questions on various undergrounds. Maybe firstly at Jundee, Simon mentioned the disappointing grades during the quarter, running at about 2.5 grams a ton, whereas I think your reserve grade’s closer to 4 grams a ton. That asset seems to have fairly consistently underperformed the reserve grade, at least in most of the recent quarters. Can you point to any perhaps recent grade control drilling or otherwise, I guess, what gives you confidence that those grades are going to improve in the second half of the year, as Simon alluded to? Thanks.

Simon Jessop, Chief Operating Officer, Northern Star Resources: Yeah, thanks, Matt. Where we’re seeing the grade start to increase back to a higher number at Jundee really is from the Griffin area to the north, and the development in that part of the mine is actually ahead of plan. That’s really pleasing. That gives us access to some better stope grade. It’s mainly the average stope grade in Q1. We just didn’t have access to the right areas to get that typical pickup in grade that we get in Jundee. That’s one area. The other area really is a place called Plutus, which we’ve been drilling for the last few years, has some very good grade that we’re accelerating our mine plan out to. It’s a combination of a number of different areas across Barton and Victor and Gateway. It’s just that it’s getting those average grades up from some of those higher grade sources coming in.

Everything else was fine in terms of development plan. Ramone is on plan. That’s coming to the end of its life. We’ll finish that project over the course of FY2026. It’s just timing of where those higher grade stope tons come through to lift the average back up.

Got it. Thanks for that, Simon. That’s pretty clear. Maybe a similar question then on the KCGM underground. You talked about the circa 3 million tonnes per annum run rate being achieved in the quarter, but obviously the grade a little lower due to the proportion of development. When does that sort of mix shift, or in other words, when do you reach that inflection point on development where you’re sort of hitting both the tonnage and the grade coming out of the KCGM undergrounds? Thanks.

Yeah, with it, a lot of what I was really pleased about was the eight and a half kilometers of, or 8.7 kilometers of development that we got for the quarter. That’s right in the rails of what our plan is for the 36 to 40 kilometers of development for the year. The grade will increase as Phoemston starts to produce more stope dirt. It’s still heavy development focus, waste and ore. As the stope contribution starts to increase, which it did throughout the quarter, you’ll see that grade, that average grade, start to come up. It’s just a function of where we’re mining at Mount Charlotte. There are a lot of different areas there, but fundamentally, it’ll return back to the average grade with volume. The stope contribution and the ramp-up at Phoemston is the main area that’ll start to lift.

Thanks, Simon. Any particular timing around that? I mean, obviously you’ve said 3 million tonnes of volume this year, 4 million tonnes next year. Is that at something close to reserve grade, or what’s the sort of timing around that? Thanks.

It’s just incremental because as the mine keeps growing, that production, it’s not going to be three exactly and then a jump exactly to four and a jump again exactly to five. As the stope areas and the mine start to really be unlocked, you’ll just see an incremental growth in production as well as grade with more stoping. At the end of the day, it’s the stope dirt, which is what we’re chasing at KCGM.

Understand. Okay, thank you for the additional detail there, Simon.

Call Moderator: Thank you. Your next question comes from Mitch Ryan from Jefferies. Please go ahead.

Morning all. Firstly, can we just spend a little time at Jundee? Can you help me understand the impact on the crushing circuit? You’ve reconfigured it into the SAG mill. What’s the cost and timeframe to return it back to the sort of design flow sheet?

Simon Jessop, Chief Operating Officer, Northern Star Resources: Yeah, thanks for that. The processing is back running at Jundee again. We’ve had around two weeks where we’ve had to pause, stop. It’s the access to the infrastructure that has failed for the conveyor belt that feeds the SAG mill. We’ve now got going again in terms of feeding that and isolated the coarse ore stockpile area. Now we can take our time to get that rectified over probably the remainder of this quarter. It’ll probably take a couple of months to actually fix that. In terms of crushing, we can still crush the material at the front end of the circuit and we can still mill the material through a revised change on the conveyor setup at the back of the circuit. Now we’ve isolated that particular area and we’ll work on the fastest fix we can for that infrastructure.

Okay, so it’s sort of that’s the 10,000 ounce impact, and then potentially a little hit to operating costs as well over the same time period.

Ryan Gurner, Chief Financial Officer, Northern Star Resources: Yeah, it’s the operating cost at the moment. It’s that engineering rectification and remediation work on the coarse ore stockpile infrastructure. That will be a bit of an unknown, but it’s, you know, talking $5 million and $10 million. You’re not talking, you know, $50 million and $100 million, right?

Thank you. My second question just relates to Hemi, and you’ve given us obviously a bit of an update there, but specifically on the negotiations with the traditional owners, how are they progressing? Do you have a rough timeframe of when you would expect those to be concluded?

There is engagement with all stakeholders. Traditional owners are absolutely continuing and working well together, but equally across all stakeholders there. We set out that in the March quarter, essentially all the feedback loops have occurred to regulators to consider all those things and any conditions related to approvals. That is all on track and being pretty patient with all that to make sure it’s done well.

Okay, thank you. That’s it for me.

Call Moderator: Thank you. Your next question comes from Hugo Nicolaci from Goldman Sachs. Please go ahead.

Morning guys, thanks for the update this morning. I just want to dig into the costs at KCGM a little bit more. It looks like the open pit mining costs have started to normalize back to about $8 a ton. The underground costs are tracking around that $40 million a quarter in terms of spend. Able to just comment sort of directionally, you know, what those rates should be going forward for the rest of the year? Should we see the open pit continue to improve and the underground sort of just pick up as you do more development?

