St Barbara finds more impairments, Northern Star reverses old ones in gold’s big reporting day
St Barbara turns in another grim set of financial results, as Northern Star delivers a big upside surprise and rising costs overshadow most gold results.
St Barbara turned in another shocking set of figures on the gold sector’s biggest day of reporting season, with Northern Star finding new value in old stockpiles and rising costs overshadowing most results.
St Barbara again cut the value of its Canadian gold assets in the second half, taking a total pre-tax impairment of $514.4m to their value for the full year – on top of a $223.5m impairment booked the previous financial year.
The struggling gold miner also took a $74.2m hit to the value of its Simberi mine in Papua New Guinea, helping the company slump to a $429m net loss for the full year.
Setting the opposite tone, however, was Northern Star Resources, with the gold major booking a $4236.6m gain on its accounts on the reversal of a 2021 impairment on its stockpiles of gold ore at the iconic Kalgoorlie Super Pit.
Northern Star is soon to be the biggest gold company on the Australian market, when Newmont finally swallows up Newcrest, and the addition of the gold stockpiles back to the company’s book valuation – a result of the company’s decision to push ahead with a refurbishment of the mill at the massive gold mine – fails to do justice to the value of the gold they contain.
Northern Star boss Stuart Tonking told analysts on Thursday the stockpiles included about 120 million tonnes of low-grade ore containing around 2.7 million ounces of gold – which can be milled by the company at minimal costs when the stockpile enters the mine’s production profile in four to five years when the refurbishment of the mill is completed.
With only a quick trip to get the ore into the mill – Mr Tonkin suggested on Thursday’s analyst call, the ore could be processed for about $20 an ounce, offering the potential for them to significantly slash Northern Star’s average production costs when they enter the mill feed.
But at today’s gold prices that suggests the stockpile contains about $8bn worth of gold – which would be processed over the better part of a decade alongside the ore being mined from the Super Pit itself.
Returning the value of the stockpiles to the books helped boost Northern Star’s annual net profit to $585m.
Northern Star booked underlying EBITDA of $1.54bn for the full year, on record cash earnings – which the company defines as EBITDA less net interest, tax paid and sustaining capital – of $1.22bn for the year.
The gold major will pay a 15.5c a share unfranked final dividend, which Mr Tonkin said sat in the middle of the company’s policy of paying 20 to 30 per cent of cash earnings back to shareholders.
But Northern Star, like its Australian gold mining peers, still faces substantial headwinds in the face of rising costs of mining and processing.
Its total operating costs rose 8 per cent for the year to the end of June, with labour, power, reagents, maintenance, accommodation and camp costs all adding to the company’s bills.
Mid-tier WA gold miner Westgold said on Thursday inflationary pressures on its own operations were a factor in its board’s decision to not pay a dividend, with the company preferring to hold onto cash in a period of “increasing inflation and supply chain pressures”.
Westgold booked a $10m profit for the full fiscal year, up $120m from the previous period, which was marred by $175m worth of impairments across its WA operations.
But Westgold also noted that its cash production costs lifted 14 per cent compared to the previous financial year, to $1686 an ounce.
Westgold booked EBITDA of $167m for the year, up from $34m, on $654m in revenue.
Silver Lake Resources also saw a substantial hit from inflationary pressures, saying the company’s all-in sustaining costs rose 10 per cent for the year to $1941 an ounce.
Silver Lake booked a $30.8m net profit for the year, down from $77.7m the previous year, on EBITDA of $248.4m.
Regis Resources says its AISC was up 15 per cent for the year, largely on the impact of industry-wide inflationary pressures.
Regis booked a full year loss of $24.3m, on EBITDA of $371.4m, up 10 per cent for the year.
St Barbara shares closed down 1c to 19.5c on Thursday, with Silver Lake unchanged at 86.5c, Regis down 1.5c to $1.525, Westgold down 3.5c to $1.46.
Northern Star was the standout performer of the bunch, closing 5.2 per cent higher at $11.16.
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