Northern Star Resources Limited (NST) Earnings Call Transcript & Summary

Thank you for standing by and welcome to the Northern Star FY '25 Half Year Financial Results. [Operator Instructions] I would now like to hand the conference over to Mr. Stuart Tonkin, Managing Director and CEO. Please go ahead.

Good morning, and thanks for joining us to discuss our first half FY '21 financial results today. We'll be referring to the presentation that's published on the ASX this morning, so I'll refer to the slide numbers there. And with me on the call today is our Chief Financial Officer, Ryan Gurner. We are excited to report record underlying earnings for a second consecutive period, which underscores the value of the profitable growth strategy that we embarked on in FY '22. We are more than halfway through this strategy and well positioned to deliver the end goal of 2 million ounces in FY '26, which drives our superior returns. What is very clear is that this interim result again demonstrates the strength and value creation that we are embedding in our business. Both EBITDA and return on capital employed metrics continue to improve. While the balance sheet remains strong and in a net cash position. This multiyear trend reflects our longer-term strategic lens we apply to all parts of our business. We believe this is a key differentiator for all our stakeholders at Northern Star, which we are very proud of. Northern Star offers significant gold price leverage to investors and we continue 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 thank our team for the effort and the commitment that delivered this excellent result. We remain well positioned to achieve our FY '25 production and cost guidance while retaining a firm focus on progressing our key growth plans, including the KCGM mill expansion project, which remains on time and within budget. With that context, I'd now like to hand over to Ryan Gurner, our Chief Financial Officer, who will discuss the results in more detail. Thanks.

Thanks, Stu, and good morning, all. I'll now step you through the first half financials. I'd like to begin on Slide 4. Our key financial metrics for the group improved significantly on the previous corresponding period. The strength and quality of our assets is illustrated by the company delivering a record underlying EBITDA of $1.4 billion for the first half of FY '25, up 58% from the previous period. Maintaining capital prudency and the realization of tax synergies from the merger have resulted in $1.15 billion of cash earnings up 63% from the previous period. This record first half cash earnings has enabled the Board to declare an unfranked interim dividend of $0.25 per share. The company expects to generate franking credits from Q3, as mentioned in the second quarterly call. And therefore, subject to Board approval, the final FY '25 dividend is expected to be partially to fully franked. In respect to the company's share buyback, we've bought back $257 million in shares to date, and the program is open, subject to blackout periods until September 25. Over to Slide 5. Our balance sheet supports our strategy and gives us flexibility through the cycle to fund opportunities that may arise to enhance our asset portfolio to deliver long-term superior returns to our shareholders. We remain well positioned to deliver our profitable organic growth strategy with our strong balance sheet, which includes $265 million net cash position at 31 December. We have significant liquidity of $2.7 billion and maintained 3 investment-grade credit ratings. Over to our production overview slide on Slide 6. During the first half, the company sold 804,000 ounces of gold at an all-in sustaining cost of $2,105 per ounce, and we remain on track to meet our FY '25 guidance. A key milestone was reached during the first half. After many years of work by our team at KCGM, they have successfully completed the East wall remediation. This now enables full access to the high-grade Golden Pike North mining area, which is key to lifting production in the second half. At Thunderbox, we are delivering nameplate throughput consistently, which is really pleasing to see. And at Pogo, with the major processing works completed in the half, this asset continues to deliver at the mine and mill, which is translating into great cash flow. Over to Page 7. This slide highlights the significant cash generation by the business during the first half with $124 million of group underlying free cash flow. The waterfall chart on the left illustrates the positive contribution from each production center to the group's cash earnings for the period. Cash earnings for each production center is represented by the segment EBITDA generated minus the sustaining capital spent at that center. Pleasingly, all production centers contributed strongly with Kalgoorlie, our largest center comprising 60% of the group's cash earnings for the period. We will continue our cost -- our focus on cost and productivity in the second half, which alongside the planned lift in group production and with the current buoyant gold price should translate into higher free cash generation. Now Slide 8. We are pleased to have doubled our return on capital employed to 6.1% half-on-half. This reflects progress in our profitable growth strategy and focus on allocating shareholder funds to generate returns. This also highlights the strength of our first half underlying earnings before interest and tax, which is up 130% from the prior year to $778 million. Over to Slide 9, which highlights EBITDA margins achieved by the group and each production center over the period. All 3 production centers performed strongly and achieved healthy EBITDA margins. A strong gold price and our focus on cost has delivered an EBITDA per ounce increase from $1,200 per ounce a year ago to over $1,700 per ounce this half. As illustrated by the graph on the left, Kalgoorlie Production Center continues as the key contributor at 52% of the group's EBITDA and is expected to grow with access to Golden Pike North at KCGM. In relation to our profitable growth strategy on Slide 10. We are now 3.5 years into our 5-year strategy, and we have delivered major milestones, which are key to us achieving our objectives. With the progress made on our strategy and the capital investment undertaken in our operations, the business has generated over $2.1 billion in cumulative operational free cash flow. As you will hear from Stu shortly, we are also well progressed at our KCGM mill expansion project. Over to Slide 11. Today, the Board has declared a record interim dividend of $0.25 per share, equating to a 25% payout of cash earnings. This dividend is complemented by our $300 million share buyback program, which remains active, demonstrating our purpose to deliver superior shareholder returns. Before I hand over to Stu to finish the presentation, I'd like to step you through Page 12 where we have set out our key elements of how we deliver shareholder value, which is through owning world-class assets in Tier 1 locations and applying our DNA of operational excellence, operating in a safe and responsible way with a demonstrated track record. Our portfolio of long-life assets in well-endowed geological systems provides us with flexibility and optionality to extract value and employ capital prudently to where the best returns can be generated. And as an overarching foundation, we maintain a strong balance sheet, which enables the execution of our strategy through the cycle. Thanks very much, Stu, back to you.

