Northern Star Resources Ltd

ASX:NST

Earnings Call Analysis

Northern Star Reports Record Gold Sales and Strong Financial Growth

Northern Star closed FY '24 with exceptional performance, driven by record gold sales and substantial cash flow across its production centers. Thunderbox and Pogo mines achieved record throughput, contributing to 439,000 ounces sold in the June quarter at an all-in sustaining cost of AUD 1,815 per ounce. The company generated $462 million in free cash flow for the year, up 29%. FY '25 guidance forecasts 1.65-1.8 million ounces of gold at costs between AUD 1,850 to AUD 2,100 per ounce. The KCGM mill expansion remains on schedule, set to double throughput by FY '29. Northern Star remains financially robust with a net cash position of $359 million.

Introduction

The company reported a stellar performance for the quarter, driven by strong output from Thunderbox and Pogo operations. This solid performance has set a favorable path for substantial growth in the upcoming fiscal years.

Financial Position

The company is in a robust financial position, having increased its net cash position to $359 million. The total cash and bullion stand at $1.25 billion. Record full-year cash earnings amounted to approximately $1.8 billion, demonstrating the strong operational cash flow and profitability across all production centers.

Production Highlights

For FY '24, the company achieved record net mine cash flows amounting to $686 million with an underlying free cash flow of $462 million, up 29% compared to the previous year. Pogo was a standout with a record contribution of $238 million.

Growth Investments

Significant investments were made in growth capital, particularly in projects such as KCGM, Fimiston South cutback, and several others. These investments totaled approximately $350 million for FY '24 and are expected to propel future production capacity.

Operational Efficiency

The company focused on optimizing operational efficiency. Sustaining capital expenditure is forecast to remain within the range of $200 to $250 per ounce sold. For FY '25, growth capital is guided at around $985 million, excluding the KCGM expansion project.

Production Guidance

For FY '25, the company expects to produce between 1.65 million to 1.8 million ounces of gold at all-in sustaining costs of AUD 1,850 to AUD 2,100 per ounce. The favorable gold price environment, currently around $3,500 per ounce, supports these projections.

Strategic Outlook

The company is well on track with its 5-year growth strategy, targeting a production increase to 2 million ounces by FY '26. The upcoming expansions, particularly the KCGM mill expansion, will play a crucial role in achieving this target, expected to be completed by FY '29.

Future Prospects

Moving forward, the company remains committed to its strategic plans while maintaining a keen focus on optimizing operational efficiencies, cash flow generation, and exploration activities. The overall financial health and strategic investments set a strong foundation for continued growth and value creation.

Earnings Call Transcript 2024-Q4

[Operator]

Thank you for standing by [ and ] welcome to the Northern Star June 2024 Quarterly Results. [Operator Instructions] I would now like to hand the conference over to Mr. Stuart Tonkin, Managing Director and CEO. Please go ahead.

[Stuart Tonkin, executive]

Good morning, and thanks for joining us. With me today is our Chief Operating Officer, Simon Jessop; and Chief Financial Officer, Ryan Gurner. I am pleased to present an exceptional June quarter performance to close out FY '24, where Thunderbox and Pogo were both highlights achieving record performances, complemented by continued strong performance from the portfolio.

In FY '24, our team delivered record gold sold and record net mine cash flow. This demonstrates the quality of the asset portfolio across our 3 production centers and also the value our investment is making to unlock future low-cost, high-margin ounces. I'm particularly proud of our people who safely delivered on our FY '24 commitments. Thank you for all your efforts, which are continuing in FY '25 as we advance our profitable growth strategy.

For the June quarter, we sold 439,000 ounces at an all-in sustaining cost of AUD 1,815 an ounce, generating underlying free cash flow of $189 million, which is up 32% from the March quarter. And for the year, we generated underlying free cash flow of $462 million, up 29% from last year.

As you can see in our results, Thunderbox and Pogo stand out this quarter for record mill throughput and in turn gold ounces. Each of our production centers remain in a positive net mine cash flow position, ensuring they are self-funding the growth. As a group, we remain financially resilient in a net cash position of $359 million. This financial strength allows us to fund all our growth investments, exploration activities and capital management initiatives, including dividends and share buybacks, as demonstrated during FY '24.

For the KCGM mill expansion, on-site construction is advancing to budget and schedule. It is exciting to see this activity underway at KCGM, which will double the plant's throughput to 27 million tonnes per annum and lift production to 900,000 ounces per annum by FY '29. Investors and analysts will have the opportunity next Sunday to visit KCGM and see firsthand a significant progress made prior to the biggest [ Dealers ] conference.

We have today also provided FY '25 guidance. We expect to produce 1.65 million to 1.8 million ounces of gold at an all-in sustaining cost of AUD 1,850 to AUD 2,100 an ounce into a very healthy gold price environment currently around $3,500 an ounce. As per previous years, planned major shutdowns will be carried out across all 3 production centers in the September quarter, so FY '25 delivery is second half weighted.

We are majority of the way through our 5-year profitable growth strategy. We see our production grow to 2 million ounces by FY '26 and more importantly, enables the delivery of higher free cash flow levels. [ 3 ] years into our growth investment, we have delivered $1.3 billion of free cash flow, which confirms our rationale for the value-creating strategy.

We forecast FY '24 capital expenditure to be in the range of $950 million to $1.020 billion, plus the KCGM mill expansion CapEx of $500 million to $530 million, which is in the second year of its build phase.

Before I hand over to Simon for the Australian operations, Pogo in Alaska delivered an exceptional quarter, a record of gold sold at 91,000 ounces at an all-in sustaining cost of USD 1,091 an ounce, which delivered record mine operating cash flow of USD 107 million and record net mine cash flow since being under Northern Star's ownership. This is a testament to the team and the asset strength, also delivering a record annual gold sold of 278,000 ounces at top of guidance range.

