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Post Market Wrap | Northern Star March Quarter Gold Production Disappoints Market

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This Post Market Wrap is presented by KOSEC – Kodari Securities

  • Pogo mine in Alaska disappoints with lower production volume and substantially higher costs
  • Australian operations tracking to plan to meet FY22 production and cost guidance 
  • Group FY22 production guidance is unchanged at 1.55 -1.65 million oz
  • Group FY22 cost guidance is now A$1600 – A$1640/oz, up from A$1475 – A$1575/oz. 
  • Cash and bullion on hand A$533 million, net cash of A$433 million at 31 March 2022
  • Comprehensive exploration and Resource & Reserve update to be released in the June quarter
  • Target of 2 million oz of production by 2026 remains.

Northern Star Resources Limited (‘Northern Star‘ or the ‘Group’) owns and operates three world class gold production centres, two of which are located in Western Australia and a third site in Alaska. Northern Star merged with Saracen Mineral Holdings in February 2021, to form the world’s sixth-largest gold miner, adding $6.7 billion value to the newly merged entity. The merger delivered sole ownership of the iconic Super Pit, located just outside of Kalgoorlie, to Northern Star. 

March 2022 Quarterly Report  

Northern Star reported gold sold of 380,075 oz at an All-in Sustaining Cost (AISC) of A$1656/oz for the March quarter. The production volume is 11,915oz lower and the AISC is A$25/oz higher than the December quarter, when 392,665 oz of gold was sold at an All-In Sustaining Cost of A$1631/oz.

The slightly disappointing numbers at the Group level can be attributed to higher production costs and now lower production forecasts coming out the Pogo mine in Alaska, Canada. Pogo was acquired in 2018 and since that date Northern has spent US$55 million on expanding resources and reserves and upgrades that include upgrading the mill throughput capacity to 1.3 million metric tons per year.

Pogo gold production for FY22 has been revised down to the range of 205,000 to 220,000 oz from 220,000 to 250,000 oz. Pogo produced 209,647 oz of gold during FY21. Costs of production have also been revised substantially higher. Estimated AISC has been revised from A$1700 – A$1800/oz to A$$2150 – A$2230/oz. The Pogo mine accounts for about 15 percent of Group operations. 

The Australian operations are tracking to meet FY22 production and cost guidance. Taking into account the sub-optimal operating performance of the Pogo mine, Group FY22 production guidance remains unchanged at 1.55 -1.65 million oz. However, Group FY22 AISC guidance is now higher and is forecasted to rise to A$1600 – A$1640/oz, up from A$1475 – A$1575/oz. 

The March quarter average realised gold price was A$2,468/oz, delivering sales revenue of A$937 million. Cash and bullion on hand at 31 March 2022 was A$533 million. Corporate bank debt stood at $100 million, leaving net cash of A$433 million at the end of the March quarter.

Outlook

A$26 million was invested in exploration bringing the total year-to-date expenditure to A$85 million, compared to FY22 exploration expenditure guidance of A$140 million. The exploration focus currently is on extending the mine life at the Group’s three production centres – Kalgoorlie, Yandal and Pogo. 

The Kalgoorlie Super Pit and Yandal site look set to continue to perform in line with expectations, however the Pogo site performed below expectations with lower production volume at a higher cost. Northern Star must improve mine productivity at Pogo to optimise future cost performance and management have indicated that the current elevated cost structure is temporary.

The Group commenced a five-year profitable growth program one year ago.  Progress with this initiative and the comprehensive exploration and Resource & Reserve update scheduled for release in the June quarter, will be closely watched by the market. The Group continues to give every indication that it is tracking to 2 million oz of production by 2026.

This Post Market Wrap is presented by Kodari Securities, written by Michael Kodari, CEO at KOSEC.

"Michael Kodari is one of the world's most consistent, top performing investor. A philanthropist and one of the prominent experts of the financial markets, he has been referred to as ‘the brightest 21st century entrepreneur in wealth management' by CNBC Asia and featured on Forbes. Featured on TV as the "Money Expert", on the weekly Sunday program "Elevator Pitch", he is recognised internationally by governments as he was the guest of honour for the event "Inside China's Future", chosen by the Chinese government from the funds management industry, attended by industry leaders, when they arrived in Sydney Australia, on April 2014. Michael and George Soros were the only two financiers in the world invited and chosen by the Chinese government to provide advice, and their expertise on Chinese government asset allocation offshore. With a strong background in funds management and stockbroking, Michael has worked with some of the most successful investors and consulted to leading financial institutions. He was the youngest person ever to appear on the expert panel for Fox, Sky News Business Channel at the age of 25 where he demonstrated his skillset across a 3 year period forming the most consistent track record and getting all his predictions right over that period. Michael writes for key financial publications, is regularly interviewed by various media and conducts conferences around the world."

