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Highlights
- Northern Star Resources revises gold output guidance downward.
- June quarter sales expected to significantly improve.
- Acquisition of De Grey Mining brings potential tax advantages.
Northern Star Resources (ASX:NST) has adjusted its gold production outlook for the year, citing challenges such as delayed access to key mining areas, increased maintenance expenses, and higher royalty payments. The revised guidance now stands between 1630 and 1660 kilograms, down from the previous range of 1650 to 1800 kilograms. Despite the reduction, the company anticipates a stronger gold price between $US2100 and $US2200 an ounce, helping to partially offset the impact.
The company has faced hurdles at its Golden Pike North mine, which have delayed expected production volumes. Additionally, maintenance costs have climbed higher than anticipated, putting further pressure on the operational side. The royalties owed have also seen an uptick, adding to the cost structure.
However, Northern Star Resources remains optimistic about a rebound in the final quarter of the financial year. Gold sales from its Kalgoorlie Consolidated Gold Mines project are projected to significantly increase in the June quarter. This expectation is fueled by a higher proportion of high-grade ore being fed into the mill, particularly from the Golden Pike North and Oroya Brownhill open pit sites. This comes after the company's sales dipped to 96,122 ounces for the March quarter, marking the lowest quarterly output in the 2025 financial year.
In a major strategic move, Northern Star Resources is also finalizing its $6 billion acquisition of De Grey Mining (ASX:DEG), with the transaction set to take effect on May 6. This acquisition not only strengthens its asset portfolio but also opens avenues for financial efficiencies. The company stated that it may benefit from consolidating De Grey’s previously incurred tax losses, potentially lowering its future taxable income through depreciation and other offsets.
The dual approach of operational recovery and strategic expansion positions Northern Star Resources to navigate short-term challenges while enhancing its long-term value proposition. As the June quarter progresses, investors and market watchers will be closely observing the company's ability to deliver on its renewed guidance and extract value from its newly expanded asset base.