I'll remind listeners that Pogo buys a gold resource of nearly 7 million ounces at above 10 grams per tonne, highlighting that we will be generating strong USD cash flow for the next decade plus, a fantastic achievement and well done to team Pogo.

Simon will now speak to the Australian operations.

[Simon Jessop, executive]

Thank you, Stuart. For the Kalgoorlie production center, including KCGM, Carosue Dam, Kanowna Belle and South Kalgoorlie, we sold 221,000 ounces of gold, down 2% at an [ Australian ] all-in sustaining costs of [ AUD 1,712 ] an ounce. This production delivered a mine operating cash flow of $335 million, up 10% quarter-on-quarter. The region also spent $264 million on significant growth capital projects. This included $101 million on the KCGM mill expansion, $52 million on the KCGM open pit mine development and $24 million on underground mine development.

We also have successfully started to commission the new [ tail ] of storage sales of [ ENF ] at KCGM, which have a 147 million tonne total capacity. At the KCGM open pit material movement was 16.6 million tonnes as we prioritize the partial access mining of Golden Pike North with a further 43,000 ounces mined in the quarter. The East Wall cutback works continued along with Oroya Brownhill and Fimiston South.

For the full year, we mined 72 million tonnes of ore and waste as the open pit team continued to manage competing priorities. We remain on track to regain full access to Golden Pike North in the quarter 2 of FY '25. Underground mining volumes for the Kalgoorlie region increased 3% to 1.55 million tonnes with grade up 12% to 2.8 grams and delivered 143,000 ounces. The higher grade was driven from Kalgoorlie operations South Kalgoorlie mine and Carosue Dam mine sequence.

KCGM's underground operations increased development a further 11% quarter-on-quarter to 4.2 kilometers. The development measures will continue to ramp up quarter-on-quarter going forward with the arrival of 2 new jumbo fleets at the end of the financial year. The Carosue Dam underground mines all performed well with 54,000 ounces mined in the quarter. Open pit movements increased 16% to 1.3 million BCMs despite consistent rain impacting these positive results.

The Kalgoorlie operation underground mines increased mined ore volumes and grade, which increased 36%, driven by South Kalgoorlie's mine averaging 5.4 grams a tonne over 37,000 ounces for the quarter.

Processing volumes in the Kalgoorlie production center increased 13% quarter-on-quarter as KCGM had a smaller planned shutdown, along with good milling performance at Carosue Dam. KCGM's head grade reduced with less high-grade ore available from Golden Pike North, which was offset with lower grade stockpile ball.

KCGM recovery was impacted due to the [ float ] circuit and Gidji losses with both being addressed in the first quarter shutdown of FY '25. Carosue Dam processing finished with a new annual record of 3.9 million tonnes processed in the year, which is a major credit to the team.

The KCGM mill expansion spent $101 million over the quarter with total engineering progress at 44%, and the major equipment package also at 42% complete. The [ concrete ] [ pour ] at the end of June was 9%. While as of today, as we're sitting here, it's 18% pour with the largest single pour of 1,600 cubes completed early in July for the ball mill raft.

We are very pleased with the on-ground construction activities, and we look forward to showing the progress of the KCGM mill expansion project as part of our upcoming KCGM site tour. The project remains on time and tracking to plan.

At our Yandal production center, including Jundee and Thunderbox, we sold 127,000 ounces of gold at an Australian all-in sustaining cost of [ AUD 2,109 ] an ounce. This production delivered a mine operating cash flow of $155 million, while we spent $81 million on growth capital projects, primarily at the Orelia open pit and Wonder underground. At our Jundee operation development advance was 7.6 kilometers, up 10% quarter-on-quarter, with 796,000 tonnes of ore mined and 88,000 ounces, up 20% quarter-on-quarter.

Processing was lower than nameplate due to a fixed plant fire, which impacted the gold room and back of the processing plant, requiring a large amount of electrical rectification works. By quarter end, the impacts of the May fire were rectified with a large buildup in gold in circuit with lower gold sales due to the reduced mill tonnes.

Jundee's renewable project of a 16-megawatt solar farm and 12-megawatt battery system is currently in its final commissioning phases with partial renewable power now being successfully exported into the group. We also have one of the 4 wind turbines erected as the crane moves through the program before commissioning of that stage begins.

The Thunderbox underground mines, including Thunderbox and Wonder, achieved 613,000 tonnes of ore for 35,000 ounces at a head grade of 1.8 grams per tonne. The Wonder underground mine continued to ramp up ahead of plan with 1,508 meters developed with one jumbo over the quarter. It's accretive to the Northern Star Mining Services team who are building this mine with the Thunderbox technical team ahead of plan below cost, which ultimately brings high-grade ore feed earlier to the Thunderbox mill.

For the quarter, the underground open pit operation successfully mined 1.5 million tonnes of ore, which is at the expanded mill's quarterly nameplate. At the Thunderbox process plant, we achieved nameplate on a quarterly average of 1.5 million tonnes milled and sold 63,000 ounces of gold, up 40% quarter-on-quarter. The mill throughput averaged an impressive 795 tonnes per [ half ] quarter. [ Availability ] was also a new quarterly record of 85% with a significant shutdown occurring in April in those numbers.

For the first full financial year processing, we achieved 87% of the nameplate throughput. We are continuing to work on availability in the crushing circuit and milling stability by rectifying known wear points. The last quarter is a great result for the Thunderbox team who continue to unlock the full value of this major plant expansion.

I would now like to pass over to Ryan, our Chief Financial Officer, to discuss the financials.

[Ryan Gurner, executive]

Thanks, Simon. Good morning, everyone. As demonstrated in today's results, the company is in a strong financial position. After an excellent quarter, we've increased our net cash position to $359 million and increased our cash and bullion to $1.25 billion.

The company has generated record full year cash earnings of approximately $1.8 billion. And as forecasted, we've delivered a material uplift in the second half, driven by higher production, lower unit costs across the business and higher gold prices. A reminder that the company's policy is to pay 20% to 30% of cash earnings in dividends.

