Northern Star share price tumbles on difficult quarter

This gold miner's shares are on the slide on Thursday. But why?

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The Northern Star Resources Ltd (ASX: NST) share price is under pressure on Thursday.

In morning trade, the gold miner's shares are down 2.5% to $14.62.

Despite this, the company's shares are up 30% over the last six months.

Why is the Northern Star share price falling?

Investors have been selling the gold giant's shares this morning following a pullback in the gold price overnight and the release of preliminary production results for the three months ended 31 March 2024.

In respect to the latter, according to the release, Northern Star reported 401,000 ounces of gold sold during the March quarter. This is down from 412,000 ounces during the previous quarter.

Management advised that this reflects the impact of significant weather events across the Northern Goldfields.

The good news is that the company appears to have moved on from these disruptions. It advised that the June quarter has started with strong operational momentum. This includes at the Kalgoorlie Production Centre with increased access to high-grade Golden Pike North material, early access to first ore at Wonder underground in the Yandal Production Centre, and grade improvements at Pogo Production Centre.

Importantly, with gold sold totalling 1.18 million ounces over the first three quarters, management believes Northern Star remains on track to deliver on its FY 2024 group gold sold guidance of 1.6 million ounces to 1.75 million ounces. This is based on positive momentum leading into an expected strong June quarter, driven predominantly by increased grade and mill utilisation rates.

Northern Star's cash balance softened during the quarter. It ended the period with cash and bullion totalling $1,076 million, down from $1,089 million at the end of December. However, it is worth noting that the gold miner paid out its $169 million interim dividend during the quarter. Excluding this, its cash balance would have lifted over the three months.

In addition, management advised that major organic growth projects continued to advance during the quarter. This includes the key KCGM Mill expansion, which remains both on track and on budget.

Commenting on the company's third-quarter performance, Northern Star's managing director, Stuart Tonkin, said:

The resilience of our team and assets was demonstrated during the quarter with operations further challenged due to adverse weather. Our profitable growth strategy coupled with elevated gold prices is expected to deliver significant cashflow generation, and in turn, superior shareholder returns.

Northern Star intends to release its full quarterly update on Tuesday 23 April.

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 Scott Phillips.

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