An Australian gold miner for global investors 1H FY2018 Financial - - PowerPoint PPT Presentation

An Australian gold miner – for global investors

1H FY2018 Financial Results - February 2018

Disclaimer

Competent Persons Statements The information in this announcement that relates to exploration results, data quality, geological interpretations and Mineral Resource estimations for the Company’s Project areas is based on information compiled by Darren Cooke, a Competent Person who is a Member of the Australian Institute of Geoscientists and a full-time employee of Northern Star Resources Limited. Mr Cooke has sufficient experience that is relevant to the styles of mineralisation and type of deposits under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" for the Company’s Project areas. Mr Cooke consents to the inclusion in this announcement of the matters based on this information in the form and context in which it appears. The information in this announcement that relates to Ore Reserve estimations for the Company’s Project areas is based on information compiled by Jeff Brown, a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy and a full-time employee of Northern Star Resources Limited. Mr Brown has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting

• f Exploration Results, Mineral Resources and Ore Reserves". Mr Brown consents to the inclusion in this announcement of the matters based on this information in the form and context in which it appears.

The information in this announcement that relates to the Central Tanami Gold Project is extracted from the Tanami Gold NL ASX announcement entitled “Quarterly Report for the Period Ending 31 March 2014” released on 1 May 2014 and is available to view on www.tanami.com.au. The information in this announcement that relates to mineral resource estimations, data quality, geological interpretations and potential for eventual economic extraction for the Groundrush deposit at the is Central Tanami Gold Project based on information compiled by Darren Cooke a Competent Person who is a Member of the Australian Institute of Geoscientists and a full-time employee of Northern Star Resources Limited. Mr Cooke has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" for the Group reporting. Mr Cooke consents to the inclusion in this announcement of the matters based on this information in the form and context in which it appears. The Company confirms that it is not aware of any further new information or data that materially affects the information included in the original market announcement entitled “Quarterly Report for the Period Ending 31 March 2014” released on 1 May 2014 and, in the case of estimates of Mineral Resources or Ore Reserves, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. To the extent disclosed above, the Company confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement. Forward Looking Statements Northern Star Resources Limited has prepared this announcement based on information available to it. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this

• announcement. To the maximum extent permitted by law, none of Northern Star Resources Limited, its directors, employees or agents, advisers, nor any other person accepts any liability, including, without limitation, any liability arising from fault or negligence on the part of any of them or any
• ther person, for any loss arising from the use of this announcement or its contents or otherwise arising in connection with it.

This announcement is not an offer, invitation, solicitation or other recommendation with respect to the subscription for, purchase or sale of any security, and neither this announcement nor anything in it shall form the basis of any contract or commitment whatsoever. This announcement may contain forward looking statements that are subject to risk factors associated with gold exploration, mining and production businesses. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a variety of variables and changes in underlying assumptions which could cause actual results or trends to differ materially, including but not limited to price fluctuations, actual demand, currency fluctuations, drilling and production results, Reserve estimations, loss of market, industry competition, environmental risks, physical risks, legislative, fiscal and regulatory changes, economic and financial market conditions in various countries and regions, political risks, project delay or advancement, approvals and cost estimates. [a] Unless stated otherwise, includes continuing and discontinuing operations for the period ended 31 December 2016. (1) EBITDA is earnings before interest depreciation, amortisation and impairment and is calculated as follows: Profit before Income tax plus depreciation, amortisation, impairment and finance costs less interest income. (2) Free Cash Flow is calculated as operating cash flow minus investing cash flow. (3) Underlying Free Cash Flow is calculated as follows: 31 Dec 2017 - free cash flow ($0.7 million) plus investments ($26.0 million), plus M&A ($4.0 million), plus FY17 tax ($35.2 million), plus working capital adjustment ($7.7 million), less bullion awaiting settlement ($12.5 million). 31 Dec 2016

• free cash flow ($12.8 million) plus bullion awaiting settlement ($10.6 million), plus stamp duty paid on prior acquisitions ($1.7 million), plus investments ($0.8 million), plus FY16 tax ($33.6 million), less working capital adjustment ($3.4 million).

