Northern Star Resources Limited

Thanks, and Happy New Year, everyone. Good morning, and welcome to Northern Star's December quarterly results, and my last delivery of quarter results as an Executive of Northern Star.

And I wish to thank my employees, management team, Board, business partners, all stakeholders and long standing shareholders for your huge and enormous support, backing myself and the company over the last 11 or so years.

Thanks, Bill. This morning, we are pleased to report our December quarter gold sales of over 252,000 ounces at the upper end of our quarterly guidance, which has quarter-on-quarter growth to a full year production of between 940,000 and 1,050,000 ounces.

We remain on track for group guidance with a strong half-two forecast.

Yes. Thanks, Stu.

Good morning, all. I'm pleased to be able to present to you some of the key financial aspects of the company's 2020 December quarterly results.

And we'll start with the cash flow order fall chart as we normally do on Page 5, which provide an overview of cash bond investment movements for the December quarter and the generation of AUD 225 million in operating cash flow and AUD 93 million of underlying free cash flow, which adjust for working capital movements and movements in the company's equity investments.

Thank you. Hi, Bill and team.

A few questions from me please. I might start on Mount Charlotte.

Just wondering if you could talk to the program of exploration works you've got plan there this year. And also what are the operating and development rates you're targeting?

Noticed the drop-off in the December quarter and also just a comment there whether that was just purely due to the rehab slowing things down but really interested in what your expectation is for rates going forward?

Yes. Thanks Nick.

It's Stuart. So look we lifted already the production sort of to 1.5 million tonne per annum from that underground.

You're pulling some from primary states but also some from the CAS material. What we're doing across the board, obviously, 1.5 million to 1.7 million where we're operating out.

We've seen instantaneous rate up towards two million tonne, but that's really because of the extra draw on the grade. Where we are targeting really from an exploration and mine life perspective there's 1.9 million ounces of resource there be able to be reviewed, drilled and potentially converted into reserves.

So with the exploration drilling we'll target that that large resource, and the beauty is you've got multiple zones in and around the main mouthed in so you can actually have multiple production horizons.

Okay. Great.

Thanks Stuart. And then on Pogo just interested if you have any thoughts around sort of the vaccine rollout in the U.S.

and when you think that may have I guess implications for your workforce their productivity or whether that's second half of the year or you do have any thoughts around that?

Yes. So the rolling vaccines out going to first responders in Alaska and it has to be really probably focused on Alaskan residents.

Look we're nearly 50% of our team over there has at some point had COVID and recovered. And so we look -- it's a management thing at the moment very hard to predict where it's going.

We currently have 0 active cases. We've taken that into account in our guidance this year and it's pleasing that despite those interruptions we're still tracking at the top end of that guidance.

So we're absolutely pleased with how the team's typing managing dealing with it as well as obviously got the expansion teams on the processing facility. So that will be commissioned, as well as slightly increasing the exploration activity.

So we've got the eight underground rigs. We've also got three rigs on the surface giving out good past it's difficult to book us but what's been proven they have relentlessly managed this for nearly 12 months now.

And you can see the performance processing at nine grams per tonne, albeit at sort of 68% of the volumes that we will forecast over the next couple of years.

Okay. And then final one, just a clarification Stuart.

I think you mentioned but I didn't quite catch it the studies around the refurbishment and the optimization of the Yandell sort of milling. Did you say that that was due to be completed this quarter?

Yes. So we've completed studies regarding the refurbishment of Bronzewing and/or Jundee expansion and we put the CapEx associated with that in the Northern Star guidance plan.

What I've said on the previous quarter was, we are now evaluating the expansion of Thunderbox in that equation and the works in regards to that are underway at the moment. So that Saracen already had a sort of stage two expansion of secondary crushing going in we'll take that sort of the 3.5 million tonnes per annum with Thunderbox.

We're looking at a much bigger Thunderbox version and we're still going through the details of that. So this quarter we have all of those side by side.

