Northern Star (NST) delivered a weaker March Q with production of 186koz at an elevated AISC of $1,369/oz (-4% on prod QoQ). The result was largely impacted by underperformance at Pogo which recorded a 33% decrease in production and 23% hike in costs. Net cash decreased to $288m (-1% QoQ). Mined and milled tonnes fell by -6%/-3% respectively. FY19 guidance has been maintained at 850-900koz, however full year cost guidance has increased for the second time to $1,225-$1,275/oz, reflecting further up-front capital investment at Pogo. June Q production forecasts of 235-260koz is achievable but this implies sweating the Australian operations to make up for the shortfall at Pogo. NST has a track record of achieving stretch goals, but with three consecutive quarters of weaker production and higher costs at Pogo suggests the integration of Australian miner innovation is not without its growing pains during the transition. HOLD maintained and target price $8.02ps (prior $8.23).
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