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Highlights
Guidance Downgrade: Northern Star cut FY25 production expectations to 1.63–1.66 million ounces and raised cost guidance amid operational issues.
Kalgoorlie Challenges: Delays at Golden Pike North pits and higher maintenance and royalty costs triggered the revisions.
De Grey Deal Progress: Northern Star’s $5 billion acquisition of De Grey Mining is set to be completed by 5 May.
Shares in Northern Star Resources (ASX:NST) fell sharply on Tuesday, dropping more than 5% to AU$19.80 in early trade, after the gold miner downgraded its full-year production guidance amid operational challenges at its key Kalgoorlie site.
Production Cut and Rising Costs
Northern Star now expects fiscal year 2025 (FY25) gold production to land between 1.63 million and 1.66 million ounces, compared to its previous forecast of 1.65 million to 1.80 million ounces. The company also raised its cost guidance, projecting all-in sustaining costs (AISC) between AU$2,100 and AU$2,200 per ounce, up from the earlier range of AU$1,850 to AU$2,100 per ounce.
The revisions come despite Northern Star reporting a steady third quarter. During the three months to March, the miner sold 385,441 ounces of gold, down from 410,249 ounces in the December quarter.
Operational Challenges at Kalgoorlie
The company attributed the reduced production forecast to several factors, notably delayed access to the Golden Pike North pits within its Kalgoorlie operations. In addition, Northern Star cited higher maintenance costs at its Yandal project and increased royalty payments, a consequence of elevated gold prices.
Adding to the financial adjustments, Northern Star slightly lifted its FY25 growth capital and exploration budget, now expected to fall between AU$950 million and AU$1.1 billion. The miner said the increase reflects expanded activity across its operations.
De Grey Mining Acquisition Nears Completion
In a positive development, Northern Star confirmed that it is on track to complete its AU$5 billion acquisition of De Grey Mining by 5 May. Shareholders of De Grey overwhelmingly voted in favour of the takeover earlier this month.
Despite the recent operational hurdles, the De Grey acquisition is seen as a strategic move that could enhance Northern Star’s long-term production profile and resource base, offering a potential boost to shareholder value.
The coming quarters will be critical for the miner as it works to address the issues at Kalgoorlie and integrate De Grey’s assets into its portfolio.
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