Northern Star Resources : Quarterly Activities Report - March 2022

ASX: NST

ASX Announcement 27 April 2022

QUARTERLY REPORT MARCH 2022

KEY POINTS

Environment, Social and Safety (ESS)

•  LTIFR at 0.5 per million man hours

•  COVID-19 Management Plan for workforce and neighbouring communities performing well

•  Decarbonisation Asset Pathway announced, setting out 35% emission reduction by 2030

Production

•  Gold sold totalled 380,075oz at an AISC of A$1,656/oz (US$1,199/oz) and all-in cost (AIC) of A$2,171/oz

•  By production centre:

  • o Kalgoorlie: 212,820oz gold sold at an AISC of A$1,659/oz

  • o Yandal: 109,766oz gold sold at an AISC of A$1,444/oz

  • o Pogo: 57,489oz gold sold at an AISC of US$1,483/oz

•  Australian Operations, which account for 85% of Group production, on track to meet FY22 production and cost guidance

•  Pogo expected to operate at 2H annual run rate of ~240koz, FY22 now forecast lower production and higher cost

•  Group FY22 production guidance remains unchanged at 1.55-1.65Moz; Group FY22 AISC guidance now A$1,600-1,640/oz, up from A$1,475-1,575/oz

Discovery and Growth

•  A$166 million spent on net growth capital and A$26 million on exploration

•  First year of five-year profitable growth pathway delivered significant, on track progress:

  • o Kalgoorlie: KCGM material movement annualising 66Mtpa, up from 30Mtpa at acquisition

  • o Yandal: Final stages of completing Thunderbox mill expansion to 6Mtpa

  • o Pogo: Mill expansion to 1.3Mtpa completed, mine ramp-up progressing

Financial

•  March quarter average realised price of A$2,468/oz for sales revenue of A$937 million

•  Cash and bullion of A$533 million at March 31; Net Cash1 of A$433 million

Corporate

•  Negotiations concluded with Osisko Mining Inc. (TSX: OSK) for potential JV participation; Northern Star retains a C$154 million (A$169 million) convertible funding agreement with Osisko, maturing December 1, 2025

•  Subsequent to quarter end, binding agreements signed to sell Paulsens and Western Tanami non-core assets for up to A$44.5 million

1 Net Cash is defined as cash and bullion less corporate bank debt (A$100M)

OVERVIEW

Northern Star Resources Limited (ASX: NST) is pleased to report operational and financial results for the March quarter 2022, with gold sold of 380,075oz at an all-in sustaining cost (AISC) of A$1,656/oz.

In summary, Kalgoorlie's production was impacted by mill availability and Yandal performed in line with expectations. Pogo established a higher paradigm for development metres.

Figure 1: FY22 Group Gold Sales and AISC

OUTLOOK

Northern Star's FY22 guidance for its Australian Operations, which account for 85% of the Group portfolio, remains unchanged despite input cost and ongoing COVID-related workforce challenges. Improved KCGM plant availability and sustained high grades at Yandal will be the primary drivers of planned improved performance in the June quarter.

While Pogo has responded to several productivity initiatives and is on track to operate at a 2H run rate of ~240koz per annum, FY22 production is now expected to be lower. Given the need to accelerate mine productivity to optimise its future cost profile, Pogo will temporarily incur an elevated cost structure.

Northern Star's FY22 gross growth capital and exploration guidance remains unchanged. Lower development receipts, due to earlier than expected commercial production at Thunderbox and KCGM, results in higher net growth capital guidance.

Commenting on the March quarter performance, Northern Star Managing Director Stuart Tonkin said:

"We have sustained our strong safety performance across our three production centres while working hard to protect our workforce from the pandemic and keep our sites operating as the world continues to live with COVID-19.

"During the quarter, Kalgoorlie was impacted due to unplanned mill downtime events while Yandal performed in line with expectations. As foreshadowed, higher mining inventory at Pogo is delivering a better milling outcome but we have more work to do to deliver on Pogo's potential.

"Group-wide and against a challenging operating backdrop, we continue to safely advance the foundation of our five-year profitable growth plan. One year in, we have significantly lifted material movement volumes at KCGM, working through the OBH cutback, almost completed the Thunderbox mill expansion and successfully commissioned Pogo's expanded mill."