EBITDA, Underlying Free Cash Flow and All-in Sustaining Costs (AISC) are unaudited non IFRS measures All currency conversions in this document were converted at a spot conversion rate of USD/AUD of 78c

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1H FY2018 – Key Financial Highlights

Interim dividend up 50% from pcp to A4.5¢ Fully Franked 25% Return on Equity and 24% Return on Invested Capital

Key Financial Outcomes Results strength illustrated by

A$433M Cash & Equivalents up 43% on pcp and no debt Cash Flow from

• perating activities up

14% to A$126.8M on pcp

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Underlying Free Cash Flow of A$61M up 9% from pcp EBITDA of A$201.7M; EBITDA Margin of 46%

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27% 36% 37% 42% 43% 38% 25% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 1H15 2H15 1H16 2H16 1H17 2H17 1H18

Annualised Return on Equity

17% 25% 28% 31% 38% 33% 24% 0% 5% 10% 15% 20% 25% 30% 35% 40% 0% 5% 10% 15% 20% 25% 30% 35% 40% 1H15 2H15 1H16 2H16 1H17 2H17 1H18

Return on Invested Capital

NST continues to lead the global gold sector in ROE and ROIC

NST generated a sector leading annualised underlying return of invested capital of 24% in 1H2018 and has averaged 28% since FY2015 For the past three years NST has delivered an average return on equity of 35% Capital is forced to compete internally for project funding to ensure NST continues to generate sector leading returns Whilst NST can generate these type of returns from organic growth it will continue to motivate capital

3 Year Avg ROIC of 28% 3 Year Avg ROE of 35%

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1H FY2018 Highlights - Underlying FCF and Operating Cash Flow Up

Cash flow from operating activities grew by 14% to A$126.7M and underlying FCF grew by 9% to A$61M

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Half Year End 31 Dec 2017 Half Year End 31 Dec 2016[a] $’000 Change % Change Revenue 435,349 415,485 19,864 5% EBITDA 201,738 218,803 (17,065) (8%) Net profit 79,090 104,624 (25,534) (24%) Net profit from continuing operations 79,090 84,720 (5,630) (7%) Cash flow from operating activities 126,787 111,349 15,438 14% Cash flow used in investing activities (126,067) (98,586) (27,481) 28% Sustaining capital (41,139) (54,107) 12,968 (24%) Non sustaining capital (33,982) (30,325) (3,657) 12% Exploration (21,804) (30,968) 9,164 (30%) Acquisition of available-for-sale financial assets (26,007) (750) (25,257) 3,368% Acquisition of Western Tanami Project (4,000)

• (4,000)

(100%) Other investing 865 17,564 (16,699) (95%) Underlying free cash flow 61,098 56,051 5,047 9% Average gold price per ounce (A$) 1,678 1,683 (5) 0% Gold mined (ounces) 293,990 271,536 22,454 8% Gold sold (ounces) 267,278 246,229 21,049 9% All-in sustaining costs (AISC) per ounce sold (A$) 1,043 1,111 (68) (6%) Cash and cash equivalents 368,054 282,101 85,953 30% Earnings per share (cents) 13.1 17.4 (4.3) (25%)

1.0 1.0 2.0 3.0 3.0 4.5 2.5 2.5 2.5 3.0 4.0 6.0 3.0 2 4 6 8 10 12 14 FY12 FY13 FY14 FY15 FY16 FY17 FY18

A$ (cps)

Dividends Declared

Interim Final Special $56 $61

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20 40 60 80 100 120 140 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18

A$M

Underlying Free Cash Flow

Underlying Free Cash Flow up 9% to A$61M Dividend up: interim dividend up 50% to A4.5cps fully franked inline with 6% of revenue EPS of A13.1cps in 1H2018 Since 2014 NST has been able to consistently grow earnings, profit margins and payouts to Shareholders

Financial Highlights for 1H FY2018

Underlying Free Cash Flow up 8% in 1H2018

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Interim dividend up 50% to A4.5cps in 1H2018

$8 $14 $36 $56 $65 $86 $105 $107 $79

20 40 60 80 100 120

1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 A$m

Net Profit After Tax

$15 $25 $31 $46 $58 $76 $94 $136 $154 $217 50 100 150 200 250 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 A$m

Cumulative Dividend Paid

35% 28% 36% 38% 42% 47% 53% 52% 46% 11% 6% 9% 13% 15% 19% 25% 23% 18% 0% 15% 30% 45% 60% 75% 90% 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18

EBITDA & NPAT Margin

EBITDA Margin NPAT Margin

1H2018 generated 46% EBITDA margins and an NPAT margin of 18%

$25 $62 $148 $166 $181 $216 $219 $242 $202 50 100 150 200 250 300 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 A$m

EBITDA

Group level EBITDA margin of 46%, ex Paulsens EBITDA margin of 50% Incorporating the 1H2018 dividend; NST has paid out A$217M to Shareholders in dividends since 2014

Growing profitability and returns to Shareholders since 2012

EBITDA 8% lower on pcp Since 2014 NST has been paid out A$217M to Shareholders in dividends

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* Includes 1H18 4.5c Interim dividend

