Northern Star Resources Limited

Thank you, Rachel. And thanks to all of you for joining us on our call this morning.

Also, joining me today is our newly appointed Managing Director, Stuart Tonkin, CFO, Morgan Ball, and our Chief Geological Officer, Mike Mulroney.

Thanks, Raleigh. But this is an exciting time to be taking the role of Managing Director, as we have bedded down the merged businesses and are positioned strongly to grow our returns to shareholders through high-quality assets in Tier-1 locations and with the caliber of skills to support our growth strategy.

A key aspect of our approach moving forward is what we refer to as active portfolio management. We will prioritize our efforts in capital invested to seek the greatest returns for shareholders, returns which are sustainable for the long-term.

The transaction we announced this morning we'll see if divest our Kundana and East Kundana joint venture interest to Evolution mining for $400 million. This is a logical transaction to consolidate the Kundana belt, and as good neighbors already, we will continue to work closely with Evolution to seamlessly transfer ownership of these quality assets and quality team.

And I thank our Kundana employees for their understanding on the decision taken. Hopefully, most of your questions regarding the sale have been answered by Evolution on their Investor Call this morning.

And this is an example of active portfolio management, where we can simplify our business, high net focus, maintaining our profitable growth to 2 million ounces per annum and redeploy capital, where it can achieve the greatest returns for shareholders. You will see how this is achieved when we release our five year strategic plan later today.

Now, I'd turn your attention to the exceptional June quarter results, which delivered 444,000 ounces sold at an all-in sustaining cost of A$1,459 an ounce, and has cemented our full year guidance delivery of 1.6 million ounces at all-in sustaining costs of A$1,483 an ounce. This was the first full quarter delivered under the merged businesses, and a credit to the operating teams to demonstrate the quality and strength of our assets.

During the quarter, we increased our reserves 8% to 21 million ounces, and resources increased 15% to 56 million ounces. And at June-end, we held 3.2 million ounces of gold in stockpiles and circuits, a significant and derisked asset.

Our balance sheet is in great shape with A$803 million of cash and equivalents, with bank debt at A$662 million, after investing A$215 million in growth capital and exploration during the quarter. Now for the operations, at KCGM, we had the strongest performance to-date since acquisition, with an 18% improvement in gold production from the previous best quarter.

Our quality pit mining is removing dilution and delivered improved grade, and increased milling realization resulted in higher throughput, and we sold 139,000 ounces at all-in sustaining costs of A$1,296 an ounce. We look forward to the delivery of a new surface haulage fleet commencing in September quarter, which will also drive productivity improvement and lower unit costs.

Thanks, Stu, and good morning all. As set out in table four of Page 8, Northern Star’s excellent operational performance in Q4 translated into strong cash flow generation for the quarter.

Cash and bullion increased by an excess of A$100 million, this is after spending over A$200 million on growth and exploration projects. If I was to normalize the cash flow for one-off items such as the Kurnalpi acquisition, and our hedge book optimization, the cash flow generation for the quarter was over A$150 million.

As mentioned, we have achieved reduction in operating cost guidance for the full year. And on a pro forma consolidated basis, we also came in below our planned expenditure in relation to both our growth capital and exploration.

Hi, Raleigh, Stuart and team. The transaction announced this morning with Evolution Mining makes sense.

It's obviously been something the market has been looking now for a long time, and the synergies they're in. But how should we view the price from Northern Star perspective?

Did you share the synergies that are gained from the deal?

Yeah. Thanks, Daniel.

And, I guess if you listen to the call, Jake was fairly clear that there were absolutely synergies associated with consolidating Kundana. And ideally, they're liberated and unlocked by Evolution to hold the Mungari mill assets.

So, there absolutely is some tearing and a split. But ultimately, they weren't available for Northern Star, because we didn't have the case to that mill.

But look, as far as the value goes, it's a quality asset, quality team. But as we grow our portfolio to 2 million ounces, its contribution for Northern Star would fit around that 5%.

So in strategy for us rotate capital to where we get the greatest returns, and you'll see more of that strategy plans going forward. But the opportunities in things like a KCGM are really surpass that.

And that doesn't say anything about the quality of these assets. It just means that we're on strategy and focusing our efforts.

Yeah, sure. And I guess most questions, I'll leave till tomorrow, reviewing the materials, but just looking at Pogo, which is a big turnaround on the development meters.

Just wondering if you could talk about how important the border between Australia and the U.S. remains on the performance of Pogo?

Is it fair to say Alaska now has about 50% of people vaccinated? United States, it appears it's less restricted in terms of people movements and things.

But obviously, there's still a hard border or restrictions I guess, between Australia and the U.S. So how important is that border to the performance?

We've got plans to deal with that. I guess the understanding is we relied on some expatriates, there's some high speed development.

And I absolutely appreciate the team's flexibility to modify rosters to accommodate those border controls. So, we're watching it closely.

But what the team has done to-date over the year, is just flex the tenure of their rosters to accommodate that. So, we don't see that as an impedance on us making a plan.