Hugo’s right here. Yeah, look, overall operating costs per ton are a bit lighter than that. They’re around currently $6 a ton, just under actually $5.95. Probably expect, as Simon said, as we, you know, on that one bench at GP North, we expect efficiencies to improve there. As we get into Ivanhoe with the approvals now, the cost per ton out there is even lower again. We expect those to improve. As Simon said, with the incremental, with the ramp-up on the underground, which I think the costs are going pretty well there, should see some improvement there too.

Simon Jessop, Chief Operating Officer, Northern Star Resources: Yeah, Hugo, I think what you’ll see is the run rate has stabilized in the open pit, and we’ve had two quarters at 22.5 million tonnes mined. It’s getting more efficiencies into that, but that’s a 90 million tonnes annualized run rate. We see that as around where we’re going to sit. Now, as we have got the approvals from Section 38, we’re going to gradually get more volume from Ivanhoe, which is obviously a shorter haul, less power to factor, etc. The volumes will stay around that 90 million, but we see positive momentum in the efficiencies at KCGM. With the underground, it’s a little bit like the previous discussion. As the stoking dirt increases at contribution, you’ll certainly start to see the average cost per ton for the undergrounds start to come down because we’re getting cheaper tonnes from the stoked dirt across Phoemston in particular.

Pretty pleased with where we’re sitting at the moment.

Fantastic. It’s all positive from a cost piece. On the processing side, it looks like the processing costs have sort of stayed at that $41 a ton from last quarter. I think 6 to 12 months ago, that was more like low to mid $30 a ton. Is that just the rate now going forward as soon as the mill sort of approaches end of life? How should we think about as the expansion comes online? I think historically you’ve talked to a $7 a ton reduction. Should we be thinking that number is potentially then bigger?

Yeah, it’s a really good point. We averaged about $33 to $34 a ton at KCGM for the quarter. Certainly, as we’re getting to the end of that life, the mills and the process plant from a structural perspective has had its day. I’m really, really looking forward to getting the new processing plant. I absolutely do feel that gap has significantly widened from when we put out the original KCGM feasibility final investment decision. We’ve seen things like cyanide and other things cost increase across the group. In terms of the maintenance cost and operating the 30-year-old plant at KCGM, that gap has widened as it’s coming into the last year of its life.

That’s helpful. Yeah, it sounds like potentially some significant room there. One more if I could, just on the corporate overheads piece, that just seems to have increased across most of the assets versus the run rate over the last 12 months. Can you just comment on what’s driving that and if we should expect that to normalize going forward from this quarter?

Yeah, Hugo, right here. Obviously we’ve picked up our degrade teams, is probably part of that. There’s been a little bit more addition around the technical and some of the operational piece here in the business. From a per ounce perspective, it’ll reduce because this is our lowest ounce quarter. From a fixed cost perspective, it’ll probably continue throughout the quarters ahead, but on a cost per ounce reduced.

Thanks. I’ll pass it on.

Call Moderator: Thank you. Once again, if you do wish to ask a question, please press star one. Your next question comes from Andrew Bolla from Macquarie. Please go ahead.

G’day, Stu and team. Just one on costs from me. From memory, Northern Star has a gold price linked to TAF incentive scheme. I was just wondering if the recent gold price lift is something that can be accommodated in the current guidance for this year. If so, is there any sort of lumpiness to expect in those payments over the year that might be meaningful for us?

Ryan Gurner, Chief Financial Officer, Northern Star Resources: Yeah, thanks, Bolla. Andrew, it did stale as the gold price ripped up $3,000, $4,000, $5,000, $6,000 an ounce. That’s been pretty full at a full rate for a number of years. There’s not compression, I guess, or bounce as a pullback in gold price at the moment. It’s fairly sticky and embedded into, but it is a very strong reminder of what we’re enjoying at levels still above $6,000 an ounce. Yes, it’s not something that’s a spring related to any of these pullbacks. What we’re enjoying is still, if we look back to a resource reserve pricing and overall cost structure, it’s really around our productivities, our production increases, the capital wind down, and the structural change with KCGM that’s going to make the big difference to migrate us down the cost curve. It’s not going to be chips and savings on unit labor costs.

It’s going to be on efficiency from that labor, productivity from that labor, as opposed to unit costs of it.

Understood. Maybe just one more on the labor force. Obviously, there’s been some articles written about the strength of the gold sector in Western Australia, but obviously, some other resources industries are suffering a little bit as well. Is there any broad comments you can make about the state of industry at the moment, how you’re finding availability of skilled staff? Is there another level of tightness coming, or is it very much being offset by some weakness elsewhere?

Yeah, I don’t see that tightening of those labor markets putting pressure on wages. What I see is cost of living put, you know, expectations and pressure on, you know, what people are feeling generally. That’s not just here, that’s also in Alaska. It’s pleasing to see, obviously, PM promoting ties to the U.S. to get, you know, new metals business growth. That will take a lot of time before there’s any kind of pressure from those new markets if there’s growth in investment in that phase. What we need to do is turn around, you know, attractiveness of investment back into Australia. That’s very promising in that regard. Equally, at the moment, we’re not, you know, gold’s in its own lane and we’re focused on the things that are in our control.

No worries. That’s all for me. Thanks, guys.

Call Moderator: Thank you. There are no further questions at this time. I’ll now hand back to Mr. Tonkin for closing remarks.

Ryan Gurner, Chief Financial Officer, Northern Star Resources: Right. Thank you all for joining us on the call, and I appreciate your interest in our company today on what is a very busy day. Thank you and have a good day.

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