Northern Star Resources Limited

Thank you for standing by and welcome to the Northern Star FY25 Financial Results. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Stuart Tunkin, Managing Director and CEO. Please go ahead, sir.

Thank you and good morning and thanks for joining us to discuss our FY25 financial results today. We'll be referring to the presentation as published on the ASX this morning and with me on the call is our Chief Financial Officer, Ryan Kerner. The company has delivered another record-breaking financial performance on the back of a dedicated team effort in a favourable gold price environment. For FY25, we reported record group underlying free cash flow of $536 million, which equates to $328 per ounce, which demonstrates the value of our profitable growth path we've been on for the past four years to delivering sustaining superior returns for shareholders. What is very clear is that the FY25 results again just demonstrates the strength and value creation that we are embedding in our business. EBITDA and the ROCE metrics have shown consistent improvement over the last three years, while our investment-grade balance sheet remains strong and in a substantial net cash position, notwithstanding the capital investment in growth projects such as the Phimiston Mill expansion at Casegear. True to our company purpose of delivering superior returns to our shareholders, the Board has declared a record final fully franked dividend of $0.30 per share. resulting in a total FY25 dividend of 55 cents per share. Including the share buyback proceeds in FY25 to successfully conclude that $300 million program, this represents Northern Star returning over $840 million to shareholders for the year. During FY25, we successfully added the HEMI development project to our portfolio following the completion of the acquisition of DeGray Mining. The acquisition is strongly aligned with our business objectives, and we are excited to progress this significant project. And the final investment decision for HEMI is subject to securing final permitting and approvals, and all the staff continues to advance state and federal permitting processes, as well as working closely with all traditional owners in the management of heritage protection. Northern Star continues to gain strength from the simplicity of our gold-only portfolio, with globally significant scale in the low-risk jurisdictions of Western Australia and Alaska. I'm proud of our deliberate strategy to profitably and safely grow the company, from one mine and 200 staff when I joined in 2013, to now with over 8,000 sustaining jobs and growing international significance. capable of delivering substantial financial results published today, as well as the health and strength of our balance sheet going forward. With that context, I'd now like to hand over to Ryan Gurner, our Chief Financial Officer, who will discuss the FY25 results in more detail.

Thanks, Stu, and good morning, all. I'm pleased to present to you our financial results for the year end 30 June 2025. Firstly, to page four. which provides an overview of the key financial highlights achieved during the year, with the business generating $536 million in underlying free cash flow and $3.5 billion in underlying EBITDA, which is up 60% year-on-year. This EBITDA is translated into record full-year cash earnings of $2.9 billion. With the strength in our cash earnings, a fully frank dividend of $0.30 per share has been declared today, bringing the total payout to $0.55 for the full year. And during the financial year, the company completed its $300 million on market share buyback program. As illustrated on page 5... We remain well positioned to deliver our organic growth projects with our strong balance sheet, which is in a net cash position of 1 billion at 30 June. We have access to flexible long-term funding options with an investment-grade credit rating, reflecting the strength of our business and the positive long-term outlook underpinned by the company's significant reserve-backed production profile within Tier 1 jurisdictions. The strength of our balance sheet reflects the disciplined approach we maintain through the cycle. It provides flexibility to fund opportunities to enhance our portfolio of assets to deliver long-term returns. As illustrated on page 6, the company continues its demonstrated history of returning funds to shareholders. As I mentioned earlier, our final fully franked dividend of $0.30 per share declared today takes our total declared dividends to $0.55 per share for the full year. This represents a payout of 25% of full year cash earnings, equating to $715 million in dividends for the financial year. Following payment of the FY25 final dividend, the company will have returned $2.5 billion in dividends to shareholders and bought back $300 million of its shares. This total of $2.8 billion in capital returns over the history of the business, and we believe there is much more to come. Over to page 7, which highlights EBITDA margins achieved for the group and each production centre. All three production centres have performed strongly and achieved healthy EBITDA margins, with the group recording a 55% EBITDA margin for FY25. prior year. Pleasingly, and as illustrated, all production centres improved margins in FY25. I'd like to point out a reconciliation of statutory MPAT to underlying EBITDA and cash earnings has been provided in the appendix of this presentation on page 17, and page 16 outlines the abnormal items to reconcile from statutory profit to underlying MPAT. Over to page 8 now. It's pleasing to see our return on capital employed lifting since the merger with Saracen, increasing by 33% in FY25, which reflects progress in our profitable growth strategy and focus on allocating shareholder funds to generate returns. This also highlights the strength of our FY25 underlying earnings before interest and tax, which is up 102% from the prior year to $2.1 billion. Notwithstanding the important capital investments being undertaken across the portfolio to generate superior terms in the medium and long term, record underlying free cash flow was generated in FY25, which totaled $536 million. Over to page 9 now. The company is now four years into its five-year organic growth strategy. Over this period, we have completed major operational milestones to strengthen our future production profile. generated $3.2 billion in cumulative net mine cash flow and returned $1.7 billion to our shareholders following payment of our final dividend. This year, the major milestones was completion of the east wall remediation project at Casey Gem, which has been one of the most significant projects undertaken by the company. With this project now complete, coupled with the mill expansion, which remains on track for early commissioning in early FY27, Free cash flow is expected to significantly step up at KCGEM. Page 10 sets out the key elements of how we deliver value and manage our capital allocation, which is through owning world-class assets in Tier 1 locations and applying our DNA of operational excellence to deliver value to our stakeholders. We do this in a safe and responsible way with a demonstrated track record. Our portfolio of long-life assets and their locations provides us with flexibility and optionality to extract value. And as a foundation, we maintain a strong balance sheet which enables the execution of our strategic framework through the cycle. I'll hand back now to Stu to finish the presentation. Thank you.