And on more local borders, so the WA border versus the rest of Australia, how much of an impact is happening on your business? And could you comment on labor and contractor costs, please?

Yeah, we're not reliant on interstate FIFO or team, so it's not affecting us in that regard. We certainly have a heightened risk management profile in regard to not importing carbon on the mine site.

So again, appreciate our team's efforts in prescreening and all those things associated with being relevant to all the changes and all the state movements. So, again, it's very manageable, and we don't see any impact in any event.

Okay. Thank you.

I'll probably ask more questions tomorrow after reviewing tonight.

Thanks, Daniel.

Thanks, guys. Good morning.

I'm just wondering if you can touch operationally we saw milling rates at KCGM averaging, so that if you annualize that you're getting 14.3 million tonnes per annum. So just wondering if you give a bit of a color on the ability to maintain that given nameplate there is 13 million tonnes.

And secondly, still on KCGM, and if you can give it, you may recall that there's been a bit of other stuff to focus on this morning, just the material movements at KCGM. And how they're trending?

Yeah, sure. So I guess in quarter three, we had that two week shot at KCGM, so you saw throughput reduced.

And obviously, we had none of those interruptions recorded or so, again, it was record throughput, when the best gold production is largely driven by grade on this site tonne. So a nice place to get over 30 million tonnes per annum, but a lot of the improvements obviously in the control systems that we installed in the quarter three are bearing fruit now with stability in that plant.

I will provide more around our views if the longer-term milling options in our strategy session tonight.

And material movements, I guess, you've called out 80 to 100 million tonnes per annum at KCGM going forward. I just wanted if you give a bit of color around that how they're trending and that’s before the fleet arrives?

Yeah. So Mitch, Raleigh here.

A couple of things on that. The new trucks are basically, 32 new trucks have arrived in Perth now.

So they're scheduled to be hitting KCGM during September and the ramp up will be complete by also it's a brand new fleet. So it's exceptional what the teams went out to do with an aging fleet there, is the first point.

And then the second thing is, material movements will oscillate a little bit. So when we're down the bottom of Golden Park, we don't get to bring the grades out of there, but obviously a longer haul.

And then we are obviously right on the cusp of really trying to launch into the theme South Kalgoorlie area where you'll see that material moment really start to ramp up and that says that .

Thank you.

Good morning, Stu, Raleigh and team. Just in terms of the 400 million that you'll be getting from Kundana and the associated JVs there.

What's the intention once that money has been received?

Yeah, so we'll give more color on the options, I guess, in our strategy that we send out there. It hadn't necessarily banked that in as Jay pointed out, we've been going for the wire to get this transaction done.

And credit to both teams, but it’s optionality. So in our view, this capital profile and growth of 2 million ounces, we can maintain that even with a divestment of Kundana.

So it's really that allocation of capital and there's some great options for us. Things like KCGM mill expansion will be things that we start to put our mines to, in regard to allocation of capital and return on that invested capital.

And given that Pogo looks like it's gone through the worst of it, and we're certainly improving there quarter-on-quarter, would you be open to now looking at North America from an M&A perspective, given that you've now got Pogo under your belt?

Look, we've still got a lot of work to do to get Pogo to 300,000 ounces with, which we're targeting, and it's still on track for FY ’23. So there's a lot of work to do there.

But as we say, we always look at opportunities. And we'll always do that.

And sometimes those things take a fair bit of runway to get the right thing at the right time. But we'll make decisions.

I think what we've got is a great track record of allocating capital. So I think the teams are now disciplined in that regard.

We expect that we would be able to articulate the best use for those proceeds from that side.

Okay. And then just a final question for me, just in terms of a follow on from that divestment.

Does that now open up KCGM a lot more than what you had originally planned? And appreciate that there's more details to come this afternoon.

But I would suspect that you've got now more optionality than you otherwise did previously.

Yeah. And it will be in the strategy.

And you'll get the opportunity tomorrow on the conference call to again, follow up all these questions. So, I don't need to take on that.

But the strategy is very clear on a very simplified business and what those options can be. So please watch the space.

Okay. But in terms of the target of 2 million ounces, it seems as though given in line with previous commentary that you'll likely preferentially trade KCGM amongst others in the portfolio for capital going forward.

Is that the best way to think about it?

We've got three meaningful production centers, and each in their own right will have strong contribution. So it doesn't mean that KCGM stands for the rest.

What it means is, we'll get the greatest return from the invested capital, and we can still get to 2 million ounces from those assets. So, again, I'd probably reiterate, we've got some great content in that strap pack and the opportunity for Q&A tomorrow, probably greater granularity on.

There's more we need Sophie, what we also have is a balance sheet now that provides that flexibility as well.

Yeah, that's for sure. All right.

That's great. Thank you very much.

Good morning, gents. Just sort of continuation and obviously you've got the pack coming out this afternoon.

But I mean, talk about in the quarterly data Thunderbolt new expansion to 6 million tonne per annum, does that sort of imply that you expand on -- I know you were trading these days off, but does that sort of imply that the expansion of Jundee will not go ahead?