Figure 9 on Page 11 presents the cash bullion and investments movement for the quarter, key highlights being operating cash flow of $688 million, a 31% lift on the prior quarter and underlying free cash generation of $189 million, bringing FY '24 underlying free cash flow to $462 million, up 29% from prior year. Importantly, all production centers are delivering strong net mine cash flows, which totaled $686 million for the full year. As Stuart mentioned, Pogo, an absolute standout delivering a record contribution of $238 million for FY '24.

Growth capital investment during the quarter related to key growth projects, including at KCGM, Fimiston South cutback and East Wall remediation works, development at Porphyry underground and Wallbrook open pit at CDO, development Orelia open pit, Wonder underground and remediation works at Thunderbox processing plant and approximately $100 million for the KCGM plant expansion was incurred during the quarter.

Total spend for FY '24 on the project was approximately $350 million. The reduced spend related to the timing of some procurement packages being finalized. But importantly, this is not expected to impact critical milestones scheduled or budget.

On other financial matters, full year depreciation and amortization of $703 per ounce is in line with guidance of $650 to $750 per ounce and noncash inventory charges totaled $34 million, with the majority of these charges relating to the [ million ] of stockpiles at KCGM.

As part of the company's ongoing capital management program, the on-market share buyback continued during the quarter. 305,000 shares totaling $4 million was bought back and canceled. Since the program started, 19.5 million shares have been purchased at an average price of $8.85 per share. $128 million remains outstanding with the program open until September this year. A reminder that blackout for us applies until our FY '24 results are released in August.

Following the delivery of a strong Q4, the company is well placed to deliver FY '25 production and cost guidance. Sustaining capital expenditure is forecast to remain within our current range of $200 to $250 per ounce sold. FY '25 growth capital, excluding the KCGM expansion project is guided at a midpoint of $985 million. This investment is centered on our returns-focused organic growth options.

At the Kalgoorlie production hub, the majority of the investment is allocated to projects which will deliver the mill feed and infrastructure for the KCGM plant expansion. These projects include development and ramp-up of [ Mt ] Charlotte and Fimiston underground mines, open pit material movement and infrastructure requirements.

At Yandal, the majority of the capital investment includes advancing the existing Thunderbox mill feed sources at the high-grade Wonder underground, Orelia and development of the Bannockburn open pit. At Jundee, mine development will commence at Cook-Griffin, a recent exploration success, and continue at the main ore body with -- main Jundee orebody with additional infrastructure planned. And at Pogo, mine development and resource drilling are an ongoing capital requirement to open new mining areas and increase the number of available headings.

In early FY '25, major infrastructure works will be undertaken to maximize utilization and availability of the plant, including rebuilding the ball mill motor and replacing the trunnion.

The milestones in FY '25 for the KCGM expansion project include delivery and installation of major equipment as well as commissioning of service infrastructure. We are guiding FY '25 spend to be $500 million to $530 million for the project. FY '25 exploration is guided to $180 million, with investment focused on KCGM and Jundee in mine exploration and the Pogo additional drilling at the [ Star ] discoveries planned.

Importantly, with the company's strong liquidity position of $2.7 billion, our profitable organic pipeline and exploration activity is fully funded.

Finally, in respect of hedging, Table 5, Page 11 sets out the company's committed hedge position at 30 June. The overall hedge book stands at 1.8 million ounces at an average price of $3,122 per ounce.

I'll pass back now to the moderator for Q&A. Thanks very much.

[Operator]

[Operator Instructions] Your first question comes from Mitch Ryan with Jefferies.

[Mitch Ryan, analyst]

My first question just relates to -- you've reiterated 2 million ounces of production in FY '26. How should we think about this? Is that sort of the lower band of guidance range? Or is this more of a midpoint? Or is it a stretch target for year FY '26?

[Stuart Tonkin, executive]

Thanks, Mitch. Yes. Look, I guess, what was published today is the FY '25 guidance outlook, and I'd reiterate that's a checkpoint by our growth pathway to 2 million ounces by FY '26. And then that is followed by the expanded Fimiston plant adding 250,000 ounces per annum through FY '27, FY '29.

So yes, it's another growth year, FY '25. And the commitment as we've held in our 5-year strategy is to grow to that profitable 2 million ounces in FY '26, and we're majority way through that plan and a lot of those actions have been delivered.

So yes, very pleased with how we're tracking. It's not a straight line. I'll remind people about our planned shutdowns we [ occur ] in quarter 1. So it's second half weighted, and quarter 1 will be the softer quarter of the year. So yes, it's not a straight line, but we're still on our growth trajectory and it's working well in cash generation.

[Mitch Ryan, analyst]

Okay. So 2 million ounces, is it a target? Or...

[Stuart Tonkin, executive]

That's FY '26, Mitch. FY '26 -- so I haven't given guidance for FY '26, but that is our 5-year strategic plan to deliver 2 million ounces from the 3 assets in FY '26. So what we've guided today is the checkpoint in FY '25, which is 1.65 million to 1.8 million ounces.

[Mitch Ryan, analyst]

Okay. So it's not an exact rate? It is a production number for the full FY '26?

[Stuart Tonkin, executive]

Yes. So the final last piece really for that to be delivered is the grade coming from the Golden Pike to lift KCGM from 450,000 to 650,000 ounces per annum complemented by the other assets being in a steady state. So [ I go with ] [ 300,000 ], Yandal at [ 600,000 ] and obviously, the balance being Kalgoorlie, but KCGM is the major step change in that last year, and Simon's updated on the progress of access of the East Wall remediation, plus the access to that [ high-grade ] and destocking those benches in the better grading Golden Pike.

