Ground Breakers: Gold hits top price since November, LNG boom drives record quarter at Woodside

Gold miners went wild this morning as prices hit US$1842/oz overnight, the highest level in two months.

The S&P ASX All Ordinaries Gold Index was up a massive 6% at on the open today as investors responded strongly to the 1.6% increase in the spot gold price.

It was fortuitous timing for Northern Star Resources (ASX:NST), who continue to work on the turnaround of the US Pogo operations in Alaska with stronger second half performance predicted in their quarterly report today.

NST was up 8.8% or 77c at 12.00pm AEDT to $9.52 after selling 392,655oz at all in costs of $2069/oz.

That was led by the company’s WA based mines including the Kalgoorlie operations, which delivered 244,915oz at $1538/oz AISC and Yandal with 102,163oz at $1518/oz.

Its Pogo mine continued to struggle with output of 45,577oz at AISC of US$1735/oz but Northern Star says it is positioned to see increased mining rates in the June half, keeping overall guidance at 1.55-1.65Moz at AISC of $1475-1575/oz.

MD Stuart Tonkin said Australia’s second biggest gold miner was more confident in Pogo’s ability to deliver in 2022 after seeing development increase to 1500m a day and hitting a mill run rate of 1.2Mtpa in December after completing a capacity upgrade from 1Mtpa to 1.3Mtpa.

Other gold miners were equally buoyant with Evolution Mining (ASX:EVN) up 9.45%, Regis (ASX:RRL) rising 6.31%, Perseus (ASX:PRU) rising 6.76% and Newcrest Mining (ASX:NCM) up 4.21%.

African gold miner Resolute Mining (ASX:RSG) was up ~5% after increasing gold production from its Syama and Mako mines by 5% to 79,816oz in the December quarter to meet the lower end CY21 guidance at 319,271oz. AISC fell 4% to $1437/oz for the quarter but its $1370/oz full year AISC remained above guidance of $1290-1365/oz.

RSG expects to deliver 345,000oz at $1425/oz in 2022.

Gold miners share prices today:

Northern star chasing 2Moz by 2026 from current assets

Tonkin remained tight-lipped on plans to exercise a right to purchase a 50% stake in the high grade Windfall mine in Canada from Toronto’s Osisko Mining, which it has exclusivity over after issuing a $169m unsecured convertible debenture to the Canadian gold company last month.

He said Northern Star would look at how the mine, expected to hit commercial around 2025, fits in if a deal eventuates but said the company can hit its aim of growing to 2Mozpa by 2026 with its current portfolio.

“We’re very happy with our portfolio, all of our producing assets are contributing strong cash flow and that’s what we’ve got our five year strategy on,” Tonkin said.

“We continually assess that on a yearly basis to see each’s contribution and what we expect out of them.

“Presently, maybe some exploration assets or otherwise we streamline, but our producing assets at the moment are all contributing strongly and meet our organic growth from 1.6 (million) up to 2Moz over the next five years.”

RBC analyst Alexander Barkley said strong performance at the Kalgoorlie Super Pit, Northern Star’s flagship asset, was a positive with near term upside from mill utilisation after KCGM produced 15% more gold than the investment bank’s estimates. A study on an expansion of the Fimiston mill due by mid-2022.

But Barkley said Pogo may struggle to reach guidance despite the promise of a ramp up in mining rates.

The other potential bogey for Northern Star would be the impact of Covid cases in Australia when the WA border opens on February 5.

Tonkin said on a results call that the miner would take experience from its Pogo operations ahead of more clarity emerging on what rules and guidelines WA’s mining industry will see from the State Government.

Northern Star reported first half 2022 earnings of $425-440m, with sales revenue of $950m at an average gold price of $2429/oz.

It has a healthy bank balance if more deals are on the horizon with $588m in cash an bullion and net cash of $288m.

LNG boom drives Woodside to highest revenue on record

Just two years after the pandemic started and tanked oil and gas demand, Woodside Petroleum (ASX:WPL) has rebounded with the strongest revenue generating quarter in its history as it prepares to run the development gauntlet on its $16 billion Scarborough gas project.

Woodside generated US$2.85 billion in revenue in the December quarter, up 86% on the September term as average prices rose 53% to US$90 per barrel of oil equivalent.

Production and sales also increased 2% to 22.6MMboe and 22% to 31.8MMboe respectively.

It has set up Woodside in a position of strength ahead of its planned merger with BHP’s petroleum division in the second quarter o 2022 and came after the company completed the sell down of a 49% stake in its Pluto Train 2 to Global Infrastructure Partners amid criticism from environmental groups and activist investors.

Woodside boss Meg O’Neill said the rising LNG price signalled the continued demand for the commodity.

“The 86% increase in sales revenue for the quarter was underpinned by a 22% increase in sales volume as well as significantly stronger average realised prices. We achieved our highest quarterly sales revenue on record,” she said.

“The upward trajectory in global oil and gas prices resulted in a portfolio realised price of $90 per barrel of oil equivalent and a strong realised LNG price of $93 per barrel of oil equivalent.

“This increase in realised price demonstrates the continued strong demand for LNG and improvement in the trading environment over the course of 2021.”

Santos (ASX:STO) also delivered record quarterly and annual sales of US$1.5b (+34%) and US$4.7b (+39%) in the December quarter and 2021, respectively, in a year which ended with its merger with Oil Search.

Managing director Kevin Gallagher said Santos’ Dorado and Pikka Phase 1 projects will progress towards FID this year.