Todays broadcast of the Qtr Report had the theme...........

Todays broadcast of the Qtr Report had the theme........ business as usual with a touch of excitement about exploration and recent discoveries. Here are some notes I took today.

Excecutive Chairman Bill Beament made opening comments:

1. Production and business on budget and on guidance.
2. Jundee has achieved a 30% increase in throughput, mainly due to the introduction of a 2nd mobile crushing unit.
3. Organic growth to 600k oz is well on track for 2018.
4. Big focus of business management has been on cost control with all long term contracts negotiated and set in 2016 whilst prices were low.

CFO comments:

5. Underlying FCF was $33m with $303m in cash equivalents and no bank debt.
6. Large cash outgoings during Qtr due to dividend and special dividend payment during Qtr plus a very large tax expense payment.
7. Plutonic sale completed to Superior Gold, which is going to list on the ASX, and NST retains an ongoing interest from the deal.
8. New hedging entered during the Qtr with another 200k oz hedged out to 2019 at $1718 oz. Total hedging sits at 465k oz and is "in the money to a tune of $45m".
9. Hedging decision was underpinned by the very good exploration success recently.

CEO comments:

10. 105k oz sitting in stockpiles at end of Qtr.
11. Milling circuits at all production hubs have been optimised.
12. Jundee throughput to increase by 50% (30% achieved to date).
13. Jundee achieved substantial ore development during the Qtr and benefits to be gained in coming Qtr's.
14. Production at the Velvet discovery in Kanowna Belle has commenced.
15. KB mill development improvements ahead of schedule.
16. KB mill expansion study underway........ further details were explained in question time and revealed that the expansion plan will achieve between 1m to 1.5m tonnes increased capacity. Most importantly the expansion plan will allow NST to move from 'campaign processing' of free milling and refractory ore to a process of dual milling.
16. EKJV ore development underway along the recently discovered 2km strike below current mines.
17. Paulsens current results reflect the amount of ore development being undertaken during the past two Qtr's and cost improvements should be forthcoming when more stoping ore is mined during coming quarters.

Chief Geological Officer (who spoke so quick it was a challenge to capture accurate notes!)

18. Exploration spend so far this FY is $32m and ahead of schedule.
19. He spoke about the success at Kundana along the K2 and Stryzlecki faults and predicted Resource upgrades will be forthcoming.
20. He spoke about many successful drill results in the EKJV ground, too fast and too many for me to note, but I note the key facts are in the Qtr Report.
21. He was excited with results at Carbine, especially the Paradigm deposit and stated the Maiden Resource Statement is currently being developed.
22. Jundee had significant exploration success with more likely to come. Presently 9 drill rigs operating underground and program is 53% complete. The Armada discovery is exciting with 2km strike length discovered to date. He forecast that Jundee will get Resource upgrades at end of FY.
23. Paulsens exploration has detected a "parallel" structure....... more news to come.
24. Central Tanami Project drilling is awaiting Regulatory approval and the completion of the wet season. He stated that there was no rush due to the increased capacity of Jundee and Kalgoorlie...... I took it that his comment was in context to the organic growth plan to achieve 600k oz in 2018.

Question time:

- Jundee milling capacity to be increased up to 2.1m tonnes per annum.
- Lower recovery rates at Jundee this Qtr due to increased processing of development ore.
- $15m capex to achieve the Jundee mill capacity upgrade.
- Increase to KB mill capacity is part of the NST production hubs strategy. Mining operations are and will be within 80km trucking distance and costs for transporting at the 80km range is $7.50 per tonne.
- The CFO answered a question about the break up of capex between sustaining and non sustaining. In the Dec Qtr capex of $34m about $19m was non sustaining... so he suggested that about $15m per quarter was a reasonable amount to factor when analysing sustaining capex figures.
- The Central Tanami Project is still at exploration stage and has been slowed up by a combination of having a new government in NT and a higher priority of effort by NST focused at Jundee and Kalgoorlie.
- No intentions to offload Paulsens at this stage. The CEO reiterated that the results at Paulsens over the past couple of Qtr's has been variable due to work effort on the development stages. He stated that the current focus is on productivity due to the amount of development work that has been needed.
- A further question was asked about the progress or lack of at CTP. BB gave the reply and stated that NST has been "a little bit distracted by other success".......... in context to the exploration successes achieved at Jundee and Kalgoorlie.

BB made the closing comments:

Operations and production is on track with guidance. NST is focused on FCF generation and the company is excited by exploration results to date. Growth is tracking to achieve targets from organic resources. Management is concentrating on continuing to achieve the good financial returns in accord with the NST track record.

Cheers