Thanks, Ryan. Now to Slide 13. I'm exceptionally pleased with the progress we are making on our KCGM mill expansion project, which remains on track and within budget. Our CapEx guidance of AUD 1.5 billion remains unchanged and is inclusive of that 10% inflation contingency. We also reiterate previously disclosed multiyear project CapEx guidance -- FX guidance, which remains unchanged. We're now halfway through the 3-year build, which will see the new plant commissioned in FY '27. And as you can see on that Slide 14, team is very busy with lots of activity on site. We are at peak labor force in our camps full, which is great to see the activity and the action and the progress. In these photos, you'll see ball mill shells that have arrived on site. There's plenty of activity in the primary crushing and milling areas, and the major concrete ports are on track and within over 50% of the total concrete port today. I'd like to thank that project team and our contractors doing that work. They're doing a fantastic job, and we're very pleased to see that progress throughout the plan. To Slide 15. On the 2nd of December, Northern Star announced that it entered into the binding scheme of implementation Deed with ASX-listed Degrining under which proposed Northern Star will acquire 100% of De Grey by way of a court-approved scheme of arrangement. And all eligible De Grey shareholders will be entitled to receive 0.119 new Northern Star shares for each De Grey share held at the scheme record date. So if approved by De Grey shareholders and the court, that scheme is expected to be implemented in May 2025. Over to Slide 16. And this reiterates our FY '25 guidance, which remains on track. For the year, our production is forecast to be second half weighted, driven primarily by the increased grades at KCGM from the Golden Pike and the fifth floor and continued strong performance across both Yandal and Pogo operations. And please note there's also major shutdowns planned in this quarter 3 across all the assets, which was foreshadowed at the start of the year and inclusive of that guidance. Slide 17. Northern Star's exploration program remains highly attractive and approach to value creation to support our purpose to deliver superior shareholder returns. And for the year ending March 2024, our cost of resource addition is a compelling AUD 31 an ounce. We're in a very enviable position where we have nearly 21 million ounces of ore reserves and over 61 million ounces of mineral resources. This corresponds to a 10-year reserve backed production profile. So just finally on Slide 18, that concludes the formal part of the presentation. I'd now like to open up to Q&A. So back to the operator. Thank you.

Your first question comes from Levi Spry with UBS.

Stuart, Ryan. Maybe just a question on the returns piece, can you just clarify exactly what you said there on the potential for the final dividend to be partially or fully franked and how you were thinking about potentially extending the buyback here? Or are we awaiting De Grey and I guess, the full integration of that in the portfolio for FY '26?