We'll go through the CapEx and the benefits longer term the plan for the Greater Yandel 600,000 ounce setter and we'll be putting that through approvals through our systems. So yes this quarter is a fair bit of the desktop work.

And ideally next quarter would be able to explain which one we're moving forward with.

Okay, great. Thanks.

Good morning team, Happy New Year. Just a few questions from me.

Firstly just around Kalgoorlie, those costs are still quite high, understand and appreciate that the production in the second half is expected to be higher. But can you just talk through the plan to deliver within the -- all-in sustaining cost guidance range of $1,650 to $1,750 just given that at the year-to-date you're over $2000, is that realistic to still land within the guidance range?

Thanks.

Look, Sophie, thank you. Look we've got plans to deliver that.

There's still risk associated with meeting that top end of the cost guidance. But at the moment we've got plans that's really volume-driven.

Grades and recoveries have been good at our Kalgoorlie operations. It's really a -- it's a volume place.

We've been milling at that sort of 2.9 million tonnes per annum between Kundana and South Kal and we really need to be sort of 3, 3.2. So it's really a volume play.

We have the added option of utilizing third-party coal mills, as well as the increased merged portfolio including Carosue Dam. So there's plan there to build in that.

I'm confident we will meet the group guidance, whether individual assets move within that, but what we've put out there is, yes, very confident that we're on track as a group to make the guidance.

Yes, sure. So just in terms of then the fact that you're running at 2.9, you need to be at 3, 3.2.

What's inhibiting that, or why would this is it emanate into the guidance?

No. Yes.

So it's listed mining activity at Kanowna, Kundana, you see this sort of wave. That's why we also put back ends or weighted guidance throughout the financial year as we're growing things, because you need the development at the front end.

You've seen development at Kanowna Belle be increased to access more of the stoping front. So it is a front-loaded to get it developed to get those stopes online and then you can be very efficient in the production side of that.

So, yes, that's just how our cycles go in the underground side of EKJV, the Millennium area as well as Kanowna.

Okay. So were there issues around getting that development far enough ahead, is that what we're trying to resolve to?

No. Look we put quarter-on-quarter guidance showing that growth.

And it wasn't -- we explained right at the start, it wasn't just Pogo related. So it was across our assets.

And you saw us in quarter four very strongly, last financial year. And when we had our mine plans, you saw that build.

So we moved from sort of 22% up to 28% of that guidance weighted from quarter one to quarter four. But the good thing is we keep that trajectory growing into FY 2022 and 2023.

So it's absolutely why we put that annualized guidance out there. We're above that guidance in quarter one and in quarter two.

So it's to plan above that and our half-two is forecast to be much stronger than half-one.

Okay. What about in terms of labor cost pressures?

Are they starting to buy, just given closure of borders around the Kalgoorlie area?

Look, they're not there yet. They will have jobs here and they -- it's more pressure on nickel, copper, lithium, those sort of things they start to put pressure on it.

At the moment, we've already got that does Saracen sort of rewarding sliding scales on productivities and on gold price mechanisms that reward our staff and retain our staff related to that. So that's already embedded in self funding.

I do anticipate that within the next couple of years, put some pressure on labor costs, but it's not going today, it something we just got to manage and deal with.

Yes. Okay.

And then what about consumables, any issues around getting them into the state. Any offshore stuff that's going to come in?

We've never had issues in relation to COVID incident Alaska. We've never had issues in regard to materials -- plant materials.

It's really the movement of labor. We're not dependent on FIFO interstate labor and the Alaskan team as well has managed through all that.

So, we haven't seen any pressure on the lack of stock or lack of materials. It hasn't been an issue for us.

Okay. No, that's great.

And just in terms of the integration planning. Can you maybe just provide some color on how much integration planning has been done and ready to, I guess, put in place and execute once the merger is approved?

Yes, look, so a lot of this work we’ve done prior to the announcement of the merger because it was trued up and proved up to be seen and the team actually sat together to understand what it could look like. So, that work was set prior to announcing back in October, those plans or that those tangible actions were really mapped out there.

