Pogo, Northern Star reach inflection point

Northern Star Resources Ltd. Jan. 29 said December marked an inflection point at Pogo that puts this Alaska gold mine in stride to exceed 300,000 ounces of gold production in 2020.

During December, Pogo produced 24,708 ounces of gold from ore that averaged 9.8 grams per metric ton. At this pace, the mine would produce 296,500 oz of gold in 2020.

Northern Star attributed the strong performance during the final month of 2019 to the introduction of long-hole open stoping and other strategic initiatives the company has been implementing as part of an 18-month transition plan at this underground gold operation the Australia-based company acquired late in 2018.

For the quarter end Dec. 21, Pogo produced 46,146 oz of gold, a 56 percent increase over the 29,468 oz produced during the previous quarter.

As a result of the increased production and efficiencies being implemented, the all-in-sustaining-cost (AISC) to produce an ounce of gold at Northern Star's first mine outside of Australia was US$1,380, down 28 percent from the US$1,919/oz during the three months ending Sept. 31.

The production costs continued to fall during the final quarter of 2019, with the AISC for the 22,574oz sold in December down to US$964/oz, which is 30 percent lower than the overall quarter.

"This continues a trend of rising production and falling costs, which is now well established," said Northern Star Resources Executive Chairman Bill Beament.

This is due to a swift rise in gold production during the final three months of 2019 – 9,800 oz during October, 14,776 oz during November and 21,570 oz during December.

Northern Star said this is a direct result of increased ore from stoping, a more bulk tonnage approach to underground mining, and improving grades of this stoped ore.

Stoping accounted for 134,764 metric tons of ore mined during the final three months of 2019, this was almost double the previous quarter. Importantly, they accounted for 60 percent of all tons mined, up from 37 percent in the September quarter.

During December, stoping alone contributed 62,550 metric tons of ore at 10.1 g/t gold. This is nearly the Northern Star's target of 65,000 tons of stoping ore at Pogo, which is why the company believes the mine has reached an inflection point.

This stoping is getting into newer and higher grades zones, which is expected to result in further increases in Pogo gold production over the coming months.

As Pogo hits its stride as the third tier-one asset – a more than 300,000 oz/year gold producer – within Northern Star's portfolio, the company is now focused on its newly acquired Kalgoorlie Consolidated Gold Mines (KCGM) open-pit gold operation in Australia.

Northern Star recently bought Newmont Corp.'s 50 percent interest in KCGM, which owns the Kalgoorlie Super Pit gold mine, and associated assets for US$800 million.

Northern Star gained economic ownership of its 50 percent interest in KCGM at the beginning of 2020 and has established an executive management committee with its new joint venture partner in the world-class project, Saracen Mineral Holdings.

"This will go down as a remarkable quarter in the history of Northern Star," said Beament. "We are delighted with the performance of our Australian operations, our strategy at Pogo delivered substantial improvements and we acquired a half-share in one of the most significant gold systems in the world through the KCGM deal."

"We now have four tier-one assets in tier-one locations delivering well over a million ounces a year, underpinned by long mine lives and generating vast amounts of free cashflow," he added.

–SHANE LASLEY