It's quite early. Thanks for the question. Yes, so I said at the second quarter that we're looking to come back into a taxpaying position. So that's not changed. I flagged that for the Australian operations, we were going to be paying roughly $60 million, I guess, up to 30 June. And then just for completeness, Pogo that is generating good money is also paying tax, not relevant to franking credits, but is also paying tax, so USD 40 million to USD 50 million this half, too. So then when we step forward, and you can see on the balance sheet of the company, there's $140-odd million of current tax liability. So that relates mostly to this first half of the Australian operations. So there's a few moving pieces, and that's why we're saying partially to fully franked. We will be starting to pay tax and into that calendar year '26 and beyond. What somewhat, I guess, not complicates it, but subject to De Grey completing, of course, then there's going to be a shield from that. Expectations aren't that we're not going to then not pay tax. It's just how much and what is the timing, I guess. As you know, tax is quite, I'll say, lumpy. So we're just waiting to see what happens in the 6 months Levi. So probably towards June, I'll be able to give a lot more conviction update on where we're going to sort of land in that next 12 months and therefore, the franking piece.

And with the buyback, obviously, we've got through September to complete that $300 million. We'll evaluate the options after that with the lens on all methods of capital returns and superior results. So that will be a decision after the end of the year.

Yes. Great. And maybe just a quick operational one. We're following your weather over there from over here. Can you just sort of talk us through how you might be prepared for a bit of rain fall through the mill of WA?

Yes, most of that cyclone that's coming down is actually hitting De Grey. You can see it coming down the top into Headland. So you see all these people exploration camps and all that have probably mobilized out this week up that part of the world, but there might be some rain fall out if it is coming down through the center of WA. But yes, no different to anything we've experienced before. When our ramps get wet, we park up our fleets. We utilize our stockpiles, we let it dry out so we don't have to go back and do much repairs to that works and just from a safety perspective, and it usually dries out pretty quick. We've had some 45-degree days and some high winds around the goldfields. So it doesn't take long for that to draw out, Levi.

Next question comes from Kate McCutcheon with Citi.

Just fleshing out the buyback, given that De Grey shareholders receive Northern Star shares when that completes, is it fair to assume there will be no stock purchased until that closes in May sometime. And if that's not fair then just what's the thinking there?

Thanks, Kate. No, they're independent. And to your point, you can do a slight calculation on that 0.119 ratio. And as we buy back shares, that ratio doesn't change and therefore, there's some slight changes of the 19.9% of the De Grey shareholders of the combined business. But you do the math, it's -- you're in the decimals -- margins of decimals. So it's in the scheme of things of how our dividends are paid and cash flow comes from that asset and future dividends on cash earnings, the contribution. All of that is being understood and considered. So I don't see that there's material reason to change any behavior in relation to that.

And then moving to the super pit. So we spoke at the quarterly that Golden Pike access was delayed by a quarter or so, and now you're back in there and thinking about the next year or 18 months, is there scope to put more gear in there to get out more of those higher-grade tons? I guess I'm trying to work out how to think about the delay and whether those impacts flow on or whether there's scope to catch up and we shouldn't get too hung up about it.

I'll probably say in mining, it's rare to catch up something where as the delay or time out or pushing of that it's -- it's always hard to say you can go faster. There's diversification of products from different areas, but all I'm saying is the pit floor in the good grade. We've manage that East Wall very, very well, destacking that and volumes are increasing of that higher grade material. So Yes. So our outlook is very favorable for the next 5 years in there, digging that high-grade pit fall complemented with the growth from the underground. And then obviously, the mill expansion comes in and then supplemented with extra low-grade stockpiles. So yes, I think we're talking about weeks and months, not significant stepbacks from where it is. But it's -- there's limited real estate on the bottom of that pit. So I can send as many trucks as I like, but they'll be queuing. So we're just really careful around vehicle interactions and how much we've been down there. So different to say the southern cutback where you can actually add more fleet and move more material when you get down the bottom of that pitfall. It is quite congested with that big fleet. So it's not a case of just throwing more gear, very similar to like an underground. You just can't throw more jumbos and trucks or something and expect more meters. It's around efficiency productivity and managing those interactions closely.