[Mitch Ryan, analyst]

Okay. Perfect. Appreciate the clarification. My second question just relates around -- again, you called out that September quarter, the shut and that will be the weakest quarter. The quantum sort of -- sometimes it's down around sort of somewhere between 7% to 15% on the June quarter? Is that sort of a fair range? Or can you give us any quantum of the -- quantum of those shuts?

[Stuart Tonkin, executive]

Yes. [ Mental ] maths is good. That's about right. So if you look at our quarter 1 last year, that was our lightest quarter, that was sub [ 400 ]. I think what we'll call out in this is Pogo's mill essentially is off for 5 weeks at a derated throughput, and that's to do substantial project work which has commenced and is tracking well at Pogo presently. So it's -- Pogo is probably the lightest sites performance coming off a strong 91,000 ounces, it steps right back down with 5 weeks out of the quarter. And then those other planned major shuts across Yandal and Kal occur as well.

So the full year, the run rate of the last 3 quarters is a very good indication to give us confidence is how we pull into FY '26. And most of that expectation step back is around the impacts of quarter 3. It is planned work, well run work. We always ask to be designed it differently, but this is how the overall plan that's played out each year. And the strong quarter 4 was delivered. We're not falling off a cliff in quarter 3. It is planned work in this first quarter, but it's just the work that has to be done that secures these assets over the years ahead.

[Operator]

Your next question comes from Kate McCutcheon with Citi.

[Kate McCutcheon, analyst]

Just at the super pit, you've given some material movement guidance previously, and I think [ '24 ] was supposed to be that peak of 85 million to 95 million tonnes, but it looks like that came in short. Can you just talk to what the stripping looks like this year and next year? And then what portion of the stripping is that guidance chunk KCGM this year?

[Stuart Tonkin, executive]

Yes. Thanks. I'll let Simon answer.

[Simon Jessop, executive]

Yes. Thanks, Kate. We'll have a look to give a good update on the KCGM movements and where we are at the site visit in a couple of weeks' time. So we'll look to -- as we've guided previously on strip ratios and things like that, we'll look at that on the site visit just before [ Diggers ].

But in terms of the overall year, quarter 3 was particularly hard with rain, significant rain throughout the quarter. So what we did was just prioritize where we work during the pit during that quarter. So we dropped away some material movement, which is -- which we can catch back up in the Fimiston South area and really prioritize on the high-value [ OBH ] areas and the East Wall remediation because that's the biggest driver of value.

And you also saw us accessing Golden Pike North, partial access to it slightly ahead of plan. So we brought some of that forward, which is obviously longer haul distances for the trucking fleet. So not concerned at all. We still guide to 80 million to 90 million tonnes, and that's where we'll consistently set moving forward.

[Kate McCutcheon, analyst]

Okay. Got it. And then staying on CapEx. So I guess it's hard on our end visibility on modeling this continued CapEx to open up some of these ore sources at Yandal, for example. So I think there's an extra [ $50 million ] this year opening up some of those pits. And you've given us some color for Thunderbox in your slide decks. How do we think about this CapEx going forward? Does it -- I know we've just got 25% guidance today, but does it step back next year? Or what sort of color can you give around when additional pits need to come in? I mean, opening up Cook-Griffin, for example, unless I missed it, wasn't really on my radar as CapEx that had to be spent this year. So just sort of, if you can talk through some of those mining areas that come in?

[Stuart Tonkin, executive]

Yes. Thanks, Kate. And I'd agree that it doesn't have to happen. We are trying to always build contingency into the plan such that we can deliver consistent guidance over the forward outlook. So [ I mean ] [ we ] can bring it through approvals and accelerate, and we have the cash flow to do that. We do bring those projects online so that we've got those diversification of production centers, et cetera, so we can manage through the weather events or approval time line slipping or other things.

So, yes, Cook-Griffin, great opportunity. We're starting that underground with the Northern Star Mining Services. We did a very similar thing last year, obviously, with Wonder starting it early, I guess, out of the timing. And then probably the other CapEx lift is the TSF down at Kalgoorlie coming in early because of the expanded mill plant. These things are in their life of asset plan. They're all scheduled and sequenced. But ideally, what we want to do is de-risk. So when the cash flow is there, the budget's there, we've got sequence and priorities. But we will bring these things in early.

We're happy to -- it's not an oversupply, but certainly de-risk it, develop it, build stockpiles near to our mills so that on any given day we have that blend of ore that we can send in. So I acknowledge that the CapEx has stepped up from consensus in FY '25. We also believe directionally gets over this hump, and we've de-risked and built gold in stockpiles and gold in circuits. I think it sits now over [ 300 million ] ounces, which is a good thing for investors, is security of forward earnings, the security of material close to our plants, and we always try to stay ahead of that investment.

It is also, I [ will ] say, discretionary. If things change in the environment, we can actually dial back some of this investment. But in this environment we're going as hard, as fast as we can to build that contingency in. So I know you're looking for the returns on the back of it. I'd be confident that we're looking through a returns lens, and we're seeing multi-digit IRRs and our decisions around these things is improving our margins and improving our overall returns. That's the lens we look at these organic investments through.

And that's versus a question that will probably come up on the call around M&A, our organic opportunities, [ Trump ], every other thing we've been looking at, that this is our business, this is our work, and this is what complements shareholder returns.

[Operator]

The next question comes from Levi Spry with UBS.

[Levi Spry, analyst]

Two questions, please. Firstly, just on Thunderbox -- sorry, I'm catching up you with a few [indiscernible] once. Can you just sort of run us through what was so good? It seems like things are back on track. Maybe just a bit of detail around that, please, Simon?

[Simon Jessop, executive]

Yes. Thanks, Levi. During the quarter, really, we're just focused on that availability and really lifting the crushing circuit availability to get stability into the process plant and the milling. And you saw that with the 795 tonne per hour average for the quarter. So nameplate 750 tonne per hour. So we saw or even in [ June ] spring capacity of the whole June average 820 tonnes per hour.