Northern Star's March quarter conference call will be held today at 9:00am AEST (7:00am AWST). The call can be accessed at:https://webcast1.boardroom.media/watch_broadcast.php?id=624be0089ad36

Figure 2: FY22 Group Guidance

FY22 GUIDANCE (REVISED)	UNITS	KALGOORLIE	YANDAL	POGO	TOTAL*
Gold Production	koz	900 - 950 Maintain	430 - 450 Maintain	205 - 220 Decrease from 220-250	1,550 - 1,650 Maintain
AISC	A$/oz	1,500 - 1,600 Maintain	1,375 - 1,475 Maintain	2,150 - 2,230 (US$1,570-1,625) Increase from 1,700-1,800 (US$1,275-1,350)	1,600 - 1,640 Increase from 1,475 - 1,575
Growth Capital Expenditure: - Mine Development - Other Total Growth Capital Expenditure	A$M	223 38 261 Maintain	168 183 351 Maintain	21 49 70 Maintain	412 270 682 Maintain
Development Receipts** Net Growth Capital Expenditure	(5) Decrease from (31) 256 Increase from 230	(57) Decrease from (81) 294 Increase from 270	- 70 (~US$55) Maintain	(62) Decrease from (112) 620 Increase from 570
Exploration	A$M	140 Maintain

Notes:

*FY22 Group guidance excludes Kundana Assets and EKJV Interests divested as per ASX release dated 18 August 2021.

**FY22 Development Receipts are from pre-commercial gold sales (~29,560 ounces vs ~50,000 ounces previously), in line with the relevant Accounting Standard. From FY23, a change in the Accounting Standards will require reporting of Gross Growth Capital. Gross Growth Capital for FY23 and FY24 is estimated to be A$425M and A$380M respectively. AISC converted at a currency using AUD:USD = 0.73. Capital Expenditure converted at a currency using AUD:USD = 0.75.

Figure 3: Five-year growth pathway

Table 1: March quarter 2022 performance summary - by production centre

3 MONTHS ENDING 31 MAR 2022	Units	Kalgoorlie	Yandal	Pogo	Total
Underground Mining
Ore Mined	Tonnes	1,419,418	911,087	258,567	2,589,072
Mined Grade	g/t Au	2.3	3.2	8.3	3.2
Ounces Mined	oz	105,387	92,408	68,999	266,794
Open Pit Mining
Open Pit Material Moved	BCM	8,427,900	2,559,502	-	10,987,402
Open Pit Ore Mined	Tonnes	2,145,060	829,129	-	2,974,189
Mined Grade	g/t Au	1.5	1.0	-	1.3
Ounces Mined	oz	101,619	26,977	-	128,596
Milled Tonnes	Tonnes	4,595,400	1,496,314	260,508	6,352,222
Head Grade	g/t Au	1.7	2.4	8.2	2.1
Recovery	%	86	92	86	87
Gold Recovered	oz	213,286	107,683	59,025	379,994
Gold Sold - Pre-Production	oz	330	-	-	330
Gold Sold - Production	oz	212,490	109,766	57,489	379,745
Gold Sold	oz	212,820	109,766	57,489	380,075
Average Price	A$/oz	2,464	2,467	2,468	2,468
Revenue - Gold (2)	A$M	524	271	142	937
Total Stockpiles Contained Gold	oz	2,974,889	127,293	2,165	3,104,347
Gold in Circuit (GIC)	oz	38,269	7,569	7,095	52,933
Gold in Transit	oz	1,992	-	-	1,992
Total Gold Inventories	oz	3,015,150	134,862	9,260	3,159,272

Underground Mining	A$M	99	68	54	221
Open Pit Mining	A$M	34	17	-	51
Processing	A$M	123	31	34	188
Site Services	A$M	18	7	11	36
Ore Stock & GIC Movements	A$M	(8)	(4)	(1)	(13)
Royalties	A$M	16	7	-	23
By-Product Credits	A$M	(2)	-	-	(2)
Cash Operating Cost	A$M	280	126	98	504
Rehabilitation	A$M	3	1	1	5
Corporate Overheads (3)	A$M	12	6	3	21
Sustaining Capital	A$M	57	25	16	98
All-in Sustaining Cost	A$M	352	158	118	628
Exploration (4)	A$M	13	5	2	20
Growth Capital (gross)	A$M	83	73	11	167
Development Receipts	A$M	(1)	-	-	(1)
All-in Costs	A$M	447	236	131	814

Mine Operating Cash Flow (1)	A$M	179	116	27	322
Net Mine Cash Flow (1)	A$M	97	43	16	156

Cash Operating Cost	A$/oz	1,320	1,152	1,703	1,330
All-in Sustaining Cost	A$/oz	1,659	1,444	2,049	1,656
All-in Costs	A$/oz	2,106	2,154	2,281	2,171
Depreciation & Amortisation	A$/oz	850	464	633	708
Non-Cash Inventory Movements	A$/oz	173	(47)	(25)	79

• (1) Mine Operating Cash Flow is calculated as Revenue, less Cash Operating Costs (excluding inventory movements) and Sustaining Capital. Net Mine Cash Flow is calculated as Mine Operating Cash Flow less Net Growth Capital.