Your next question comes from Matthew Frydman with MST Financial.

Stuart, Ryan. Can I firstly ask on your leases and lease liabilities? So end of the half, $360 million of lease liabilities and cash outflows from leasing expenses running at about $220 million a year. Can we get a sense of how much of that sits in equipment, either at KCGM or maybe other long-life operations? And I guess how you guys think about whether there's any benefit in whether you convert some of those leases to North Star owned equipment?

Yes. So there's been a bit of an increase. There's a little note there on the financials about it. The Jundee renewables project is effectively our purchase agreement. So as you know, we've got 4 wind turbines there and a solar farm. So that's been the completion piece, and therefore, onto the balance sheet as a liability this half. We also are looking at -- well, we have also ordered some open pit gear to replace some of the hired gear that we -- that are used across the Yandal ops so trying to obviously pay margin out when you hire things. So trying to get a better cost outcome there for the business. And then, of course, Mount Charlotte ramps up and has probably over the last 1.5 to 2 years, here there is also increasing with that more meters, more advanced, et cetera. So across the business, you will see probably the gear held move up over these next few years.

And then maybe secondly, I apologize, it's a pretty general question. But at Pogo, obviously, we're about a month into the new administration in the U.S. Is there any sort of impacts or things to call out there that are affecting the operation or that you've seen over the last month or so?

Yes, nothing material to what we've seen, but it's fluid, let's put it that way. And we've already had experience version 1 of this, and it really -- I guess we endured through that. And so the tariffs and imports around materials that have moved in or out, they were already there, do exist. And U.S. content of supply, it is more expensive to get things in Alaska that aren't born out of the U.S. in the first place. And if they are, just a freight to get it up there as well makes it a challenge. So there was already levies on a lot of the stuff that comes out of Asia or Europe, which is a lot of our underground source first for things that we do in Australia. So I think then back domestically, we don't have a lot of U.S. content supply. So tariffs around that regard is not necessarily going to put pressure on those things. But U.S., it's kind of insulated given it's got U.S. cost base, U.S. revenue line. and a general higher cost of just getting stuff to Alaska in the first instance. So I haven't seen any structural changes. We're very alert to policies that are different to what we've planned around. But as you can start to see at Pogo, the margin there from where U.S. is over USD 2,900 an ounce and our all-in sustaining cost were 1,500 over margin. It's generated serious U.S. dollars more than we acquired that asset for us always said it would be knocking that out on a yearly basis. It's going to surpass that. So very happy with Pogo is not fragile. And we can -- we might not like it, but it will be able to manage any of those structural changes that partly can be imposed over the coming years.

Anything maybe to call out in terms of labor access or workforce? I mean, obviously, it's probably something that affects the Southern states more than Alaska. But yes, anything to call out there?

We haven't seen it -- again. We haven't seen any problems there. And I think if anything, we've got a pretty motivated team that are have seen success through their own hard work. They've been rewarded well. They've got benefits that they don't typically get across other operations that we've sort of brought into that asset over the years. Also Simon Jessop is over in Alaska at the moment, Jim Cox and the team. So I'll come back with another further outlook and update. And we're looking at what's a pretty bright future at Pogo. So looking forward to getting out of the winter months, getting new portals established down near the airstrip there, getting into accesses as they take us out under the river through to good pasta and the overall plan of what we can do beyond the current plans of Pogo are pretty exciting.

Your next question comes from Daniel Morgan with Barrenjoey.

First question is you flagged shuts obviously, this quarter or reiterated them. Can you just talk about if those shuts already occurred? And if so, how does that go?

No, it goes when liners run out and you got to replace them. And I think even Jundee, for instance, has got a shut right in the last week of March. So not ideal, but it is when it is. And all we say is we do those sort of quarter 1, quarter 3. So quarter 1 is a larger shut. Quarter 3 is a mini shut across most of our plants. And we also highlighted we took Pogo to a 3 shut scenario so that we could do sort of mini lines. So we're just flagging it to say we've reiterated our production and our cost guidance for the full year, second half weighted. You're going to tell me quarter 4 is going to be a good one. We see the risks you see it's largely on grade and ounces coming out of Golden Pike out of the super pit floor. And essentially, the rest of the assets, we're very pleased with how they're tracking against their plans. yes, it's progressing great, not without the risks and the weather and things that Levi as, they're all usual parts of our business. But yes, with the outlook, all these things is still on an upward trajectory as we grow to 2 million ounces and beyond and with the Fimi mill expansion. And if we're successful with De Grey, we've got exciting outlook over the next few years with very strong leverage to gold price.