So we're continuing to work on the availability. We still believe there's 5% or 6% more availability to -- [ a.k.a ] that infrastructure. And we know what the areas of focus are. So it's known wear points. But I'm really pleased with the team in terms of just constantly working through areas that fail and then putting long-term rectification pieces in place. So there's a big year for the team, but really pleased to get 1.5 million tonnes for quarter 4 and start FY '25 in a strong position from a process plant perspective.

[Levi Spry, analyst]

Yes. Nice one. And maybe just on the capital question, just extending some of those good questions there previously. How can you help us in the sort of 3 to 5-year time frame, [ Stu ]?

[Stuart Tonkin, executive]

Look, we don't guide out that far. But what I'll say is growth CapEx gets you growth. So FY '26 is that 2 million ounces. You've got visibility of the capital to deliver Fimiston. So we're in the second year this year -- you have $500 million and $530 million being spent this year. So you've got the tail of that CapEx going into '26 and then a slight piece in '27 on Fimiston, so another $500 million, '26 there. But the remainder of the -- to keep that 2 million ounce profile across those assets, is set of one of an open pillar and underground being turned on each year. And then TSF lifts that -- a multiyear lifts, so whether it's dollars in a year that get amortized over the future, life asset types of things.

So I would also say we're seeing a huge amount of opportunity. So look, we're going to up our exploration expenditure, $180 million to $200 million this year. That liberates things like the Hercules discovery just less [indiscernible] from Fimiston plant. You'll get capital in a hurry to develop that into a mine and get that gold into the mill.

So there's still -- I guess for analysts and investors, it's hard to say, well, you haven't got visibility out 5 years and talking about things we never heard about. We're still discovering things like Hercules this year, that I will prioritize and fast track and it will attract capital, but it will attract superior returns because of the success of the exploration team.

So sort of bear with us a bit that there is a sustaining capital to maintain a [ 200 ] -- sorry, 2 million ounces per annum. And typically, it's -- we're 1 year ahead. Our capital is 1 year ahead of when the production comes in. We'll build a stockpile, develop a mine, build a stockpile and extra 1 million and the ounces will come the year after. And that's the thing. But yes, it is still a very heavy lifting capital year FY '25, as we acknowledge.

[Levi Spry, analyst]

And maybe just sneak one in on AISC. So how do we think about that in the context of the volume growth?

[Stuart Tonkin, executive]

Yes. So look, again, we've given at $1,850 to $2,100 and that's considering where the gold price is and the cost that it attracts and the behaviors that it drives. We're -- I'm also thinking with the backdrop of the nickel production, lithium reduction, even some gas at [indiscernible], there's potentially some cost plateauing or even potentially some retraction savings across energy, across labor.

So we haven't baked that into anything across our costs on dollar millions, and then as you pointed out, economies of scale or [ denominated ] gold sold. Just as a see-through on Pogo, it delivered in the quarter AISC at USD 1,090 an ounce. So you've got over 100% to AISC margin of the U.S. price to AISC and then on dollar million is still sitting over [ USD 30 million ] per month. And I sort of spoke about still got the new trucking fleet to be brought in to take from sort of 10 trucks to 6 trucks and drop labor and drop maintenance costs around that fleet.

So there's some improvements we are seeing to make true step-down changes. And then as we've reduced stripping ratios across the business and getting to the primary ore of these pits, we're also seeing some benefit there. But we've -- I've maybe been conservative in dragging costs right. When we look across the consensus peer group, we're probably seeing the same trend and expecting -- staying still is a good thing in this environment, we'll still migrate down the cost curve, but we have to see most people's reporting on AISC.

[Operator]

Your next question comes from Daniel Morgan with Barrenjoey.

[Daniel Morgan, analyst]

My question just relates to the Pogo, the outage or the mill maintained periods that you're doing in, well, I guess, as we speak. What impact does that have on accommodation? I'm just thinking through, once you get it complete, will accommodation constraints mean that development rates and mining rates suffer a little bit as a hangover or consequence?

[Stuart Tonkin, executive]

Thanks, Dan. So there's a few things that happen throughout the year to be able to sort of disconnect activities because we're very [indiscernible] out there. So a lot of the great work team has done to be at a -- when the mill is off to not stop mining where it is to sort of back up within 1 day or 2. So obviously, the [ ore ] passes -- in this season, surface temporary stockpiles can be built prioritizing of waste development and grade. But last quarter, we averaged over 16 [indiscernible] [ meters ] a month. So we're ahead on the development rates and a lot of good work is going into doing that.

So I don't see any mining impacts throughout the 5 weeks. That means that we're behind the game. In fact, we'll build contingency up to be ready to turn it on well. And we're also running the -- on a [ say ] [indiscernible] case or at about 30%, 35% of the general throughput, which is good for gold production, but it's better that you're keeping all the rest of the plant running so that it's not sitting idle. And yes, so just keeping it all moving and keep the team applied in that period. So that's all useful.

And then the major project that's underway right now future proofs the asset. So that motor that failed back in February, last year, we have obviously put -- a full [ rewind ] goes into that motor and have a replicate spare, then a lot of work on the ball mill and all of project was around [ coarser ] bins, [ funnel ] bins to make sure that these things don't trip us up throughout the year for the [ remain ] part. So yes, combination of less staff and construction crew, they're all there. They will be closed out and done and gone in 4 weeks and then back on -- going back on.

So pretty impressive outcome, just can't pull out enough 31,000 ounces at [ USD 1,090 ] AISC an ounce, USD 107 million. Reminding we paid USD 260 million for this asset 5 years ago, and we're sitting there with multi-decade outlook. So it's a fantastic asset. So it's worth investing in.

[Operator]

Your next question comes from Matthew Frydman with MST Financial.

