Northern Star flags return to dividends as cash flows
Northern Star Resources has posted record quarterly gold sales despite COVID-19 disruptions in Alaska.
Northern Star Resources says it expects to return to paying dividends “in the ordinary course of business” after its operations produced 267,361 ounces of gold in the June quarter despite its Alaskan operations being hit hard by the coronavirus.
The company said its Pogo gold mine in Alaska has now suffered 36 cases of COVID-19 since the pandemic began. Northern Star boss Bill Beament said the scale of the outbreak in Alaska meant he expected the mine to produce at only 75 per cent of its potential while the virus remains prevalent in the state.
But Northern Star’s gold mines still generated underlying free cash flow of $218m in the June quarter as the gold price rose, with the company promising to reduce its hedging position to take advantage of the higher gold price.
Northern Star finished June with $770m in cash and bullion at hand, and corporate debt worth $700m.
“Our quarterly sales of 262,717oz was not only a record, but also very solid given the imposts stemming from the COVID-19 measures we moved quickly to put in place,” Mr Beament said.
“All-in sustaining costs were restricted to $1,475/oz despite the impact of these measures and therefore margins were robust given the average selling price of $2,487/oz. As a result, underlying free cashflow was a record $218 million.”
And June 30 Northern Star’s hedge book stood at 536,426oz at an average price of $2085/oz, well below current spot gold prices of just under $2600/oz. The company said its hedging position was about 15 per cent of its next three years worth of expected production.
Northern Star’s production was marginally below analyst expectations, with UBS resources analyst Glynn Lawcock having tipped quarterly production of 272,000oz at an AISC of $1522/oz.
Its shares closed Wednesday at $15.93.
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