And separate question just on mills, maybe the Yandal mill. How is that going with throughput and reliability post quarter end?

Yes. So it's that nameplate saying 6 is reliably deliberate. We obviously know it can do more. So we're not stopping there. And so just getting the stability into it. So you're very pleased with this performance to date. And it's -- there's no issues there at Thunderbox.

Next question comes from David Radclyffe with Global Mining Research.

Stuart, Ryan. So a non-accounting question for me. Just on the midterm production profile, and just to come back to this, because obviously, at today's price, there should be good upside to extend the shorter mine life assets in the portfolio post the end of this decade. So I appreciate you spending a lot on exploration, but do you need to consider maybe raising the gold price assumptions or investing some capital now in the good times to develop that optionality within those. So thinking outside of KCGM and potentially De Greyhere, it just good to understand what your thinking is here and maybe which of those shorter mine life assets you think have a better potential and stand out?

Yes. Thanks, David. So we do our resource reserves sort of close out on the end of March. So a lot of that work is underway and the valuations are underway for that. And I think you're right in saying you relook at those gold price assumptions for resources and reserves, you go back to what we were using, they're less than half of spot price. So it's important that we consider those things, but it's more driven by costs, and we've seen cost escalate, the [ lode ] cutoff grade. We then put in that revenue line to ensure we've got those embedded returns in those ounces we're seeking. I'm not going to get changing prices to add book ounces then grow resources or reserves and add it on the end of these lives. You've seen the behavior over the last few years of us investing in our already longer life but lower cost mines and also try to get the economies of scale to lower the costs on the global cost curve and start in the first half. So I think you're right in this something I've said before, these pop-up shops where there's -- at this gold price, lots of mines can start or extend, but then they are fragile if there's retracement of pricing. So we're very careful to not do that. But I think you're going to see a bit of that across the sector where ounces that can be mined and made money in this period. I think if you can pull it out in the next year or 2, that's pretty wise. If you're trying to add year 10, 11, 12 based on today's gold price, I think that's a bit of an accounting magic. So I think we'll leave that one.

So there's no, I guess, obvious capital projects you're talking about because the risk is obviously you're successful as a reak hope on to De Grey, and then you're putting money into that. And then there's potentially not surpluses to then put into those older assets. Is that the way to think about it?

Well, no, our growth strategy that we embarked on from '22 is addressing all of those opportunities that we saw at a much lower gold price that is just more greatly enhanced by the current gold price. So the $1.5 billion KCGM mill expansion from 13 million to 27 million tonnes per annum, the view and the attitude around those was done it was AUD 2,700 an ounce an IRR of 9%. You start running spot through it, it enhances it. So we don't have to do much more. We can look at resources, reserves, put it on paper, but ultimately, the hardware of our plants the mining activity and going through the plants to derive a gold bar, we've already done multiple times at both Jundee, TBO, now obviously, Fimiston is underway. I've just said there's a window of Pogo with an opportunity to do more. And then when you look at De Grey, they've already got a $10 million first plan with a 15 million tonne per annum upgrade option in their thinking on the equipment sizing that they've ordered. So I think it's -- we did this years ago. We're not suddenly pondering on what we do next if the price stayed or increased $1,000. This is all enhanced on things that were already 3 years ahead of everyone else in the thinking and investment in that regard.

The next question comes from Hugo Nicolaci with Goldman Sachs.

Just a couple of questions from me, please. And again, sorry in advance for asking a lease accounting question, but just following on from Matt's comments before just around the renewables projects and lease additions. Can you just remind us where those projects are at? How much we might expect that liability to keep increasing in the second half? And then just what the cost savings you're expecting to come out of those PPAs look like?

