- Northern Star Resources (NST) has adjusted its business and production strategies, and will defer an expected dividend payment due to COVID-19
- New distancing measures have forced NST to implement new controls and requirements at all its sites to protect the health and safety of its workforce
- The company says it will also implement a range of financial measures to preserve the value of its business in the long term
- Northern Star has withdrawn its production and cost guidance for 2020, and will defer payment of a 7.5 cent dividend, which was due on March 30
- Despite the uncertain conditions, Northern Star says it’s in a strong financial position in terms of both net cashflow and its balance sheet
- Northern Star is down 12.4 per cent to $11.82 a share
Northern Star Resources (NST) has adjusted its business and production strategies, and will defer an expected dividend payment due to COVID-19.
New distancing measures have forced the ASX 200-lister to implement controls and requirements to protect the health and safety of its workforce, their families, local suppliers and neighbouring communities.
It will also implement a range of financial measures to preserve the value of its business in the long term.
Northern Star Executive Chair Bill Beament says the company is fully mobilised to adjust to the changing conditions.
“We are working closely with our local communities, indigenous peoples, state and federal governments and health experts to protect our workforce, local suppliers/service providers and nearby communities.
“However, while these measures are essential, they are creating unavoidable disruptions to normal operations and affecting gold production.”
“The company’s outlook is becoming more difficult to predict with any certainty.”
Mr Beament says there is also the prospect of further movement and isolation restrictions in Western Australia and Alaska which may affect operations.
No New Guidance Amid Uncertainty
At this stage, NST expects a 10-15 per cent reduction in production for the March quarter. Given the uncertain outlook, it can’t predict production rates for the June quarter.
In light of this, Northern Star has withdrawn its production and cost guidance for 2020, and has decided to defer the payment of its interim dividend, which is due on March 30.
NST’s intention is to pay the 7.5 cent dividend in late October, following the release of its full-year financial results in August.
The company considers the deferral to be prudent financial management in the circumstances. This will help maintain and build NST’s financial position to respond to the COVID-19 pandemic and subsequent global financial impact.
In terms of both net cashflow and its balance sheet, Northern Star is in a strong position. Currently, total debt stands at $700 million. This comprises a $400 million four-year term loan and a three-year $300 million credit facility. The company’s total cash on hand and bullion awaiting settlement stands at $534 million.
The only scheduled debt repayment in the next 12 months is for $25 million on December 31 2020.
Northern Star is also taking steps to minimise the financial risk associated with its gold hedges by requesting to defer its 2020 hedges until next year. Deferral means NST will not have to deliver gold into these deferred hedges this year unless it chooses to.
Northern Star is down 12.4 per cent to $11.82 a share as at 11:40 am AEDT.