Australia’s biggest gold miner delivers record dividend
Northern Star will reap the rewards for fixing a problem global gold majors Barrick and Newmont put in the too hard basket.
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Northern Star will reap the rewards for fixing a problem global gold majors Barrick and Newmont put in the too hard basket as the price of the precious metals soars to record highs.
Australia’s biggest gold miner has started tapping into a “honey pot” of high-grade ore at the bottom of the fabled Super Pit mine at Kalgoorlie after a mammoth job repairing the eastern wall of the mine.
The completion of the four-year repair job helps put the Super Pit on track to churn out 900,000 ounces of gold a year by 2029 as Northern Star invests $1.5bn to more-than-double milling capacity at the mine.
Stuart Tonkin-led Northern Star is also on target to complete a $5bn all-scrip takeover of De Grey Mining and its Hemi project in WA’s Pilbara in May in a deal that has potential to propel it back into the ranks of the world’s top five gold producers.
Higher gold prices and sales delivered a 63 per cent jump in underlying first half earnings to $1.15bn for Northern Star and triggered a record interim dividend of 25 cents a share, unfranked.
The miner sold 804,000 ounces of gold in the six months to December 31 at a price of $3562 an ounce.
The spot price is now hovering at about $4642 ($US2915) an ounce, fuelled by US president Donald Trump’s return to the White House and geopolitical tensions.
Mr Tonkin said he could see the price going even higher from the very strong base of more than $US2900 an ounce in uncertain times.
Massive rock falls which displaced more than a million tonnes of ground in May 2018 were the catalyst for Barrick and Newmont to sell their stakes in the Super Pit. The mine had been producing more than 700,000 ounces a year before the rock fall hit operations.
Mr Tonkin said Northern Star had carried out remediation work that was too daunting for the two gold majors.
“We’ve said from the onset of committing to that work that the prize was a honey pot of gold at the bottom of the Super Pit, and we’re in it now,” he said. “Things just get better from here.”
Barrick moved to sell its share in the Super Pit to Saracen $1.08bn in late 2019 and within weeks Newmont sold its stake to Northern Star for$1.17bn. The North American-based heavyweights had made no move to repair the wall.
Northern Star took full control of the Super Pit after a merger with Saracen in 2021. The Super Pit together with linked underground mining has produced more than 65 million ounces of gold over its lifetime, with plenty more to come.
“The before and after photos show the extent of the work that was completed (to fix the east wall), remembering it was one of the catalysts that the previous owners surrender, give up and walk away,” Mr Tonkin said.
Northern Star is on track to be producing 2 million ounces a year by 2025-26 from its Kalgoorlie and Yandal operations in WA, and Pogo mine in Alaska.
The addition of Hemi is expected to lift production to about 2.5 million ounces a year by 2028-29.
Northern Star closed the first half with cash and bullion of $1.2bn.
Originally published as Australia’s biggest gold miner delivers record dividend
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