Thanks, Ryan. Yes, don't expect -- so the renewables at Jundee, as I mentioned with Matt, don't expect that to increase because that's an over term cost. So that's a fixed PPA. So I don't expect that to increase. So that was -- that's the single largest renewable project the company has done. There's been some smaller scale solar farms done at Carosue Dam and there's similar things planned at Thunderbox to be, I guess, installed in the future. So I don't expect that to increase. Obviously, there's a very potential large-scale wind and solar project that we're considering at KCGM, but that's a little bit away yet. So yes, I don't expect that to increase going out in the first half. I spoke about the equipment. That's -- there are obviously leases too. We've typically bought gear through a lease. There's increases with the open pit. As I mentioned, we're looking to replace some high gear and then obviously, with the underground ramping up at Mount Charlotte, expect that to sort of feature there.

On unit cost, you're going to see no worse and potentially improved but marginally. So on a net-net basis, it's going to stop escalation of volatility around carbon-intensive energy generation, but it's going to be the PPA as a consideration, all of those things is to pretty much stabilize power. So net-net dollars is pretty similar. But obviously, the set and the motivation has largely been around decarbonization. And we said we have that 35% reduction by 2030, and we've got 70% of our emissions come from those power generation sources and grid, which these are doing -- these are underway to replace.

Excellent. And then just to ask another one on capital management. I'm sorry to push the point after a few questions already, but not extending the buyback, you only got $43 million left in that program, having spent $85 million last half despite half of that being in blackout. On your reported metric, your net cash liquidity is $2.7 billion, comfortably covers the acquisition if that completes before considering the cash you'd also acquire. So I guess to Kate's question, it sounds like the buyback and the acquisition are independent. So how do we, I guess, interpret that? Do you see maybe higher returning opportunities on a 6-month view? Or is it just not a priority at the moment in terms of the capital returns and it's kind of see how some of these projects go before you start to consider wrapping that up?

Yes. So we've got until September to complete that buyback. And when it doesn't mean like we've done historically, it will be opportunistic as we've utilized that, and we're also restricted by those blackout periods. So e're not going to talk about a new or an extension or an uplifted buyback until we've completed by time or money the current one. So just that's the process that we're running through. But I think the sensible time is after the full year accounts to assess all of that plus the knowledge of the grades in or out. Our capital projects are understood. All those things are there. The half yearly, I think it would be a bit cute to come out now and boost up a buyback. I think that's getting to be cute. And I think across the sector, you're hearing global peers do that. They work on calendar year. So they're at their full year, trying to appreciate that. So majors today that have announced buybacks, that's on the end of their full year account as opposed to us sitting in the interim.

Yes. No, that makes sense. And then just last one, if I can squeeze a third in. Can you just remind us the moving pieces that go into adding that sort of 0.5 million tonne per year step-up at the underground at KCGM and sort of the time line to execute and get new equipment and all those sorts of things?

Yes. So quarterlies, you'll see in the back pages on the development meters. And quarter-on-quarter-on-quarter, they've just been building and adding and it's just opening up tonnes per vertical meter across Mount Charlotte and all those new portals being established inside the super pit and access along between super pit in Mount Charlotte, which is now [indiscernible] et cetera, and you start to see those meters being delivered. So we'll be sort of 7, 8, 9 kilometers a quarter coming into those areas, opening up those large tonnes and the stope tonnes come off the back of that. And we've -- the outlook is 500,000 tonnes per annum addition as we grow from 2 million to 4 million tonnes per annum from that -- and then obviously, when the super pit at the Golden Pike gets exhausted, Fimiston starts to really start to contribute and turn on, but the development will be in place in advance of that. So that's -- there's plenty of charts there showing sources of weighting between stockpile open pit and underground, but we haven't given the granularity of zones or areas or meters. That's -- it's a big beast and we'll fill it up with the best material we can put in.

Your next question comes from Mitch Ryan with Jefferies..

My question just relates to the KCGM mill expansion. Just wondering if you can expand on that. So obviously, we've seen in the region smaller mills, but that's come in ahead of schedule and under CapEx budgets. Is it too early to sort of give comment? You sounded quite happy with the progress to date, but are you seeing -- how are you seeing things on a capital spend relative to expectations and also timing relative to expectations?

