One gold miner saw 30% profit boost this quarter
It looks as though one gold miner has bucked the trend of declining profits and massive write-downs: Northern Star (ASX:NST) resources, which mines gold deposits in the Pilbara region of Western Australia, has announced a profit boost of 30%.
Yes, you read that correctly: An Australian gold miner hit record profits this quarter of A$28.3 million. During that same period gold prices hit their lowest levels since 2010 – prices which Northern Star's managing director called "fantastic."
The company jumped nearly 8% on the Australian exchange on Monday but year-to-date has lost 35%.
Northern Start attributes the success to increased production and foresight, Australian Mining reports.
Bill Beament, the company's managing director, boasted the results at Australia's Diggers and Dealers mining conference on Monday.
“We’ve got a very low cost base," said Beament, according to Australian Mining. "We did our heavy lifting 12 to 18 months ago we changed out the contractors, we went to all of our suppliers, we put those disciplines in our business."
According to Northern Star's conference presentation, the company is now mining half a million tonnes of ore per year – a 100% increase since 2011 when it took hold of its operations rather than using a contractor. Total cost per tonne has dropped 20%.
The miner cut cash costs to $680 per ounce – a 5% reduction – and booked a $10 million write-down on exploration and investments. Employees have also seen a pay freeze and a few job cuts.
“We’re not immune to the downturn but had to make a few people redundant a few months ago which is hard,” said Beament who also had something to say about Australia's upcoming federal election: Beament hopes the new government will support the industry with exploration flowthrough schemes because money may soon run dry.
Creative Commons image by: Pascal