So, in recent months both companies are basically running their businesses. As you've seen the performance Saracen announced earlier today, a great quarter, great half as its Northern Star.

So, from that regard both teams are respectful to the result of the vote last Friday. But in many ways, in a couple of weeks, actionable start and both companies got great growth plans.

It's really just growing them together.

Yes, Sophie, it’s Bill. Just add to that is something I mentioned earlier in my feel is we're well advanced on putting the team together.

So, yes, we had to be respectful of a vote. But the initial feedback and feedback until the official vote on Friday last week was very positive.

So, we didn't sit idle as a combined management team. We really put his name on the office next to me pretty quick, and the team have been pretty much working hand in glove consistently, because we don't want to lose time on the opportunities that we can create on the merged company.

So, I can assure shareholders that we're well advanced on that. And as I said earlier on is we'll put more color out in the coming quarters on how that looks.

Yes. No, that's great.

So, just in terms of then the synergies, when can we expect the first sort of lot to come through?

Yes, look, we're going to catch up as an executive in February together and then a wider management group in March to really develop the future group strategy, which includes all our organic growth, which we’re well advanced on both management teams implementing those plans. But what the merger entity then goes beyond that.

So, we'll put all that together this quarter and we'll start giving a lot more color, midyear this year.

Okay. That's awesome.

Thank you, I'll leave it there. Great.

Good day guys. Responds a little bit off topic but -- and it's probably one for Bill given his affiliations with OSM.

There was a story in the OUS today. I'm not sure if you notice Bill, but South32, COO, Jason Economidis was speaking at the company's Canter mine in Queensland.

One of the comments he made was that some of the mining course students of -- some of the students mining with their courses involved with South32 were being partly being heckled at by co-students at UNI, because they're doing mining courses. And I was concerned that the sector could be losing the public relations battle with the sort of young people coming through and also expressing concerns about as a consequence of that they're not being enough graduates for the sector going forward.

Were you aware of those comments? And if not, do they sound alarm bells to you, or are you confident that, it won't be an issue in terms of getting graduates, and that public relations situation?

Yeah, look, I saw those comments today like we did in the Australian, which is probably an eastern states based paper. But look, when you look at universities over in the eastern states mining is a very small proportion of their intake.

And you've seen my comments, a week or so ago is unfortunately the economies over there really don't see the connection of the resource industry, even though it's powering the Australian economy right now and obviously keeping the nation on a flight during a very interesting and difficult time of COVID. So, yeah, Western Australia, I think what's very, very evident is our public understand the importance and the great connection to the – to the resource industry, which is now like 70%, 75% of the resource industries is based in Western Australia.

So I wouldn't expect to see heckling in Western Australian unit. And when you look at some of the developing sectors like lithium and the battery metals, like, how can anyone heckle on the EV revolution.

So we're going to need those skills to develop those resources to create those products for the futures of societies around the world. So, I can't say heckling in Western Australia.

I can definitely understand some – some elements like the East Coast because they again reemphasizing, they don't understand the importance of resources. And I don't know what that's live in or what they're drive around, if they didn't have the resources that come out-of-state for Western Australia and elements of Queensland and New South Wales, all keep a life on mining margin.

Got it. Thanks, Bill.

Thanks, Melanie. Today's results and those you've seen from Saracen show our two companies are about to embark on a unique journey from positions of great strength.

Our enlarged company is set to travel a path which we have no doubt is lined with opportunities; opportunities for growth opportunities to reduce costs, opportunities to unlock further value from our Tier 1 assets and fantastic opportunities for our employees and business partners to continue with our growth and their own careers. We will also have the opportunity to attract the biggest investment houses in the world to our share register, because we will offer them growth in a flat or shrinking industry and we have genuine scale moving forward.

Others can offer one or the other; but both, that's the Northern Star point of difference moving forward. Thanks for joining us today.