• (2) Excludes the impact of unwinding the hedge book fair value assumed as part of the initial acquisition accounting required in relation to the merger with Saracen. Revenue - Gold does not include Development Receipts.

• (3) Includes non-cash share-based payment expenses in corporate overheads.

• (4) Excludes exploration spend at non-producing projects and regional sites (A$6M).

Pogo Operations costs are presented in AUD which is the Group's presentation currency. USD cost disclosure is presented in Table 11.

Table 2: FY22 YTD performance summary - by production centre

9 MONTHS ENDING 31 MAR 2022	Units	Kalgoorlie	Yandal	Pogo	Total
Underground Mining
Ore Mined	Tonnes	4,611,874	2,619,460	682,448	7,913,782
Mined Grade	g/t Au	2.5	3.2	7.6	3.2
Ounces Mined	oz	365,882	270,046	167,072	803,000
Open Pit Mining
Open Pit Material Moved	BCM	25,547,165	8,703,338	-	34,250,503
Open Pit Ore Mined	Tonnes	6,709,513	2,773,174	-	9,482,687
Mined Grade	g/t Au	1.4	1.2	-	1.3
Ounces Mined	oz	299,362	103,769	-	403,131
Milled Tonnes	Tonnes	14,578,238	4,426,334	724,124	19,728,696
Head Grade	g/t Au	1.7	2.4	7.3	2.1
Recovery	%	86.99	91.28	85.07	87
Gold Recovered	oz	680,447	316,886	144,879	1,142,212
Gold Sold - Pre-Production	oz	1,412	23,755	-	25,167
Gold Sold - Production	oz	688,647	298,018	147,058	1,133,723
Gold Sold	oz	690,059	321,773	147,058	1,158,890
Average Price	A$/oz	2,409	2,414	2,422	2,415
Revenue - Gold (2)	A$M	1,659	719	356	2,734
Total Stockpiles Contained Gold	oz	2,974,889	127,293	2,165	3,104,347
Gold in Circuit (GIC)	oz	38,269	7,569	7,095	52,933
Gold in Transit	oz	1,992	-	-	1,992
Total Gold Inventories	oz	3,015,150	134,862	9,260	3,159,272

Underground Mining	A$M	299	194	141	634
Open Pit Mining	A$M	111	38	-	149
Processing	A$M	362	85	92	539
Site Services	A$M	52	20	29	101
Ore Stock & GIC Movements	A$M	2	(20)	-	(18)
Royalties	A$M	47	19	-	66
By-Product Credits	A$M	(8)	(1)	-	(9)
Cash Operating Cost	A$M	865	335	262	1,462
Rehabilitation	A$M	9	3	3	15
Corporate Overheads (3)	A$M	41	18	8	67
Sustaining Capital	A$M	169	75	57	301
All-in Sustaining Cost	A$M	1,084	431	330	1,845
Exploration (4)	A$M	38	18	13	69
Growth Capital (gross)	A$M	192	240	38	470
Development Receipts	A$M	(3)	(57)	-	(60)
All-in Costs	A$M	1,311	632	381	2,324

Mine Operating Cash Flow (1)	A$M	627	289	37	953
Net Mine Cash Flow (1)	A$M	438	106	(1)	543

Cash Operating Cost	A$/oz	1,256	1,119	1,784	1,288
All-in Sustaining Cost	A$/oz	1,574	1,441	2,254	1,627
All-in Costs	A$/oz	1,904	2,115	2,605	2,069
Depreciation & Amortisation	A$/oz	790	532	599	700
Non-Cash Inventory Movements	A$/oz	202	(66)	9	106

• (1) Mine Operating Cash Flow is calculated as Revenue, less Cash Operating Costs (excluding inventory movements) and Sustaining Capital. Net Mine Cash Flow is calculated as Mine Operating Cash Flow less Net Growth Capital.

• (2) Excludes the impact of unwinding the hedge book fair value assumed as part of the initial acquisition accounting required in relation to the merger with Saracen. Revenue - Gold does not include Development Receipts.

• (3) Includes non-cash share-based payment expenses in corporate overheads.

• (4) Excludes exploration spend at non-producing projects and regional sites (A$16M).

Pogo Operations costs are presented in AUD which is the Group's presentation currency. USD cost disclosure is presented in Table 11.