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MarketScreener Homepage  >  Equities  >  AUSTRALIAN SECURITIES EXCHANGE LIMITED  >  Northern Star Resources Ltd    NST   AU000000NST8

NORTHERN STAR RESOURCES LTD

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Northern Star Resources : Pogo Operations Update

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02/11/2019 | 08:00pm EST

ASX: NST

ASX Announcement 12 February 2019

POGO GROWTH STRATEGY UNDERPINNED BY EXCEPTIONAL EXPLORATION RESULTS

Upfront investment in drilling already generating significant results, with high-grade hits pointing to substantial increase in Resources and Reserves

HIGHLIGHTS

  • Northern Star's investment strategy at the Pogo gold mine in Alaska is generating outstanding exploration results which in many cases are even better than expected based on the Company's due diligence at the time of acquisition

  • Resource extension and infill drilling has returned exceptional results which point to a significant increase in the existing JORC Resource of 4.15Moz and bodes well for a substantial maiden JORC Reserve in mid-2019

  • The results stem from a A$35M exploration and concentrated infill drilling campaign in the twelve months to Dec 31, 2018 using four underground rigs and four surface rigs

  • A further A$15M of exploration drilling is budgeted for the second half of FY2019, in line with previously stated FY2019 group exploration spend of A$75-80M, with an additional four underground rigs mobilised to site last month

  • Drilling has continued to demonstrate significant extensions to the Liese Vein system which has provided most of the 3.6Moz produced at Pogo; Significant results include;

    • o 5.8m @ 59.7gpt (~4.8m true width "TW"), 22.5m @ 33.8gpt (~5.8m TW)

    • o 6.4m @ 42.7gpt (~3.5m TW), 2.9m @ 72.9gpt (~1.7m TW)

  • Drilling has significantly extended the known extent of the South Pogo Veins; results include;

    • o 8.7m @ 17.5gpt (~6.1m TW), 6.7m @ 28.6gpt (~3.2m TW), 2.8m @ 30.0gpt (~2.7m TW)

  • Drilling has significantly expanded the X-vein/North Zone area; Results include:

    • o 4.0m @ 40.7gpt (~3.1m TW), 7.8m @ 18.0gpt (~5.5m TW), 4.1m @ 23.9gpt (~3.9m TW)

  • Strong results received from initial extension drilling in the Fun Zone, including:

    • o 4.9m @ 14.8gpt (~3.4m TW), 11.8m @ 16.9gpt (~2.8m TW), 2.4m @ 19.8gpt (~1.7m TW)

  • The results include the discovery of the "Central Lodes" vein system ~800m from existing mine infrastructure

  • The Central Lodes has been defined over a strike length of ~650m and a down-plunge extent of ~500m. The vein array remains open in all directions with a maiden Resource expected by mid-2019

  • Significant intersections from Central Lodes surface drilling include:

    • o 2.0m @ 175.3gpt from 410.4m (~1.2m TW), 3.6m @ 50.6gpt from 260.5m (~2.6m TW)

    • o 14.3m @ 6.1gpt from 453.3m (~10.9m TW), 2.0m @ 35.1gpt from 257.7m (~1.8m TW)

    • o 3.4m @ 26.8gpt from 37.3m (~2.2m true width)

  • Approvals are already in place for exploration and production activities on the Central Lodes

  • Review of historic drilling conducted by previous owners has identified more than 2500 significant unmined intersections (defined as minimum 2m wide at 4gpt Au) outside the current Resource. Intersections include:

    • o 12.0m @ 51.5gpt, 7.6m @ 66.2gpt, 2.3m @ 171.7gpt, 5.9m @ 65.5gpt and 4.7m @ 50.9gpt

Northern Star Resources (ASX: NST) is pleased to announce a host of outstanding exploration results which further underpin the Company's growth strategy at its Pogo gold mine in Alaska.

Northern Star Executive Chairman Bill Beament said the Company had invested heavily in Pogo since its acquisition in October last year as part of its strategy to grow its mine life, production and cashflow.

He said the benefits of this investment were already clear, with the results strengthening the view Northern Star formed of

Pogo's huge potential at the time of its acquisition.

"Many of these exceptional drilling results come from outside the existing Resource and clearly pave the way for a significant increase in the Mineral Resources," Mr Beament said.