So turning to Site 11, Northern Star has completed the first two years of the three-year build for the Fimston Mill expansion project, which will see plant throughput increase to 27 million tonnes to average 900,000 ounces of gold sold from FY29. It was great to display the significant progress that has been made over the past two years to analysts, investors and media who joined our site visit earlier this month. And pleasingly, the project remains on time and within budget. The slide 12 reiterates our FY26 guidance, which has commenced the year well, with major plan shutdowns now completed. For the year, our production is forecast at 1.7 to 1.85 million ounces at an only sustaining cost of Australian dollars, $2,300 to $2,700 an ounce, alleging production output remains second-half weighted. We've also included further financial guidance on depreciation and amortisation, tax and dividends at the bottom of that slide. To slide 13, Northern Star's exploration program remains a highly attractive strategy to value creation and to support our purpose to deliver superior shareholder returns. For the year ending March 25, our cost of resource addition is a compelling $20 an ounce. And at 70.7 million ounces of mineral resources and 22.3 million ounces of oil reserves, which excludes our recently acquired HEMI development project, this corresponds to a 10-year reserve-backed production profile. To slide 14, we have released the company's annual report, as well as today the FY25 Environment Social Responsibility Reporting Sweep. The collation of these quality publications, led by Hilary MacDonald and the corporate team, aim to highlight the extensive efforts across the business in responsible and sustainable operations, and we are proud to showcase the results in these reports. I'm also exceptionally proud of our industry-leading safety performance. The safety and wellbeing of our people is integral to our success, with critical risk controls remaining a significant focus for our team during the year. and we are maintaining sector-leading outcomes for our significant workforce. Looking ahead, our focus remains on unlocking the full value of our production centres and advancing the newly acquired HEMI project that aligns with both our portfolio and strategy to responsibly deliver superior returns for our shareholders. And that concludes the formal part of the presentation, and I would now like to hand back to the moderator for questions and answers. Thank you.

Thank you. If you wish to ask a question, please press star, then 1 on your telephone, and wait for your name to be announced. If you wish to cancel your request, please press star, then 2. If you are on a speakerphone, please pick up the handset to ask your question. And our first question today will come from Mitch Ryan with Jefferies. Please go ahead.

Morning, Stu and team. Thank you for taking my call. During the period, you completed a $300 million buyback. Can you talk to the board's decision not to renew that at this point in time, and how does that interact with the fact that the ranking on the dividends are released in the next 12 months?

