Northern Star revels in tripartite tremble

THE BOURSE WHISPERER: Western Australian gold miner Northern Star Resources announced a triple play consisting of a predicted cash surplus for next year, payment of a maiden dividend, and a Resource upgrade.

The company said it expects to generate surplus cash of $65 to $85 million next calendar year on the back of higher production and lower costs assuming the gold price remains hovering around the A$1,550 per ounce mark.

Northern Star recently completed its budget for 2013, which it said shows the company is set to produce between 100,000 to 115,000 ounces of gold for the year at cash costs ranging $610 to $690 per ounce (inclusive of $40/oz royalty).

This compares favourably with Northern Star’s forecast for the current year of 75,000 to 80,000oz at $650/oz.

The company confirmed recently it is on track to meet this guidance.

According to Northern Star the increased production next year will result due to a rise in average milled head grade from the current rate of around 7gpt to 8 to 9gpt.

The higher grade is due to the recently discovered extension zone at the Voyager 1 lode at Paulsens, which has a resource grade of 25gpt.

The company’s directors are also preparing for a bought of RSI as they prepare to sign a lot of cheques to pay a fully franked maiden dividend of 2.5c a share, which represents a 3 per cent yield based on a share price of 85c.

The dividend payout will total $10 million, however the company insists it will still keep plenty of its powder dry to take advantage of any acquisition opportunities which may arise.

The dividend will be declared to all shareholders on the register at 05 September 2012 and is expected to be paid on 12 September 2012.


Long section of Paulsens Mine Open Pit and Underground Mineral Resource and Reserves. Source: Company announcement

To top all this off Northern Star increased the JORC-compliant resource estimate at its Paulsens gold mine in WA to 2.4 million tonnes at 5.0 grams per tonne gold for 403,000oz.

This compares with the previous estimate of 318,000oz and comes after 32,000oz was mined in the intervening period.

The increased inventory is a rise of 25 per cent and is sufficient to underpin a mine life of at least 5 years at Paulsens.

“These forecasts show Northern Star is poised for a bonanza year marked by superb cash generation, significantly higher production and some of the lowest costs in the Australian gold mining industry,” Northern Star Managing Director Bill Beament said in the company’s announcement to the Australian Securities Exchange.

“Our commitment to exploration at Paulsens is being repaid in spades, with the mine now having at least five years’ worth of resources.

“And we have discovered significant areas of additional mineralisation which further strengthen our belief that Paulsens has a long profitable future beyond current resources.

“In addition, we are continuing to drill on the other side of the gabbro unit surrounding Paulsens and remain hopeful of identifying repeats of the Paulsens orebody.”