Northern Star sees a turnaround at Pogo

Northern Star Resources Ltd. April 24 reported that the Australian company's investment in Pogo has resulted in reaching turnaround point for the Alaska gold mine.

During the three months ending March 31, the Pogo Mine produced 33,381 ounces of gold from 190,868 metric tons of ore averaging 6.1 grams per metric ton gold. This is down 33 percent from the 50,106 oz of gold produced during the final quarter of 2018. This lower quarterly gold production is the result of both lower grade ore and lower mill throughput.

As a result of the lower gold output and heavy investments by Northern Star, the all-in sustaining cost for producing an ounce of gold at Pogo during the first three months of 2019 was US$1355 (AU$1,909).

Northern Star said production at Pogo was significantly impacted during the first quarter due to a delay in equipment delivery, with only five of the scheduled sixteen pieces of underground mobile plant arriving. The delivery of the remaining eleven units during the second quarter will see productivities and efficiencies continue to rise and lower the unit costs.

The Australian miner, however, said significant progress was achieved during the first quarter and into April, with production set to rise over the coming quarters as long-hole stoping is ramped up.

The new mining method of long-hole stoping began late in the March quarter and represented only 11 percent of the quarter's processed ore. So far in April this has increased to 27 percent and the average grade of the ore fed into the mill has risen to above 8 g/t gold.

"The introduction of the new mining method and the late delivery of some equipment reduced production at Pogo, which in turn temporarily drove up the costs per ounce," said Northern Star Resources Executive Chairman Bill Beament. "But these changes are starting to pay dividends, as the results in the months of March and April show. As well as ramping up tonnages from the long-hole stoping towards the end of the quarter, we cut site expenditure to an average of US$18.5 million a month in the March quarter from an average of US$22.5 million a month in the previous two quarters."

Northern Star's three operations – Pogo (Alaska), Kalgoorlie (Australia) and Jundee (Australia) – produced 186,255 oz of gold during the March quarter.

The company sold 185,296 oz of gold sold in the quarter at an all-in sustaining cost of US$972 (AU$1,369)/oz. This included the sale of 82,000 oz in the month of March alone, which Northern Star attributes to the early benefits of the changes made at Pogo.

In light of this strong progress at Pogo, Northern Star said it is set for record production in the June quarter of 235,000-260,000oz at an all-in sustain cost of US$763 to US$834 (AU$1,075-A$1,175)/oz.

"We always said it would take 18 months to implement our strategy at Pogo so despite the temporary delays we are still on schedule," said Beament.

On the exploration front, Northern Star had eight underground diamond drill rigs focused on reserve development drilling throughout the quarter with an additional reverse circulation underground rig introduced on trial.

This underground drilling primarily targeted the Liese Vein systems, North Zone, X-Vein, South Pogo and Fun Zone areas. The company said extensions to two of the Liese Veins – L2 and L3 – and North Zone have returned excellent results.

One hole drilled into L3 cut nine meters (8.5 meter estimated true width) averaging 30 g/t gold. Another drilled in the same vein cut 4.7 meters (2.4 meter estimated true width) averaging 82.5 g/t gold.

Four surface rigs at Pogo focused on infilling and extending the gold mineralization at the recently discovered Central Vein project.

Highlights include 1.5 meters of 48.6 g/t gold, 1.3 meters of 33.2 g/t gold and five meters at 13.9 g/t gold.

The results from the surface and underground drilling will be incorporated in a new mineral reserve estimate slated for completion around mid-year.

–SHANE LASLEY