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Northern Star (ASX:NST) share price drops 5% on March quarter update

The Northern Star Resources Ltd (ASX: NST) share price is down around 5% after revealing its March quarterly update.

Northern Star is one of the largest gold miners in the region.

March 2024 quarterly update

The business said it sold 401,000 ounces of gold sold at an all-in sustaining cost (AISC) of A$1,844 per ounce, or US$1,213 per ounce.

Northern Star wanted to tell the market about three main points.

Kalgoorlie Consolidated Gold Mines (KCGM) delivered “positive step-change”, driven by increased access to high-grade material.

Weather impacts across Yandal masked strong milled tonnes at Jundee. Thunderbox mill remediation is “ongoing” to improve availability and consistently deliver to capacity in the long-term.

Unplanned mill outages at Pogo offset a modest grade uplift.

Northern Star also said its all-in cost was A$2,620 per ounce as major growth projects continue across the group, including the KCGM mill expansion.

In terms of cash flow, the miner said it generated underlying free cash flow of A$143 million for the quarter, compared to A$102 million in the December quarter.

Management comments

The Northern Star Managing Director Stuart Tonkin said:

The March quarter was challenging but also demonstrated the resilience of our teams at our three production centres. Adverse weather had a significant impact and contributed to the company revising our cost guidance for the year, though I am pleased to confirm that we remain on track to deliver our FY24 production guidance into a strong gold price environment.

At KCGM, our largest and lowest cost asset, the team achieved an exceptional operational and financial performance, with the Kalgoorlie Production Centre generating the group’s highest free cash flow per ounce. Strong milling performance was achieved at Jundee while Pogo remains positioned for a stronger June quarter with throughput expected to lift.

We are focused on maintaining the strong operational momentum so far seen in the June quarter, which will enable us to safely generate significant free cash flow and, in turn, superior shareholder returns.

Outlook for the Northern Star share price

The gold miner is guiding that for FY24 it’s expecting to sell 1,600,000 ounces to 1,750 ounces of gold at an all-in sustaining cost of A$1,810 per ounce to A$1,860 per ounce.

For the June quarter, which is the last quarter of the 2024 financial year, some of the company’s focus includes Thunderbox having an annualised mill throughput rate of 5mt per year. At Pogo, the focus is improved mill throughput, reflecting improved capacity and continuity from completed projects.

It’s expecting its FY24 growth capital to be between A$1.15 billion to A$1.25 billion, with an exploration budget of A$150 million.

The gold price is very high at the moment, so the company can make good cash flow in the current situation.

I’m not sure what the gold price is going to do next, and I don’t know if it will go through a cycle. Gold miners aren’t the sort of investment I’d make for my own portfolio.

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