"And the infill results show we are well on track for a substantial maiden JORC Reserve."

As part of the drive to grow the Mineral Resources, Northern Star has already secured key exploration and production approvals. These approvals now cover the proposed production site at the Central Lodes and stretch to the edge of the highly promising Goodpaster prospect.

Mr Beament said the results showed, yet again, the merits of Northern Star's strategy of investing in Tier-1 projects in Tier-1 locations.

"Pogo is fast turning out to be everything we expected and more," he said. "Our policy of investing in exploration and productivity is generating results which are entirely consistent with our goal of growing Pogo's mine life, production and cashflow."

DETAILS OF EXPLORATION AND RESOURCE GROWTH UPDATE

INTRODUCTION TO THE POGO DEPOSIT

The Pogo gold deposit is located ~60 kilometres north-east of Delta Junction in Alaska, USA. Located within the world-class Tintina Gold Province, Pogo is one of a series of intrusion-related mineral systems associated with mid-Cretaceous intrusive complexes (Table 1).

Pogo was discovered in 1994 and commenced underground production in 2006. To mid-2018, total gold production from Pogo totalled 3.8Moz at an average grade of 13.6gpt. A plan and representative cross section from the Pogo deposit is shown in Figure 1.

POGO DEPOSIT - GEOLOGICAL OVERVIEW

Deposit Classification

Mesothermal, quartz vein related, structurally-controlled gold deposit; related to mid-Cretaceous intrusive complexes; mineralisation dated at ~104Ma;

Host Rocks

Sillimanite-bearing paragneiss or orthogneiss that range in age from Proterozoic (>541Ma) to mid-Paleozoic (Siluro-Devonian, ~375Ma); Proximal to Mid- Cretaceous granitoids and other associated intrusives;

Mineralisation

  • (1) Quartz hosted, stacked vein systems (Liese, Fun Zone, South Pogo & East Deeps); flat to moderately dipping (25-45o) laminated to massive veins dipping towards the NW; North Zone is sub-vertical and dips steeply east. Average grades mined to date is 13.6gpt. Vein width varies from <0.5m to >10m (average ~3m);

  • (2) Sulphide associated gold present in disseminated sulphides or in sulphide veinlets;

Sulphide Assemblages

Low sulphide content (<3%); Main sulphide species include pyrite, arsenopyrite, pyrrhotite and chalcopyrite. Mineralised zones may include trace amounts of loellingite, bismuth-tellurium sulphides, molybdenite, and galena. Occurs as fracture fill, disseminations, stringers, coarse blebs or on sheared surfaces;

Structure

Multi-phase, early stage brittle-ductile structures offset by late stage brittle faults with both sinistral and dextral displacement observed. The Liese mineralised structures are parallel to a low-angle regional shear and exhibit laminations adjacent to the FW contacts. Late stage north to north east trending faults displace the ore veins;

Alteration

Multi-phase variable alteration assemblages. Common alteration minerals include biotite, silica, sericite, dolomite and chlorite.

Table 1: Geological overview of the Pogo deposit.

Figure 1: Plan of Pogo vein interpretations and cross section through the central zone of the Pogo deposit. L1-Liese 1, L2-Liese 2, L2Ext-Liese 2 Extension, L3-Liese 3.

POGO MINERAL RESOURCE

The Pogo Mineral Resource calculated as at 30 June 2018 was reported in accordance with the JORC Code (2012 edition). The Resource contained a total of 8.8Mt @ 14.7gpt for 4.15Moz of gold, inclusive of ore reserves. (see Table 2). For further details, please refer to the ASX announcement dated 16 October 2018 titled 'Pogo Resource Update'. An updated Mineral Resource and Reserve estimate is planned for release in August 2019.

POGO MINERAL RESOURCES (1, 2, 3, 4)

As at 30 June 2018

Category

Tonnes

(M)

Grade (gpt)

Contained Au

(Moz)

Measured

0

0

0

Indicated

3.3

15.7

1.67

Inferred

5.5

14.1

2.48

Total Resource

8.8

14.7

4.15

Table 2: Pogo Mineral Resource as at 30 June 2018.