[Matthew Frydman, analyst]

Can I just carry on from Levi's questions on the all-in sustaining cost base of the business? And I guess, really thinking about things more in dollar million terms, you spent about $3 billion on all-in sustaining costs in FY '24. Your guidance implies that's going to lift to about $3.4 billion in FY '25, so about a 15% increase. Can you just talk through what, I guess, the kind of high-level drivers across the business are that are driving that increase?

So you mentioned labor costs, synergy, consumables, all of those things have gone up and potentially the [indiscernible] services in your guidance around those. But to my mind, that doesn't really drive a 15% increase to the sustaining cost base. My interpretation is that it's more driven by, I guess, increased material movements across the business, bringing on new feed sources, maybe a larger proportion of higher-cost underground tonnes as well. Is that a fair assessment of what FY '25 looks like?

And then looking beyond that, should we expect that your sustaining cost base is going to continue to grow ahead of, I guess, what we would consider to be industry cost inflation in order to deliver that 2 million ounce target? Is it a case of continuing to -- needing to bring on some higher cost feed sources in order to achieve those numbers? Or is that increase something that's a little unique to FY '25, that there are other [ factors ] to call out there that are somewhat unique?

[Stuart Tonkin, executive]

Thanks, Matt. A lot packed into that question, but I'll address it. So our exit rate obviously, for the year, the [ 1.621 ] -- 1.621 million ounces delivered mid, adding [ $50 ] AISC. And then when you look forward, we say well the bookings are [ 1.65 million ] to [ 1.8 million ] and the AISC being [ $1,850 to $2,100 ]. I get the point saying, it appears that there's a big step up if you're taking midpoint, et cetera, from what we've just delivered. There's a couple of things in that. We have visibility of renewed contracts with escalation. So there are some known costs that we have, negotiated long-term contracts with major suppliers who are doing a fantastic job and with valid cost [ impost ], I -- we have repriced those contracts. So we've got that.

We also see the elevation of what gold price is doing to flow through costs around royalties and other things that it attracts. We'll also see the introduction of things like traditional INR royalties that start to come in more honestly this year. So they're impacted in there. We've got a higher escalation or [ view of ] where some energy input costs are for the year. We may not see those, and we may enjoy a reduction of those, but yet to plan. I'd rather be a little bit conservative on what we've historically seen there. There is still some grade-driven things in the interim to get to that full thing. So you pointed out saying it's higher -- it's high-cost tonnes, higher cost underground. I guess it's not. It's that lower grade material is now materially profitable.

And I'm not going to say demerging, but I'm going to say that grade denominates that. So when you drop it by decimal points, your AISC will go up. But when the gold price is $3,500 an ounce, and you're doing your reserves a bit over $2,000 and your results is around $2,500, there is a lot of headroom for profitable material that's in and around the activities that we're mining. It could change through strip ratios. It can -- if you've got mill capacity, it can change cash flows, all those things. So we're also conscious about those grades and the incremental material that can be milled in, albeit at a higher AISC but generating significant cash flow from those tonnes. So some of that incremental material sits in that plant.

And then, yes, look, this is a checkpoint on the way to the sustaining long-term part. So Simon talked about Thunderbox get stability, but we've still got 5-plus percent availability to get out of that. We're saturated with maintenance labor. We'll get it up, get it stable, then we'll start pulling away some of those resources. So there's some expensive ounces at the moment just because we're building -- putting in contingency.

But yes, if you look across the sector, I think we're still pretty healthy compared to the average of increases that you're starting to see. So I'm not saying we're the best of the worst bunch, I'm just saying, it is -- what happens, when the gold price goes up, it drags the costs up as well. So your midpoint is still up [ $2,000 ]. And when you start looking at the margins to that, it's very strong. So hopefully, comprehensive answer to your comprehensive question, Matt.

[Matthew Frydman, analyst]

No, I appreciate that. Obviously, multifaceted. So I appreciate the additional detail. Maybe just quickly, can I ask on the buyback? And I know Ryan touched on this in his remarks, but obviously, you guys have been quite judicious in exercising that. You've obviously been constrained by blackout periods as well. Can you just remind us, I guess, how you think about when you choose to enter into the market in the buyback? Obviously, you're sort of [ recutting ] your view on the value of the business based on gold price movements, et cetera, et cetera. But I mean, broadly, in a gold price environment, all else being equal, would -- should we expect that you would reenter into the buyback at similar levels if you were constrained by blackouts?

[Ryan Gurner, executive]

Yes, Matt, look, it's opportunistic, Matt. I mean, yes, I sort of mentioned we're sort of nearly 20 million units purchased an average cost of under $9. So I guess we're not just saying pin [ back ] this, just buy the rest of it out. We're trying to be opportunistic. Obviously, there's volatility in our own price. So -- and there's also competing capital.

So I think the best way to put it going forward is it's a Board decision on whether we extend the buyback, increase it or completely walk away from it from here, but that will be wrapped up in the context of the next few years, the outlook and all these things. So I guess in a nutshell, we're opportunistic on it, and I think it's worked well so far.

[Operator]

[Operator Instructions] The next question comes from Hugo Nicolaci with Goldman Sachs.

[Hugo Nicolaci, analyst]

Thanks for the update this morning. My first one is sticking in to Pogo a bit more. I was wondering if you provide any extra color around the strong performance in the quarter. How much of that do you think was running the mill hard into the major shut versus maybe some optimizations you've been able to get out of the plant that maybe you can carry forward from here? And I'll come back with the second.

[Stuart Tonkin, executive]

Yes. So look, to deliver that strong quarter, I guess everything was working really well. So the mining physicals were performing above the plan. The mill throughput performed above nameplate and very consistent throughout the quarter. Grade obviously was achieved throughout the quarter pretty consistently. So all of those things, controls and stability delivered that exceptional outcome.

You can see our dollar millions costs are still elevated whilst we're transitioning fleet and also getting change management settled and stability into things. So there's still opportunity to be able to reduce overall input costs, but we're also working hard to all the planning and preparation to manage this planned shutdown and refurb on the plant in this quarter. So a lot of the thinking went into that.

