Northern Star (NST) delivered a weaker Dec Q with production of 214koz at an elevated AISC of $1,365/oz (-6% on production, +11% on costs, vs Sept Q 208koz @ AISC $1,226/oz). The result was impacted largely as a result of lower production at Jundee and higher costs across the board. Net cash increased to $292m (+5% vs Sept). Mined and milled tonnes rose by 3%/7% respectively. FY19 guidance has been maintained at 850-900koz, however full year cost guidance has increased to $1,125- $1,225/oz, reflecting up front capital investment at Pogo and NST’s mining for margin strategy of lower grade ores in a higher gold price environment. A strong 2HFY19 rebound is highly likely at Pogo, but the stock’s premium trading metrics appear to be less justified after what we feel was a subdued performance. HOLD maintained.
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