Yes. Thank you. I don't know which mill came in under schedule and under budget, might have been [ Clarky ] at Capricorn, I don't know. But I don't see us coming in under timing or under money. We'll get what we ordered and built as planned. And as I probably forecast right at the get-go, contingency was basically allowance for escalation on things that weren't completely designed or secured through an order number or float on labor costs and hours. And so I expect we will consume that. Hence, why we told people that. I'm happy with the progress to date. It's still working very closely with our contract partner to make sure we're doing it, and we're in the thick of it right now, but you don't take your eyes off that. So there's still a lot of work to do. I'm just pleased with where we're positioned on the quality that's occurred and the progress that's being made, but we've still got nearly 18 months to run that through. So yes, I'm a bit early to call either way, but I'm pleased with where we're at.

Your next question comes from Al Harvey with JPMorgan.

So I suppose you did mention you're still progressing towards that 5-year 2 million ounce target by FY '26, so just under 18 months away. I suppose when you got Hemi coming in, you mentioned the upside at Pogo with the exciting upside there. I guess I'm just trying to get a sense of when we might be looking at timing for the next 5-year plan and directionally where group production could go to, notwithstanding, obviously, you do have 18 months on the current one left to go. But yes, any -- are we kind of thinking post financial -- full year results this year? Or could it be a bit earlier?

Yes, thanks. Look, we're definitely thinking around that, but we've still got a bit to do to deliver the existing one, and I don't want to rec people's focus or direction on those things that we've done a lot to deliver what we said we would do, and that's what we want to do. Look, it will be on that full year and whether it's pre-diggers or around that full year results call is when that strategy and our guidance typically comes out. So whether that's 1 year or whether that's greater years, we'll consider all those things. But I appreciate people want as much visibility as they can. But at that point, we'll obviously know how this year was delivered. We'll know De Grey's in or out. We'll know our resource reserve update. So it's a more complete picture as opposed to going a bit early again and lots of arm waving, we're careful about that.

Our next question comes from Baden Moore with CLSA.

Just a question really just following up on some of the investor focus on the buyback. If I look at your cash movement through the first half. It looks like you actually went backwards on cash through the 6 months despite the strong commodity price. I appreciate you're reinvesting a lot of money, but that also included a $200 million gain on your sales. Just wondering, do you think it's appropriate to be thinking about extending your buyback while you're not generating excess cash? Or do you think that in the second half, you're going to see a material turnaround in that cash growth?

es. So we're not extending the buyback. We're just reiterating the buyback has until September 2025. And we're -- what is $257 million complete on that. So there's only $43 million remaining. through September 2025. So questions on the call saying, will we lift it, will we extend it? We're saying that decision will come at the full year results in July, August. But to your point, we're investing for returns and superior returns and people can see our CapEx guidance. You can see increased return on capital employed metrics as we are delivering those organic projects. So yes, absolutely and strong net cash position and balance sheet. People can appreciate the money is going back in. But I think today's $0.25 per share dividend and cash earnings of $1 a share demonstrate the health of the business to support those returns. And our policy of dividends doesn't change with the inclusion on the Hemi should that occur through this year so that people get immediate returns from that if they come on board from De Grey shareholders. So all those things, there's not many companies that are doing all those things, organically growing, margin expansion, dividend paying, buybacks, inorganic M&A that's accretive. We've paid back to shareholders to date $2.3 billion through dividends and buybacks. So I think -- Yes, have a good look at the history and the outlook, it's in a good enviable position.

No, no. Forgive me. I'm not suggesting the balance sheet is weak. I just think when we're thinking about potential signals for where you have the additional liquidity you may need, do you think you'll need to see a turnaround in that cash generation? Or do you think you'd be happy spending out of the capital you've got at hand?

I don't know -- we can maintain around of cash generation. We're up 63% cash earnings period-on-period, and as gold price stable is still going up.

Just the net cash went from $1.1 billion to $1 billion in round numbers?

Through investing. Yes.