So yes, I wouldn't share -- say there's only one single thing. I think the whole team across each department absolutely know what they did. And they've done it before just north at 90 days in a row. So I'd give the credit is -- we've always seen the highlight of 1 week, 1 month, 2 months and then there'd be something either due to age of fleet or some other hand-to-mouth issue, which should have eroded -- impacted 1 week or 2 or the mill [ modified ], those sort of things, which when you zoom at looks like a [ love ] average.

We always saw the highlights of mine development, stock grades, milled grades, mill throughput run rates. So we're pleased to see it very consistently, which has obviously delivered plus 360,000 ounce per annum run rate. That's what I think people need to look at it with this asset, is we're trying to get it to a stable [ 300,000 ]. It just delivered a [ 363,000 ] run rate in the quarter. So and we're not asking you to do that.

[Hugo Nicolaci, analyst]

And then my second one is just coming back to the FY '25 cost piece. Could you provide any extra clarity, Stuart, how much of the [ outstanding ] cost guidance might get impacted by inventory adjustments through things maybe like shuts? And then any extra color on the point you touched on around royalties increasing on some of the assets from things like native title and [ anything ] this year?

[Stuart Tonkin, executive]

Yes. So some of those things around gold price impacts. It will be less than [ $50 ] an ounce. I'd put to that. And I'm not going to ever disclose what they are. But between state and third-party contributions it will go through in that sort of magnitude. But when you look at inventory adjustments, there's no make mirrors or sort of games on [ base ] or growth CapEx or whatever, you just look through our cash flow and see the money has been spent. Ryan, do you want to just talk about the treatment of the [ 5 week ] [ at ] Pogo?

[Ryan Gurner, executive]

Yes. I guess -- yes, so I mean, Pogo will carry -- yes, its cost will be higher because it will be carrying a cost while the mill shut. But I think on the inventory adjustments here, I think, over the year, we will likely build more stockpile than -- well, build more stockpile because we'll be mining more than we milled. And really what that does is it does carry a little bit more cost, I guess, you could say in AISC, because the operating costs whilst they're backed out, the capital, obviously, that goes through each month and we spend on the business isn't. So when you're denominating less gold sold you still got your capital spend there. So that's a bit of it.

I think I'd just say at cost, just the macro landscape obviously is we're still seeing cost increases, as [ Stu ] mentioned. I think if you look at the midpoint to where we landed this year, it's 3% in all-in sustaining cost land so [indiscernible]. So, yes, there's still challenges out there. I guess we're hopeful that -- as [ Stu ] sort of alluded to, we're hopeful that as some other unfortunate sectors are winding off, that maybe there's some opportunities there for us, but we can't bank them until we see them occur.

[Hugo Nicolaci, analyst]

Right. And just costs around the reprice contracts. I mean just confirming there's probably still rise and falls in those sort of costs across the sector to start to come off, you can benefit from that to a large extent?

[Stuart Tonkin, executive]

Yes, there's rise and fall mechanisms in them. I don't know if we've ever experienced a full, call them rise and rise, index driven.

[Ryan Gurner, executive]

And Hugo, just on that, I mean, I think what I'd say is we are very fortunate that we have Northern Star Mining Services as our business because we are not experiencing the same, I guess, cost increase that we are getting from our third-party contractors.

[Stuart Tonkin, executive]

Yes, that's a great point.

[Ryan Gurner, executive]

And that's something at least that we're really wrapped with. And they are growing -- I guess, they're growing the activity in our business. So it's really helpful there.

[Stuart Tonkin, executive]

Yes. So we do well over $1 billion, so nearly probably $1.5 billion of underground activity across our business and over half of that is done by in-house on the Star Mining Services and there is still a results like Simon highlighted about 500 meters a month a jumbo at Wonder. We're getting a huge unit cost savings and now getting to [ know ] what is quicker. We've got the 2 best contractors in the land in our Northern Star Mining Services in [ Byrnecut ] and doing the primary work for us.

[Operator]

Your next question comes from Neil [ Watkinson ] with Kalgoorlie Miner.

[Neil Watkinson]

I just want to focus first on the FY '24 guidance where Kalgoorlie is hit, Pogo is hit, the overall is hit, but Yandal just down a bit. Was that mainly due to the fire at Jundee? Or were there a series of factors that just slightly constrained Yandal in the FY '24?

[Stuart Tonkin, executive]

Yes. Thanks, Neil. If you kind of recall, being flooded in on an island there in Kalgoorlie during the first half...

[Neil Watkinson]

Yes.

[Stuart Tonkin, executive]

Yes.

[Neil Watkinson]

Yes, it was a bit wet, yes.

[Stuart Tonkin, executive]

Yes. So I don't know if you've got it [indiscernible], but you would have [ needed it ]. The [ North ] [ and ] Gulf fields were flooded for a large part of that year. So a lot of the haulage of pit material to mills was substantially impacted across the gold sector. We utilized our [ pulses ] that were close to our mills throughout that period, which were obviously a different grades to our primary plan, but we were able to keep going through that. That was obviously Kalgoorlie, but also Carosue, including the Northern Yandal mines of Jundee pulling a really material that of Thunderbox, et cetera, plus [ Wonder ] getting [ trucked ] up. So that was probably the primary impact.

The secondary was this throughput run rate of TBO, which is now being delivered a 6 million tonne nameplate for quarter 4. We're very pleased with that. There were certainly impacts related to the gold room thermal event at Jundee and the team did a fantastic job getting that back online. But in that process, we're able to utilize other infrastructure that we had to continue to produce gold from that carbon -- [indiscernible] carbon. So yes, it certainly had impact, but the team got back in time and rectified in great order.

So yes, Northern Yandal had a lighter year on that overall guidance. That is the strength and beauty of having diversification of production centers, flex in the business plan, contingency of production sources that we do, [ ducks ] on the water. We're kicking pretty hard, and we're able to restore and deliver into that guidance as a group.

