Northern Star Resources Limited Announces Kalgoorlie Power Plant Acquisition
Northern Star Resources Limited (ASX:NST) announces purchase agreement with Newmont Australia for Parkeston Power Station, expects continuing production growth towards FY26.
- 1Q22 sales volume of 386,160 ounces of gold @ A $1,594 per ounce
- FY21 Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) up 216 per cent at $2,268 million,
- FY21 Net Profit After Tax (NPAT) up 300 per cent at $1,032 million
With a current portfolio comprising 6 West Australian mines and its Pogo site in Alaska, Northern Star’s announcement today of an acquisition involving Newmont Australia’s power business demonstrates a lateral move to improve its All-In-Sustaining-Cost (AISC) for years to come. The acquisition deal will see Northern Resources purchasing Newmont’s power business for US $95 million. The deal comes as a part of an earlier option exercised by Newmont, during its acquisition of 50 per cent of Kalgoorlie Consolidated Gold Mines Pty Ltd (KCGM).
Exercising this option to complete the purchase will see Northern Star paying a balance of US $70 million to complete the sale agreement, expected to finalise in December this year. As part of the purchase, Northern Star will enter a binding sale agreement with Newmont to fully acquire GMK Investments Pty Ltd, which currently owns and operates Newmont Power (NP) Pty Ltd, and NP Kalgoorlie Pty Ltd. The latter company presents with 50 per cent ownership of Goldfields Power Pty Ltd, which controls the Parkeston Power Station in Kalgoorlie-Boulder, Western Australia.
The 110 MegaWatt capacity power station supplies KCGM and the surrounding Kalgoorlie area with electricity. Said Northern Star Managing Director Stuart Tonkin, “The purchase means our Kalgoorlie power supply will now form part of our studies into ways to meet our commitment to becoming carbon-neutral.”
Northern Star’s Continuing Progress Along FY26 Trajectory
The group’s environment, social and safety initiatives see it setting a 2050 goal to achieve net zero scope 1 and 2 greenhouse gas emissions. Additionally, it anticipates setting a 2030 target to be clarified within its 2021 Sustainability Report, due March 2022. Alongside its current trajectory towards a carbon-neutral production profile, Northern Star also sees continuing production performance, moving in line with its expectations to deliver 2 million ounces of gold annually by FY26.
In its 1Q22 report published on 19 October, Northern Star presented shareholders with a number of performance updates — among which include a total of 386,160 ounces of gold sold at A $1,594 per ounce during the reporting period. This places the company well on track to deliver its earlier provided FY22 guidance of 1.55 - 1.65 million ounces at AISC of A $1,475 - $1,575 per ounce.
The company’s 1Q22 performance is seen as a continuation of its record A $648 million cash earnings generated in FY21. For the full year reported, Northern Star delivered EBITDA up 216 per cent at $2,268 million, and NPAT up 300 per cent at $1,032 million — crediting its record performance to the strength of its underlying business.
In anticipation of its full-year results, the company notes most of FY22 production to weigh towards the second half, especially with increased grades expected of its Yandal production, and increased mining rate within its Pogo site. Additionally, Northern Star expects its AISC to fall over FY22. At the time of writing, the Northern Star share price is trading at 29.76 per cent lower since this time last year.