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International brands adapt strategies to reach Chinese consumers

International brands adapt strategies to engage Chinese consumers through localisation, data insights, and cultural integration amidst market challenges

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International brands adapt strategies to engage Chinese consumers through localisation, data insights, and cultural integration amidst market challenges

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In Short:
– U.S. and European brands are refining strategies to engage Chinese consumers despite economic slowdown.
– Localisation and consumer data are crucial for successful market entry and product development in China.
China’s economic slowdown has not deterred U.S. and European brands from redefining strategies to engage Chinese consumers.

The nation remains an enticing market, prompting companies to innovate amid rising local competition.Kraft Heinz, for example, has enlisted a local agency to enhance its ketchup sales, utilising promotional campaigns that resonate culturally, such as marketing ketchup in stir-fried egg dishes. Competition in this market is dynamic, with shifts in consumer behaviour evident over time.

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Brands, including Starbucks and Lululemon, demonstrate that successful entry often hinges on localisation.

Effective international marketing strategies dedicate significant resources to content-first campaigns, tailoring products to local preferences. Under Armour’s approach features affordable product lines and community-building through livestreams.

Foreign investment remains robust in China’s evolving market, with brands adapting to new social commerce norms exemplified by platforms like Douyin. The shift presents unique challenges requiring comprehensive strategies, which can quickly yield substantial sales benefits.

Data Utilisation

Access to consumer data is critical for brands navigating the Chinese market. E-commerce platforms like Alibaba provide detailed consumer insights, allowing companies to innovate based on market needs. An example is Perfect Diary, a makeup brand, which successfully developed targeted products for price-sensitive consumers.

With the recent iPhone 17 launch, JD.com reported strong preorder volumes, highlighting the relevance of tailored features in attracting local interest. Companies that establish local R&D facilities gain a competitive edge by developing products that align with local tastes swiftly.

Cultural engagement is paramount for brands aiming to resonate with Chinese consumers.

Collaborations with local artisans signify a deeper cultural integration. Despite market challenges, innovative store designs, like LVMH’s new Shanghai location, reflect a blend of heritage and modern consumer values.


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How do banks assess you for a home loan?

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Ama Samarasinghe, RMIT University

Navigating the money side of buying a home can be daunting – especially if it’s your first time.

Unless you’ve recently come into a small fortune, you’ll need to have saved a deposit and take out a home loan.

That means engaging with the world of banks and mortgage brokers, and grappling with what might be intimidating-sounding jargon – terms like “pre-approval”, “offset accounts” and “serviceability buffers”.

Here’s a general guide to some of the essential steps: how to figure out what you can afford, how the loan process works, and some key things to watch out for before taking the plunge.

How much can you afford?

Taking out a home loan means you’ll be required to make regular repayments over many years. So, a bank or other lender will first want to make sure you can afford them.


This article is part of The Conversation’s series on buying a first home.

We’ve asked experts to unpack some of the biggest topics for first-home buyers to consider – from working out what’s affordable and beginning the search, to knowing your rights when inspecting a property and making an offer.


It’s important to understand the difference between borrowing capacity and affordability.

Your borrowing capacity is the amount a lender is willing to offer you, based on your income and debts, and their own stress tests. Affordability, on the other hand, is about you – your lifestyle, choices and actual spending patterns.

These two things are related but don’t always align, so it’s important to factor affordability into your decision. Being clear on both helps you avoid taking on more debt than you can comfortably manage.

Doing your own calculations first

It’s a good idea to start with your own numbers. List all your household expenses over at least the past six months – everything from groceries to streaming subscriptions – and work out the monthly average.

Streaming apps on a smart TV
Monthly subscriptions – such as streaming services – can have an impact on borrowing power.
Oscar Nord/Unsplash

After setting aside some room for savings and unexpected costs, the remainder gives you an indication of what could be available for mortgage repayments.

As a rule of thumb, many suggest keeping repayments to no more than about 30% of your after-tax income.