And it's great that sometimes those cylinders all fire together, sometimes they're firing different times. But we've seen Pogo really shine in this quarter. And that's [ subsidized ] some of the setbacks that we got with the seasons here as well. So I think it's just pleasing to see the portfolio as a whole, is this contribution and [ now ] passengers across the group.

[Neil Watkinson]

What [ caused ] that?

[Stuart Tonkin, executive]

Pardon?

[Neil Watkinson]

What -- how did the fire start? What was the cause of it?

[Simon Jessop, executive]

Yes, Neil, Simon here. It was a scrubber unit on the back of the gold room. So you look at it, it's a very small piece of infrastructure. And the team did a great job containing that within about 1.5 hours. But it was just that part of the plant, there's a lot of electrical cables, so took some time for rectifying.

[Neil Watkinson]

And just a second question on KCGM. Just gold sales down during the quarter. Was that expected? And also how confident are you that you can wind up to $650,000 across the next financial year -- 650,000 ounces, sorry.

[Simon Jessop, executive]

Yes. So I think the point is good on timing. If you kind of look at gold produced versus sold, there's obviously [ over ] production of gold there. So timing is everything. You've usually got a 2- to 3-week lead time on a refractory plant to get gold [ free ] concentrates and then offline grinds back into gold [ rams ] and gold bars, et cetera.

So unless the grade goes through 3 or 4 weeks before the end of the quarter, saying that, and the gold bar sold at the back end. And that was some of the impacts we've had with power, et cetera, across the gold fields and time is everything. So there are events.

What was the other question?

[Neil Watkinson]

Yes. Just looks like KCGM has [ came ] -- getting up to your guidance this financial year, winding up to around 650,000 ounces. How confident are you feeling that you're going to be able to achieve that in the coming financial year?

[Simon Jessop, executive]

I'm always confident, Neil. The guide is with the plan that's there we have clarity of the mine sequence. It's obviously driven by the material from the gold [ in ] pipe, the grade from the bottom of the pit as well as growth out of [ Mt ] Charlotte and Fimiston underground being brought into the feedstock. So the back stock is always the low-grade stockpile. If you go and look at the group, we have 3.5 million ounces in stockpile in and around our processing facilities, and the majority of that is setting KCGM.

So we've got years and years and years ahead of security of supply, and therefore, it's the rate at which we get that milled and produced. The 650,000 ounces is fundamentally, we've taken it from a full [ 50,000 ] up to midpoint [ 550,000 ], and [ 650,000 is the last, the last piece of getting into that grade. That is still only a checkpoint when the expanded mill turns on to 27 million tonnes per annum, gets ramped up 24.5% up to 27% over 2 years. And that will take KCGM to 900,000 ounces per annum.

So that's the ultimate game. 650,000 is the checkpoint. And by FY '29 to be knocking out over 900,000 ounces per annum from KCGM, which includes the open pit contribution, the large underground is continuing in [ Mt ] Charlotte and underground -- new underground at Fimiston as well as the supplemented low-grade stockpile to deliver that major top 5 global gold [ bond ] .

[Operator]

Your next question comes from Jarrod Lucas with ABC News.

[Jarrod Lucas]

Looking forward to the [ Diggers ] site trip. I just wanted to expand on -- you slightly mentioned just how the nickel environment is changing the labor market. Have you seen that with the closures we've had so far this year in nickel, has that reflected the labor markets yet? Or are we yet to see that flow into the market?

[Simon Jessop, executive]

Absolutely. We've seen -- we've already seen our the vacancy rate reduce. So the ability to get staff in, we've seen turnover reduce because obviously, there's no jobs to go to and where we expect to see again September, October, a flood of labor that's available.

It doesn't necessarily mean it relates through to the change to the costs or labor reductions, rates, all those sort of things. But it just takes away some of that pressure. It's fair to say a lot to beneficiaries of that retraction. But it also was unique that all the cycles peaked at once when we had -- we took years of border locked that we had iron firing, lithium firing, nickel firing and then gold firing [ all ] at the same time with an ability to get imported labor. And the staff was short 25,000 resource workers, that's why you got cost escalation.

So this is the opposite side of that hill. Again, we've reached out to those proactively to say be interested in our growth trajectory and [ gold ] cleaner and greener and nice place to work in the Gulf fields, as you know [ Jarrod ], than the Pilbara. So we're encouraging people to look at our business and multi-decade outlook and secure the residential homes in Kalgoorlie and move there.

[Jarrod Lucas]

And I can attest it was an island for a while. And just one more if it's on the Jundee renewable project, if you could expand on how I guess that's progressing? I see the first of the 4 wind turbines is up. And once that's operational, is that going to have a material impact on your cost base at Jundee with electricity, obviously?

[Simon Jessop, executive]

Yes. So the overall mix of the solar, wind, battery will displace about 55% of the power inputs for Jundee. And ultimately, it's a similar or improved unit cost given we amortize the project and have a power agreement. It's -- but it's important, it will be -- the solar's all up and running and connected, the wind tower, 1 of 4 will be -- is done and by December, we'll have those 4 erected and commissioned and [ contributing ].

So yes, pretty pleased with what's the progress has been made. And ultimately, this is about our commitment of 35% reduction by 2030. This is a major contributor to that. So we really got the big solar field at Carosue. This is now a big solar in and the wind coming and we're obviously evaluating the broader Gold Fields project that will feed KCGM as well as Thunderbox.

[Operator]

Thank you. There are no further questions at this time. I'll now hand back to Mr. Tonkin for closing remarks.

[Stuart Tonkin, executive]

Okay. Thanks all for joining us on the call, and I appreciate, obviously, it's a very busy morning. Look forward to updating you all as we continue to advance our profitable growth strategy. Thank you, and good morning.