Northern Star and Saracen Set for Big Production Growth (ASX:NST)

Northern Star and Saracen Set for Big Production Growth (ASX:NST)

The share price of gold mining giants Northern Star Resources Ltd [ASX:NST] and Saracen Mineral Holdings Ltd [ASX:SAR] have both received boosts thanks to increased production at the joint venture project.

In an announcement made today, the Kalgoorlie Consolidated Gold Mines (KCGM) 50/50 joint venture has beaten out original resource size estimates.

The increase in both production and size has boosted both miners’ output guidance.

At the time of writing, the NST share price is up 4.21% to $14.87 per share, while SAR shares are 0.53% higher to $5.65 per share.

ASX SAR and ASX NST share price chart

Source: TradingView

Big mine potential as gold retraces record high

NST’s and SAR’s joint venture, KCGM, released its strategic review of the project today.

And the results have significantly boosted both miners’ resources.

But the news has had the biggest impact on the NST share price.

Last week, we saw the NST share price dive because of negative investor sentiment.

The coronavirus had hampered its progress on becoming a million-ounce-per-year miner.

How fortune can change in the blink of an eye.

With that magic 1Moz per year mark expected to be hit in FY23, it now appears there’s a chance NST can hit that figure in the current financial year.

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With the review complete, KCGM JORC compliant reserves now total 9.7Moz.

That’s up from the non-JORC compliant estimate of 6.3Moz last year.

This comes after the two open pit mines and the underground mine at the project received significant upgrades to their reserves.

The JORC compliant resources now total 19.0Moz compared to the non-JORC compliant estimate of 12Moz last year, bringing the estimated mine life to 15 years.

Production guidance at the project is tipped at 440,000–480,000oz this year, with an all-in sustaining cost (AISC) of AU$1,470–1,570/oz.

Production is expected to surpass 500,000oz per year by FY24, and then climb to more than 675,000oz pa by FY28.

What does this mean for Northern Star Shares?

Like I mentioned before, NST might come close to hitting the 1Moz mark this year.

That’s a big improvement on the recent guidance of 720,000–820,000oz.

The miner set its FY22 forecast at ~1.15Moz.

The big kicker is that both resources and reserves have now doubled, while measured and indicated resources increased 94% to 20.8Moz.

Though, this is not entirely because of the KCGM project.

Reserves increased 102% to 10.8Moz, which basically indicates that NST has the resources to pump out gold for the foreseeable future.

The share price might have even more upside potential as the Aussie gold scene continues to heat up. Our resident gold expert, Shae Russell, has tipped Australia to become the next ‘gold epicentre’, meaning there could be big spikes in Aussie gold stocks. If you want to learn more, download your free report here.

Kind regards,

Lachlann Tierney,

For The Daily Reckoning Australia