*

$111 $127 $100 $105 $110 $115 $120 $125 $130 1H17 1H18 A$m

Net Operating Cash Flow

Operating cash flows grow again in 1H FY2018

Jundee operations grew operating EBITDA margins by 5% over the pcp to 58% in 1H2018 Kalgoorlie operations generated an EBITDA margin of 49% in 1H2018 Net operating cash flow across the business grew by 14% to A$127M in 1H2018

Net Operating Cash Flow was up 14% in 1H2018 to A$127M

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55% 56% 41% 58% 49% 25% Jundee Kalgoorlie Paulsens

Operating EBITDA Margin

1H17 1H18

Significant free cash flow generation

NST generated underlying free cash flow of A$61.1 million at an average gold price of A$1,678/oz Underlying free cash flow was up 9% on previous corresponding period NST also paid out A$36M to Shareholders in 1H2018

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(14.1) 61.1 7.1 7.4 4.0 36.2 4.0 3.5 35.2

• $20
• $10

$0 $10 $20 $30 $40 $50 $60 $70

YTD Cash, Bullion & Inv Movement Working Capital Investments Dividends paid Proceeds from share issue M&A Debt Repaid FY17 Tax Paid Underlying Free Cashflow

A$M

$56 $61 $30 $34 $31 $22 20 40 60 80 100 120 140 1H17 1H18 A$m

FCF vs Growth Capex Spend

Underlying Free Cashflow Non-Sustaining Capex Exploration

Free cash flow and cash balance growing despite capex growth

During 1H2018 A$56M was invested in exploration and expansionary capital to build the Resource and Reserve inventory and grow production in the coming years Despite an increase in expansionary capex of A$4M on pcp underlying free cash flow was up 9% in 1H2018 Since 2011 NST has been able to grow Reserves and Resources on a per share basis consistently through value accretive M&A and investing in exploration across its Tier-1 portfolio of assets

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$303 $433 50 100 150 200 250 300 350 400 450 500 1H17 1H18 A$m

Cash Bullion & Investments

Despite increased Capex FCF grew in 1H2018 by 9% Cash, Bullion & Investments grew by 43% on pcp

$1,640 $1,660 $1,680 $1,700 $1,720 $1,740 $1,760 $1,780 $1,800 $1,820 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 A$ Gold Price Ounces

Hedge Profile

Hedged Ounces Hedge Price Spot Gold Price

Cash Bullion & Investments $A433M Undrawn Standby Debt Facility $A100M Hedgebook $A13M Ore Stockpiles & GIC $A87M

Available Funding Capacity

Growing Cash generation and a balance sheet with flexibility

NST currently has a sector leading balance sheet to fund organic or inorganic growth opportunities The business has a current available funding capacity of A$633M NST hedge book has 270,500oz at an average gold price of A$1,750/oz vs the current spot price of A$1,700/oz

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Total Funding Capacity A$633M NST Hedge book has an average price of A$1,750/oz

93,748 102,719 30,141 137,095 106,972 23,211 Jundee Kalgoorlie Paulsens

Gold Sold (oz)

Dec-16 Dec-17 51koz 159koz 289koz 291koz 284koz 278koz 246koz 280koz 267koz

$1,120 $978 $968 $1,007 $972 $930 $1,111 $962 $1,043

$900 $1,000 $1,100 $1,200 $1,300 50,000 100,000 150,000 200,000 250,000 300,000 350,000 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 Ounces

Group Production and AISC

Paulsens Kalgoorlie Jundee Plutonic* Total AISC

Production up and AISCs down

Group level AISC of A$1,043oz in 1H2018 fell by 6% on the pcp Jundee: Gold Sold of 137,095oz was up 46%

• n pcp at an AISC of A$863/oz (US$673/oz)

Kalgoorlie operations: 106,972oz sold was up 4% at an AISC of A$1,191/oz (US$928/oz) Paulsens: 23,211oz sold at AISC of A$1,485/oz (US$1,158/oz) due to the wind down of operations at Paulsens

Gold Sold up 9% and costs down 6% on pcp Up 46% Up 4%

Gold sold of 267,278oz in 1H2018; an increase of 9% on the previous corresponding period despite the divestment of the Plutonic operations

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**

* Plutonic was divested in 1H2017 ** Paulsens Mining Operations ceased in 1H18

Organic growth - delivering returns to Shareholders

NST has been able to successfully organically grow production, Resource and Reserve life on a per share basis for its Shareholders, today’s exploration release points to further growth net of mining depletion In FY2017 Reserves were added at a cost of just A$24/oz delivering 10 year mine life visibility

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Northern Star Resources

An Australian Mid Cap gold miner – for global investors

Contact Details: Luke Gleeson – Investor Relations +61 8 6188 2100 Email – info@nsrltd.com Website – www.nsrltd.com

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