Thanks, Mitch. Well, look, we always look at all the options for capital management. Obviously, buybacks are included in that. We ultimately see very compelling returns on our current organic investments. So I think it's important to understand that and the multiplier effect of investing back in the business with those funds and we're getting those superior returns. You've seen, you know, RSE metrics lifting year on year and I think they're the considerations that we'll have from time to time when we look at all these capital management tools.

Okay, that's it for me. Thank you.

The next question will come from Kate McCutcheon with Citi. Please go ahead.

Hi, good morning, Stu and Ryan. If I can start with a production question, and then I do have a financial question for Ryan. So thank you for the updated YAMS or medium-term outlook earlier in the month. I guess in February we still had the 600,000-ounce expectation for that hub versus the 500 to 550 now. What were the key catalysts for that change, or what is different now?

Thank you. Thanks, Kate. So just for clarity, it took about the February 600,000 ounces. What we've, I guess, re-spoke about Yandle generally is 500 to 550 this year, and fundamentally that 550 is a pretty steady state go-forward number for Yandle, largely driven by around 250 from Thunderbox, not 300. And fundamentally, that's great. You know, we've shown in the last quarter run rate, even for last year, 6 million tonne per annum. The grade's been about that, 1.4. Obviously, the recovery's 89.9%. to that $250,000 than the $300,000. So unless throughput goes up, grade comes up through higher underground feed, unless we can get a 1.7, 1.8 grade through the plant, $250,000 is its happy place. And we've looked at this trading off against the always-sustaining cost. So growing just for ounces, we've really been looking carefully with the pressure and costs. you know, quality over quantity in this regard. So not just pushing to 7 million tonnes, really looking at the higher-grade feed. So Bannyburn's in development. The Wonder Underground's building its volumes. We're still pulling the Aurelia material back down from Bronze Wing. They're all contributing feeds to that plant. But you've seen in the quarterlies we've achieved 1.4 grams, and that's a steady state at about 240,000, 250,000 ounces.

OK, that is crystal clear. Thank you, Stu. And then for Ryan, you've guided the cash tax of $700 to $835. In the quarterly, you noted that you may be eligible to use DeGray's tax losses, which I think were about $440 a mil, but gross, but correct me if I'm wrong. But that needed to be confirmed post-implementation. The deal's been implemented, so when do you expect to have clarity over those tax losses? And then secondly, can I just confirm when you expect to be able to start to amortize that 50% of the tax depreciable amount? value for DeGray.

Yeah, thanks, Kate. Yeah, so you're right. So the tax losses we will be able to use. So from, I guess, a cash perspective, that equates to about $150 million. they will be probably used over a shorter period of time, probably three years. And then if you think about the actual acquisition value, that's $1.5 billion. And we said before roughly 50% of that will be annotised over five years. So that's the maths. Now, how does it then impact our actual cash tax? What I'd probably say is you're not really going to see much of it until the second half of FY27, because we bought it at May this year, or this financial year, there's only really two months of that shield, so you're not really going to see that until we do the tax return again for FY26, which might be till December of calendar year 26, and then we'll pick up, I guess, that shield from that second half of financial year 27.

Okay, cool. Thank you. And so those degrade tax losses, you can use them this year or not?

We can, but it won't be much. It's based on a fraction of what those losses are to our market cap. So we won't see them that much this year. We'll see them in FY26. If you're saying this year, I'm probably thinking 25. So we'll see them through 26, but you won't see the large shield. until, as I said, that second half of FY27.

Yeah, for listeners, on page three of that release today, under the DeGray section, the integration section, so it highlights the interim assessment is still 12, 24 months away, and then you've got the DNA doesn't come until commercial production from HEMI, which is obviously plus the three years. So that's the utilisation of those.

OK, that's clear. Thank you, Steve. Thanks, Rand.

The next question will come from Daniel Morgan with Baron Joey. Please go ahead.

Hi, Stu and Ryan and Tim. I guess the question is more directed to Ryan as it's a financial one. Just on the cash tax guidance you've paid, I mean, there's a range that's been given. Can you just talk about some of those assumptions that might be embedded in that range? And I presume that it's going to be at roughly current gold and currency assumptions?