Yes, again, content detail in there. I alluded to the fact we got some capital in this quarter.

And as to secure long lead items, we basically put on and adding sag mill as a long lead item to secure offer that option. So that'll be fully uncovered, I guess, later today, but your assumptions are correct.

And I guess, also continuing on the theme of Pogo. You talked about vaccines, certainly weighing on output, by helping output and COVID not weighing on output so much.

Can you quantify that in terms of absence from work and numbers have stopped sliding and that sort of thing? What are you seeing?

Is it a dramatic turnaround? Or, is it still incremental in size?

Look, we would – it’s really kind of on or off. We were saying our physicals were being impacted about 20% from its peak last, and so we will still just prioritizing teams and efforts in areas, where I'd say that all we're saying at the moment is you know, half the team appear to be vaccinated in the states background backdrop is that appears to be getting better.

And so even in quarter four you saw great performance is still the lead indicator. There are the physicals and mill construction still going forward to have 1.3 million tonne per annum capacity by September quarter.

We won't have the mining physicals to that. But it was pleasing to say that the mining physicals in June gave at about 1.1 million tonnes per annum run rate.

So, all these things are aligning. It's starting to get better.

Obviously, this is construction season in Alaska, so that could be the place. And, we'll bring out the good past resource with finalizing a lot of the drill information that's been fit into that.

And it's just great to see them get some wins. It's been a difficult year, past year, and I think again credit to the team for the perseverance.

That’s all for me. Thanks, guys.

Hi, good morning, everyone. I've got an accounting questions are probably for Morgan.

In regards to the Kundana’s sale, is this likely to be captured in the upcoming full year results? And maybe you could sort of remind us of the book value there so we can sort of estimate the quantum of a non-cash for the machines gain?

Yeah. Dave, we're still working that through, we haven't actually -- we're not at completion yet.

So I'll talk to the orders. I think, the preliminary answer that will be reflected in the results and you'll see a bit of clarity to understand the accounting side of it.

The sale price is materially above the book value.

Okay. Thanks.

I'll hold everything else like everyone, till tomorrow. Cheers.

Thanks. Good morning, Northern Star team.

Just a quick one for me on labor. One of your peers in there, I guess outlook release cited that, obviously increasing labor costs was a big driver in terms of their cost guidance, but they're saying labor costs going up around 3% to 4% year-on-year.

Clearly, you guys have just renewed a couple of mining services contracts as well. Just wondering if you are saying the same levels of labor cost inflation either reflected in those contracts or in your existing workforce, in the current turnover and rehiring in your existing workforce?

And I guess, how do you think about those factors, when you contemplate guiding into FY ‘22 and the impact that might have on your cost base? Thank you.

Thanks, Matt. And look, we actually have seen turnover increase, but given over two-thirds of their workforce are residential, that it's not affecting Kalgoorlie operations in that regard or even Alaska.

Look, there is still cost pressure, there's still labor shortages, there's still border closures, all those things are absolutely real. We fortunately have a lot of activities related to the merger, we're starting to liberate offset that and even a growth profile starts to offset any of that escalation.

And as you pointed out we’ve secured some long-term contracts with quality providers. And we've had some modest increases in some of those things.

But we haven't seen, I guess some of the wholesale changes that we're hearing out there. Look, it’s really needs to be managed.

And in a fortunate position, we're in to drive productivities, organic growth as the ounces growth of 2 million, but also just adjust those synergies come into us. And look that's the logic again on Kundana.

It's absolutely logical, the Evolution consolidate that Kundana build to improve the overall cost profile of that district. It's a very logical transaction.

And so they're all things that just help the go forward part of the sector.

Sure. Thanks, Stu.

Looking forward to this evening's release. Cheers.

Good morning, Northern Star team. Just one from me.

And I'm sorry, if this was touched on earlier with Evolution’s call, but I wasn't listening in on that one. Are you able to provide any color on when discussions with Evolution on Kundana started in earnest?

And who actually approached who?

Look, we’ve been neighbors again for six years, effectively, Jason side. We cooperate on a number of fronts in sharing some resources up and down that belt, and we're very close to their team.

So, in quarter four both companies ideally doing their strategic plans going forward. And that's when people start reassessing all options in their business side.

All I'd say is it's moved pretty quick. They are absolutely quality incredible counterparty to give us confidence to transfer out our team across, and it just makes sense to consolidate that build.

They're already in the community. They're already contributing in the community.

So they're a great counterparty to take those assets forward.

If I was being speculative, could we say what three months ago discussion started, six months ago, 12-months? Are you able to give me any indication?

I think you can credit Evolution and Northern Star for moving quicker than that.

Okay. Thank you.

Thanks very much. Thank you for your time today.

We have now set the same for the significant opportunity available to continue superior sustained shareholder returns. Our assets and our teams are charged to deliver profitable growth to 2 million ounces per annum from a simplified business in Tier-1 locations.

I'm excited to lead the company as Managing Director after significant input to building the business over the past eight years. And I encourage you to participate in the ASX release of our five year strategic plan later today, and conference call tomorrow morning.

Thanks and good day.