Northern Star share price tumbles on guidance update

This gold miner’s shares aren’t glittering today…

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Key points

  • Northern Star's shares are falling on Wednesday
  • This follows the release of a disappointing quarterly update
  • Due to the gold miner's Pogo operation, it has lifted its group cost guidance for FY 2022

The Northern Star Resources Ltd (ASX: NST) share price is dropping on Wednesday.

In morning trade, the gold miner’s shares are down 2% to $10.00.

Why is the Northern Star share price dropping?

Investors have been selling down the Northern Star share price today after the gold miner’s quarterly update disappointed.

For the three months ended 31 March, Northern Star reported total gold sold of 380,075 ounces at an all-in sustaining cost (AISC) of A$1,656 per ounce.

This reflects 212,820 ounces of gold sold with an AISC of A$1,659 per ounce at Kalgoorlie, 109,766 ounces of gold sold with an AISC of A$1,444 per ounce at Yandal, and 57,489 ounces of gold sold at an AISC of US$1,483 per ounce at Pogo.

While this means that its Australian operations, which account for 85% of total production, are on track to meet FY 2022 production and cost guidance, this won’t be the case for its Pogo operation. It is expected to fall short of its guidance for production and costs.

In light of this, management has retained its FY 2022 group production guidance at 1.55M ounces to 1.65M ounces but has lifted its AISC guidance to A$1,600 to A$1,640 per ounce. The latter is up from its previous guidance of A$1,475 to A$1,575 per ounce.

Nevertheless, for the quarter, thanks to an average realised price of A$2,468 per ounce, Northern Star reported sales revenue of A$937 million for the quarter. This was broadly in line with what was recorded during the December quarter.

Management commentary

Northern Star’s Managing Director, Stuart Tonkin, acknowledged that the company had a tough quarter.

He commented: “During the quarter, Kalgoorlie was impacted due to unplanned mill downtime events while Yandal performed in line with expectations. As foreshadowed, higher mining inventory at Pogo is delivering a better milling outcome but we have more work to do to deliver on Pogo’s potential.

“Group-wide and against a challenging operating backdrop, we continue to safely advance the foundation of our five-year profitable growth plan. One year in, we have significantly lifted material movement volumes at KCGM, working through the OBH cutback, almost completed the Thunderbox mill expansion and successfully commissioned Pogo’s expanded mill.”

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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