Yeah, that's right, Dan. Yeah, that's right. I mean, yeah, so we're trying to, you know, we don't know yet exactly because we pay an instalment rate per month, which is just a percent of our revenue. We don't know exactly what that second half percentage will be. We have an idea. And then, of course, as you say, gold price dependent will impact some of that actual dollar value.

Yep. Thank you so much. Those are my questions. Thanks, Dan.

Again, if you have a question, please press star, then 1. Our next question will come from Matthew Friedman with MST Financial. Please go ahead.

Sure. Thanks, Morning, Stu and Ryan. A couple from me. Firstly, Stu, apologies, but you probably get asked this on every call, but can you give us an update on your expectations around HEMI, the process there in particular, anything any kind of dates or expectations around the state and federal approval process that you're expecting over FY26 and also any dates we should be thinking about in terms of your next study update. Thanks.

Yeah, thanks, Matt. Look, probably not different to what we've probably articulated. You know, early calendar year, we put in the scheme implementation deed saying that's the likely timing around those approvals. It's still iterative and we're still working with all stakeholders at the moment to find solutions to things we're dealing with. So I think that's the process for the next four or five months. But, yeah, it's tracking as, I guess, we expected. But what we said was once we see those approvals, that's the time to really refresh the pricing around capital. And then that's what will be put to our board for that final investment decision. So we still think that's FIDS later in the year. later in the financial year, potentially for an inclusion in next financial year, which neatly fits with the conclusion of the Phimiston Mill expansion, you know, capital off and revenue up is probably a neat timing, all going well.

Okay, I understand. Thanks for that, Stu. And then maybe pivoting over to KCGM and obviously some great detail provided in the site visit presentation earlier this month. I'm interested in the... the regional and, I suppose, satellite deposit opportunities. In particular, you called out Redhill and Hercules. Can I just understand the four-year production profile that you've given at KCGM, you know, the 10 years at 900,000 ounces, is any of that dependent on bringing some of those regional and satellite opportunities into the mix? And if so, how do you think about sort of timing of capital and quantum of capital on those projects and where they fit in? Thanks.

Yeah, good point. Look, all that guidance through to that 900,000 ounces by FY29 forward is what we term ACGM, so it is the open pit, super pit, it is the undergrounds of Thimberston and Charlotte growing volumes to that 8 million tonnes per annum, and it's then supplemented with that large 100,000 40-plus million stockpile this year. That's the net that delivers that guidance and that production. When you sort of start to zoom out, and that's where we're putting our thoughts to, that more regional contribution, and it's a grade displacement now, so any higher grade coming out of Redhill or Hercules or other sources into that Phimiston plant gives us ability to displace 0.6 gram material with higher grade material and therefore get that ounce So, absolutely, we'll start talking less about KCGM and maybe more about the Phimiston mill as a cash engine and the supplementing fees, but we still haven't talked about timing, haven't talked about capex or when that starts to come into the plan, but we're absolutely... considering the power of that plant once it's operating. It's going to be the lowest cost mill in the region and we've got a lot of tenure sitting in and around it that we own and deposits and discoveries that have been proofed up just now.

Yeah, okay, understood. So hypothetically, potentially, if something like a Redhill or a Hercules could come in at a higher grade than the salt piles, then it would obviously... displays lower-grade material and potentially provide upside to that 900,000-ounce production profile, but obviously at a capital cost and an operating cost.

Yeah, it's good to hear that. Is that how you think about it? To give an example today, HPJ, you know, it's 100,000 ounces, one of our lowest cost mines. It's being trucked up to Kanana Bell at probably twice the milling cost of what Finmerston will land at. It is free milling, not refractory ore, so recoveries through that circuit are better. But that's the sort of scenario as we look at all the economics of trucking costs, milling costs, overall recovery performance. Is it better to concentrate it, put it through the one circuit? And you're putting that high-grade 100,000 ounces in instead of, you know, low-grade material. So we'll assess all that stuff at the right time.

Got it. Thank you, Steve.

Thanks. Again, if you have a question, please press star, then 1. There are no further questions at this time. I would now like to hand the call back over to Mr. Tunkin for closing remarks. Please go ahead, sir.

Thank you very much. And, look, thanks very much for joining us on the call on a pretty busy reporting day. I appreciate your continued interest in our company, and thank you, and have a great day.