It's the outlook. So obviously, as Stuart is saying, we -- yes, there's money putting into this business for the future. We see the outlook and our behaviors and our actions are based on the outlook. So the half change is right, right? So -- but when we think about our buyback and think about all the dividends we're paying out and the future, we look at what the outlook is. So the strength of the outlook is there. That's why we have the buyback, even though, yes, our cash position is moving quarterly, half yearly, we see the outlook. So that's how we judge our actions, our behaviors is on that outlook.

But on the full year guidance, I mean, growth capital is $950 million to $ 1,020 billion in growth capital plus the KCGM mill expansion of $500 million to $530 million, understood plus exploration of $180 million. That's pretty clear on what was going into the ground from cash flows, plus you'll appreciate the hedging being unwound, and that's the average realized price isn't spot, but that's improving as well across the period. So I think point taken, cash goes backwards, but it's lumpy as Ryan put out with tax and timing and capital at the moment.

Yes. And it's going back because we're paying dividends out. So we're giving the money back to, rightfully, shareholders.

Your next question comes from Levi Spry with UBS.

It's a good time to be a gold miner. I think you reaffirmed the 2 million ounces for next year, too. I just want to confirm that's not a run rate to be achieved through the year. And I guess, some pretty material growth from this year, if maybe we're heading to sort of the mid- to lower end of current guidance. So can you just maybe remind us of the drivers from the key centers, Kalgoorlie, Yandal year-on-year as we look forward?

Yes. So we'll obviously put our FY '26 guidance out with our results in July. And it's never a point. It's a range. And our strategy is to deliver 2 million ounces, which is a checkpoint on the way through to the mill expansion additional and other things that are coming. So that was 300 out of Pogo , 600 out of Yandal, 1.1 out of Kalgoorlie which was inclusive, I guess, of that $650 million from KCGM. And KCGM is the final step-up piece from where it was last year, $450 million. We're obviously trying to get $550 million this year at a group is what we're confirming our group guidance at an asset level, it might be contributed from different areas because we've got that flexibility diversification. But absolutely, that's the outlook. And ideally, we have a good window to that in the run rate of quarter 4, this quarter 4 to show what these assets can do as well.

Your next question comes from Simon Grogan with the West Australian.

A Labor-related question for me. I was just wondering, just in terms of the salaries and what Northern Star is offering, do you think they're competitive enough to compete with the iron ore majors up in the Pilbara, just thinking in terms of staff, they build and once operation start?

Yes. Good question. Look, consideration around the Pilbara, it certainly will have the labor pool of the -- less of the labor pool, but the expectation of trades up there may be a bit different. If you consider our current operations in Kalgoorlie, we have a large residential workforce. So when you tap into that fly and fly out workforce going anywhere, particularly Pilbara, but I believe that, that's all absolutely being considered in the definitive feasibility studies assumptions, et cetera, that De Grey published. So I'm not concerned that's going to be changed. I think it's accurate and it's being considered and what feeds into it. So -- and I think the other part is just there's been relief across labor in the state in the recent years. So I think that also assists in just keeping that normalized and not continuing to ramp.

And I was also just curious on the DEI front. I don't believe Northern Star has like a workforce gender diversity target as such. Just thinking if you're obviously increasing scale, assuming that the De Grey deal goes ahead. And then just sort of the rhetoric coming out of the U.S. regarding DEI, there's a lot of sort of moving pieces on this. I just wondered where Northern Star was sort of at with targets and your approach to this subject sort of on the whole.

Yes. So we've always fostered inclusion. So our focus has been on creating inclusive workplaces and considering where it's difficult or challenged or these barriers and work to remove those and bring that in from an inclusion perspective. I've never worked from bigger number and try and drive to it because you get different outcomes. So yes, we've got team inclusion across our company with workforce suggestions like we do, say, safety reps that go in and feed into that information to improve safety policy and procedures. So yes, multiple years driving that through our culture. So I don't see us pivoting or changing related to other global views. It works in our company. We're pleased with it. And our attitude is always be improving it like we do on the safety front. So yes, I think it's -- still got work to do, obviously, and we think about it.

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

Great. Thank you so much for joining us on the call today, and I look forward to updating you all as we continue to advance our profitable organic growth strategy. So have a great day.

That does conclude our conference for today. Thank you for participating. You may now disconnect.