Here are a few tips to avoid mortgage stress:

  • Budget for reality, not hope. Don’t assume you’ll slash spending just because you’ve bought a home.
  • Stress-test your budget. Could you still make the repayments if your interest rate rose by 0.25–0.5%? What if it rose by 1-2%?
  • Don’t forget the extra costs that come up with home ownership. Factor in insurance, council rates and higher utility bills in a larger home.

How much will the bank lend you?

Your borrowing power depends mainly on:

  • household income
  • living expenses and debts (credit cards, car loans, buy-now-pay-later arrangements)
  • number of financial dependants.

Most banks have online calculators in their banking apps to check your borrowing capacity. The Australian Securities and Investments Commission (ASIC)’s Moneysmart site also provides calculators for borrowing and repayments.

Lenders are also required by law to check a borrower could still afford repayments if interest rates rose by a certain amount. This “serviceability buffer” is currently three percentage points.

Pre-approval doesn’t guarantee a loan

Getting pre-approval means a lender has reviewed your finances and indicates they’re willing, in principle, to lend you up to a certain amount.

But it isn’t a binding contract. You’re not locked into taking the loan, and the lender isn’t legally bound to provide it.

Still, getting pre-approval can have some benefits, including:

  • giving you confidence about your borrowing capacity
  • helping set realistic price limits and narrowing a property search
  • signalling to real estate agents and sellers that you’re a serious buyer, which can make you more competitive in a hot market.

At auctions, pre-approval is especially important. Once the hammer falls, the sale is binding – there’s no cooling-off period and no finance clause.

If you don’t have pre-approval in place, you could win the bid but may be unable to secure finance, leaving you at risk of losing your deposit.

Different types of loan

One of the first decisions you’ll face is whether to go with a principal and interest loan or an interest-only loan.

Principal and interest is the standard choice. Each repayment reduces both your loan balance and the interest owed. Most first-home buyers opt for this option because it steadily pays down the debt.

Interest-only loans mean that for an agreed period (say five years), you only cover the interest. Repayments are lower during that time, but the loan balance itself doesn’t shrink.

To illustrate, if you took out a $200,000 interest-only loan at 5% for five years, you’d pay $10,000 a year in interest. But at the end of the five years, you would still owe the full $200,000.

Interest-only loans can make sense for some investors focused on cash flow, but they’re far less common for first-home buyers.

Finding a loan

There are many ways to find a loan that suits your needs. You can compare products directly with lenders, use comparison sites, or go through a mortgage broker.

Mortgage brokers compare loans on your behalf and are often paid a commission by the lender, meaning you aren’t directly charged a fee.

It’s important to make sure they’re licensed (check ASIC’s professional register), reputable, and – if possible – recommended by family or friends.

A good broker will break down fees, features and hidden costs so you’re comparing more than just the interest rate. Before you sit down with a broker, think about what matters most to you: getting the lowest cost loan, or flexibility through features?

Take offset accounts as an example, where savings can reduce interest on the loan. An offset is a transaction account linked to your loan. If you owe $450,000 but keep $30,000 in the offset, you’ll only pay interest on $420,000.

Another common feature is called a redraw facility. This lets you make extra repayments (thus reducing the amount of interest you pay) and withdraw them later if needed.


Disclaimer: This article provides general information only and does not take into account your personal objectives, financial situation, or needs. It is not intended as financial advice. All investments carry risk.The Conversation

Ama Samarasinghe, Lecturer, Financial Planning and Tax, RMIT University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Why most Australians aren’t ready for retirement

Australians’ retirement readiness declines as super fund trust wanes; expert shares insights and solutions for financial confidence.

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Australians’ retirement readiness declines as super fund trust wanes; expert shares insights and solutions for financial confidence.


Fewer than one in three Australians feel financially prepared for retirement, with trust in super funds falling and planning gaps widening. In this episode, Dale Gilham from Wealth Within explains why the nation is struggling with financial confidence.

We cover the most common mistakes retirees say they’ve made, how super fund distrust is reshaping decisions, and what role financial planning plays in boosting readiness.

Gilham also outlines the tools and resources Australians are seeking most as they look to secure their financial future. Subscribe to never miss an episode of Ticker – https://www.youtube.com/@weareticker

#Retirement #Superannuation #Finance #Australia #WealthPlanning #MoneyMatters #FinancialFreedom #TickerNews


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