(1) Inclusive of ore reserves; (2) Reported in accordance with the JORC Code (2012 edition) (3) Pogo in-mine area only (4) Calculated at 6.2gpt COG;

All Indicated and Inferred material reported within the current 2018 Resource is spatially located within 500 metres of the existing mine operations (Figure 2). The Resource consists of extensions to currently mined mineralised structures, coherent mineralised structures parallel to the Liese system and remnant material not extracted during first pass mining.

Figure 2: Location of drill intersections used to inform the Mineral Resource. Intersections displayed are >4gpt over a minimum downhole width of 2m with no more than 2 metres of internal waste. Left image shows stopes mined to January 2019.

RESOURCES AND RESERVE GROWTH POTENTIAL

Northern Star completed a detailed review of opportunities to increase Reserves and Resources with growth opportunities at the Pogo Mine broadly classified into 3 categories:

  • In-mine extensions and discovery;

  • Cost reduction and/or productivity improvement (cut-off grade reduction);

  • Regional discovery;

The key Resource growth opportunities are summarised in Table 3.

Since acquisition in late September 2018, Northern Star has made significant progress with respect to actions required to deliver future Reserve and Resource growth.

POGO RESERVE & RESOURCE GROWTH ELEMENTS 2019

IN-MINE DISCOVERY & EXTENSION

COST REDUCTION & PRODUCTIVITY

IMPROVEMENT

REGIONAL DISCOVERY

Northern Star Observations / Opportunities

  • Extensive unmodelled mineralisation outside of current Resource;

  • Key in-mine mineralised structures remain open along strike and at depth;

  • Historic drill expenditure relative to production rates was low;

  • The mineralised structures at the known extents are poorly defined by drilling;

  • Exploration and drill orientations have focused on Liese oriented structures. In-mine observations demonstrate there are mineralised structures in other orientations that may not have been sufficiently tested;

  • Historic sampling has focused on quartz veins, however mineralisation is observed in sulphide halos and stockworks outside of the main structures;

  • Extensive mineralised structures and halos that are greater than 3gpt were considered uneconomic due to high costs;

  • The cut-off grade (COG) for the 2017 year-end mine plan was 8.2gpt;

  • Large quantities of metal come into the LOM plan if COG is reduced;

  • Reduced cut-off grades may add additional remnant material to the mine plan in proximity to previously mined areas;

  • Mining method changes reducing unit mining costs;

  • Mill utilisation and capacity adjustments to reduce unit processing costs;

  • Extensive regional dataset available for interrogation;

  • Untested drill-ready targets, highlighted by regional geochemistry and geophysical surveys conducted historically;

  • Well-developed regional exploration model;

  • Advanced projects such as Hill 4021 and Keri/Chorizo. Foreign resource estimates that were not prepared in accordance with the JORC code (2012 edition) were historically completed but have not been reported by Northern Star;

Table 3: Summary of key growth opportunities identified at Pogo.

PRE-2018 DATA

As part of the Pogo acquisition, Northern Star inherited a lease-wide dataset containing ~5,689 diamond drill holes totalling ~872,000 metres with more than 90% of drilling activities historically focused in the mine area.

Northern Star has completed a rigorous evaluation and validation of the data, including the introduction of a new data storage platform (AcQuire). Review of historic practices and checks of original data (where practicable) indicate that data collected under the previous owners of high quality with no fatal flaws. Select historical intersections are presented in the Appendices.

INTERSECTIONS OUTSIDE OF MID-YEAR 2018 RESOURCE

The Pogo dataset includes 2,544 significant diamond drill intersections outside of the 2018 Resource estimate that meet the specific criteria of being greater than 2 metres downhole width at 4gpt (maximum internal dilution of 2 metres). The quality and distribution of the significant intersections (Figure 3) demonstrate the potential for future growth.

Disclaimer

Northern Star Resources Ltd. published this content on 12 February 2019 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 12 February 2019 00:59:02 UTC

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Sales 2019 1 464 M
EBIT 2019 379 M
Net income 2019 266 M
Finance 2019 366 M
Yield 2019 1,42%
P/E ratio 2019 23,06
P/E ratio 2020 15,57
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EV / Sales 2020 3,21x
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NameTitle
Stuart Tonkin Chief Executive Officer
William James Beament Executive Chairman
Shaun Day Chief Financial Officer
Christopher Kenneth George Rowe Independent Non-Executive Director
Peter Edmund O'Connor Independent Non-Executive Director
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